CUSHMAN & WAKEFIELD SUMMARIZED UP RETAIL MARKET PERFORMANCE IN Q3 2015

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  • 20 new quality shopping centers with GLA of 443,700 sq. m were completed in Q1-Q3 2015, and 5 quality projects with GLA of 306,000 sq. m entered into Moscow market
  • Average GLA of regional SCs decreased by more than 30%
  • Key indicators for existing shopping centers remained sustainable in Q3 2015

In Q3 2015 Russian retail market showed active performance with 12 new regional projects entering the arena, 2 of which were developed in Moscow region. In 2015 Russian regional market saw 20 new shopping centers contributing total GLA of 443,700 sq. m.  

In terms of projects quantity the market retains the activity – during the same period in 2014  21 new projects (GLA – more than 682,000 sq. m) were delivered to regional markets, in 2013 the figure made up 18 (GLA – 527,000 sq. m).

The fact is that average regional SC’s GLA this year amounts to 22,000 sq. m, while in 2014 the same figure reached up 32,500. This shows the volume decrease by 32%.

The pipeline for Q4 2015 is rather strong, which proves that the market still shows the active performance. Cushman & Wakefield research states that total new GLA volume in 2015 will amount to about 1,300,000 sq. m. Such decrease compared to the same figure in 2014 is the reflection of SCs’ average GLA decrease at a time when development activity remains high.

In 2015 five new SC with total GLA of 306, 000 sq. m entered into Moscow market, which almost makes the last year record volume of 309,300 sq. m of new retail GLA in the city. The market outstrips the volume demonstrated in 2010-2013. Q3 didn't see any new opening but pipeline for Q4 is quite strong.

Consumers have become less active than they were, the footfall showed slowdown by 10%. According to C&W research the occupancy level is rather stable: the high-quality active shopping centers in Moscow with good location saw the slight increase of the average vacancy rate: form 2,17% to 2,35%. The average vacancy rate in Moscow increased in Q3 by 1,3% and amounted to 9,3%.

Rental rates in SCs opened in 2014 remained stable in Q3 as well as during the whole of 2015. Some retailers make payments calculated as the fixed percentage of turnover amount.  The discounts granted in 2014 will lust until the end of 2015.

Lada Belaychuk, Associate and the Deputy Head for Cushman & Wakefield research department, says: “In Q3 2015 – for the first time during the latest 4 quarters – retailers again started to announce their development plans. They continue to optimize their chains, clothing ineffective shops and making use of new opportunities”.

Flagships of well-known brands are entering the market (Befree in Saint Petersburg, Deri & Mod in AfiMall, Forever 21 in Metropolis, United Colors of Benetton in Yaroslavl) and going on expanding their presence in regional cities. Existing brands introduce shops in new formats (Lenta in the format of supermarket, Smartori – the club project of Globus Gourmet). Franchise is also being implemented (Euroshop discounters, kids’ store Rookie).