The retail real estate market in Moscow (14.26 million square meters of operating facilities, of which 7.22 million square meters are leasable) in the first quarter grew with only one new facility - the Discovery shopping center. The construction of two more shopping centers was completed, but their opening was canceled. The level of vacant space in the shopping center of the capital, according to Knight Frank, increased to 13%. Attendance of shopping centers by the end of the first quarter decreased by an average of 6%. This is compared to the same period in 2021, when shopping centers were left without a buyer due to the lockdown.
In St. Petersburg, where there are more than 4 million retail squares, in the first quarter, the increase in retail space was zero. No new projects announced. The attendance index of the shopping and entertainment center decreased by almost a quarter, according to the review of IB Group.
“In March, about half of the tenants associated with international brands stopped working in shopping centers. Part of the tenants of the shopping malls turned to the management companies with requests for rental holidays or changes in the order of rent payments”, - the IB Group report says. Street retail is also seeing a decline in occupancy and increased rotation. According to the results of the quarter, the number of closed enterprises exceeded the number of opened ones.
Trade in new buildings also went downhill. According to "Real Estate and Construction of St. Petersburg", the volume of offers in the commercial real estate market in new buildings in St. Petersburg and its environs increased by almost 26%.
“All retail real estate participants had high hopes for 2022, the market was ready for active development and recovery. However, the February events dramatically changed the plans <…>. Taking into account the difficult foreign policy background, disruption of supply chains and problems with inventory, which will affect the development of retail real estate and the well-being of the operators themselves, we expect adjustments in key market indicators as early as the second quarter of 2022”, - comments the regional director of the retail real estate department Knight Frank Yevgenia Khakberdiyeva.
Analysts have not yet summed up the results of the second quarter, but the trend is clear: when about 160 foreign companies suspended their work in Russia, the positive dynamics in the retail real estate market will have to be forgotten for now.
Andrey Braude, director of RED Managing Company, draws attention to the fact that the departure of anchor tenants de jure and de facto is already different now. And the statistics will not quickly fix the total outflow.
“Take, for example, the fashion segment. Most of the players have stopped their activities, but the retail space in the mall is still occupied by them and they pay rent. The contract usually provides for a minimum wage, plus a percentage of turnover. In other words: if the store is closed, then the owners of the mall receive a minimum from such a partnership. At the same time, the occupancy of the premises is normal”, - Andrey Braude explained.
Yevgenia Hakberdiyeva adds that few companies have finally given up trading in Russia. In her opinion, at the current moment, the trend of transferring business to local players will continue. “Moreover, everyone will act differently: some foreign companies will continue to sell all or part of the business, while others will transfer the company's share in trust management to local management for a while. Such maneuvers will allow foreign retailers to return to the Russian market again and continue their business activities in the usual format”, - explained the regional director of the Knight Frank retail real estate department.
Andrey Braude believes that in any case, the owners of commercial real estate will have to think about reconception. And some malls the next crisis is simply not to survive.
“I think where there is a high credit burden, then decisions will already be strategic. Both closure and bankruptcy are possible. For example, in Yekaterinburg, it is still at the level of an idea, but the issue of converting some retail space into warehouse centers is already being discussed. Examples will also appear in the country when the shopping and entertainment center will be rebuilt for housing as well”, - Andrey Braude predicts.
The retail real estate market, which survived the coronavirus lockdown, has long been in search of new formats. Yevgenia Khakberdiyeva listed the possible trends of the current crisis especially for Novye Izvestia.
“Among the market trends today, one can single out, for example, a shift in supply towards small-format shopping centers. In the conditions of competition with online stores, offline trading needs to give the consumer something new that will not be available online, and small-format shopping centers with modern public spaces for everyday leisure respond to the demand of the modern buyer”, - says Yevgeniya Hakberdiyeva.
The expert attributed resale to the novelties of the season. “The resale that we are now seeing is a new trend in the market, and not only second-hand goods are sold, but also new ones. Today, there are many online platforms for reselling things on the market, the actively developing ones include OSKELLY, Second Friend Store, The Cultt, LOTS, SPIN4SPIN, some of them have their own offline stores in the showroom format, ”explained the interlocutor of Novye Izvestia".
Dark stores, dark kitchen, self storage also appear, but these are complex formats - for hangar-type facilities that are located outside the Third Ring Road.
“The formats of coworking and beauty coworking spaces are a more promising story, but they have more stringent requirements for sites (construction, premises), so most shopping centers are not suitable for coworking spaces”, - Yevgenia Khakberdiyeva believes.
Andrey Braude, director of RED Management Company, believes that by the end of the year, if the political situation does not change, the main market trend will be “waiting”. “Now no one has the basis and data for making a decision. Uncertainty. I think there will be some waiting before the end of the year. If something changes for the better, then recovery will begin next year. In the meantime ... we are waiting”, - summed up Braude.