Street Retail Moscow
Total Page:16
File Type:pdf, Size:1020Kb
STREET RETAIL MOSCOW Q1 2020 2 KEY MARKET INDICATORS Q1 2018 Q1 2019 Q1 2020 Total stock of street retail space on central 562.1 562.5 563.0 corridors, thousand sq m Amount of retail space, number of units 3,074 3,110 3,129 Average size of leased units over 140 180 181 March2020 | Moscow International retail market Q1 2020 | Moscow Colliers the period, sq m Vacancy rate, % 7.0 6.0 6.4 * Based on the analysis of Moscow’s 90 streets. SUPPLY The average vacancy rate on central shopping streets in Moscow increased by 0.3 p.p. compared to the previous quarter, this was due to tenant rotation in these locations in Q1 2020. Premises are being vacated due to outdated concepts and changes in development strategy by some owners of retail chains and food & beverage operators. Nowadays, many business owners are focused on improving their business structure and modernising store concepts to attract more customers and visitors. CHART 1: 12,0% 11,0% 11,0% Average vacancy rate 11,0% on Moscow’s central 11,0% streets, % 10,0% 9,0% 9,0% 7,8% 8,0% 7,5% 7,0% 7,0% 6,4% 7,0% 7,1% 6,0% 5,9% 6,0% 4,8% 5,7% 6,1% 5,0% 5,3% 4,8% 4,0% 3,0% 2,0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 Source: Colliers International 3 MAIN STREETS IN MOSCOW International retail market Q1 2020 | Moscow Colliers March2020 | Moscow An increase in vacant premises in Q1 2020 was recorded TABLE 1: on pedestrian streets (3.9% versus 3.1% in Q4 2019), on Vacancy rates on main shopping streets in central corridors (7.4% versus 6.9% Q1 2019) and on Moscow, % Patriarch Ponds (6.1% versus 4.4 in Q4 2019). The vacancy growth is attributed to the closure of several stores, for example, the Kiko Milano cosmetics store on STREET Q1 2019 Q1 2020 Kuznetsky Most, the Goal Center sportswear store on Krasnaya Presnya, and Moskhoztorg home goods store Stoleshnikov Ln 6% 4% on Malaya Bronnaya and Krasnaya Presnya. In addition to stores, food & beverage operators were closed, such Kuznetsky Most St 5% 3% as Shake Shack on Arbat (the American fast food restaurant chain announced its closure in Russia in early Petrovka St 6% 5% 2020), Saxon + Parole, and Junk Food Bar closed on Patriarch Ponds. Banks are continuing to reduce their Myasnitskaya St 3% 6% branches in central locations due to services moving online. Arbat St 5% 5% The lowest vacancy rate on central streets was observed on Rozhdestvenka (0%), Kuznetsky Most (3%) and Novy Arbat St 4% 5% Stoleshnikov Lane (4%). Rozhdestvenka St 1% 0% Pyatnitskaya St 1% 4% CHART 2: Vacancy rates by type of retail corridor, % 10,0% 9,0% 8,0% 8,0% 8,0% 6,9% 7,0% 7,4% 6,5% 6,1% 6,0% 6,3% 6,2% 5,0% 5,4% 4,4% 3,9% 4,0% 4,5% 3,0% 2,0% 1,0% 0,0% Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Central corridors Pedestrian streets Boulevard Ring Patriarch Ponds Source: Colliers International 4 March2020 | Moscow International retail market Q1 2020 | Moscow Colliers TENANT STRUCTURE According to Q1 2020 results, the largest category of rented premises has decreased to 127 sq m) and by tenants remains food & beverage operators, which increasing their geographical range by opening of a amounted to 35% (the same figure as in Q1 2019) of large number of mobile locations in the coffee-to-go all leased space within the Garden Ring. The format and hybrid coffee shops in grocery stores. In segment has been the main growth driver of the addition to food & beverage, the presence of food street retail market over the past few years. retailers increased over the year by 1 percentage point (7% against 6% in Q1 2019). This increase In the year up to the end of Q1 2020, the top three in occurred due to the active expansion of grocery terms of food & beverage openings were cafes, chains such as VkusVill and Dobryninsky. The restaurants and coffee shops. On central shopping average leased area of grocery stores, including streets, restaurants and cafes accounted for 48% of non-chain outlets, on central streets was 184 sq m. openings, while coffee shops made up 20% (from the total volume of food & beverage openings). The In Q1 2020, the structure of other tenant profiles did coffee segment is undergoing rapid development not change significantly compared to Q1 2019: due to the emergence of new formats in Moscow. beauty and health (14%), banks and financial Coffee shop operators are reducing their costs every services (8%), fashion (8%), services (7%) and year and strengthening their positions in the Moscow household goods (2%). market by reducing rental space (the average size of 5 CHART 3: Demand distribution International retail market Q1 2020 | Moscow Colliers March2020 | Moscow in the rental market by retailer profile, % 7% 3% 2% 8% Accessories Banks 16% 14% Beauty & health Food & Beverage 7% Fashion Grocery 8% Other 35% Household goods Services CHART 4: Structure of open food & Garden Ring 19% 11% 19% 4% 37% 7% 4% beverage operators for Q1 2019 — Q1 2020, by type Patriarch 31% 31% 15% 8% 8% 8% of operators, % Ponds Boulevard 18% 21% 26% 6%3% 24% 3% Ring Pedestrian 27% 47% 13% 7% 7% streets Central 20% 29% 14% 2%5% 19% 3% 7% corridors 0% 20% 40% 60% 80% 100% Restaurant Café Bar Pub Bakery Coffee House Pizzeria Bistro Food-court Canteen CHART 5: Structure of open food & 5% beverage operators for Q1 22% 2019 — Q1 2020 by type of price segment, % 26% Premium Medium Medium+ Economy 47% Source: Colliers International 6 RENTAL RATES Rental rates on several central shopping corridors and pedestrian streets have shown a multi-directional trend. In Q1 2020, the upper range of rates increased on Stoleshnikov Lane (3%), Petrovka (4%) and Bolshaya Nikitskaya (14%) compared to the figures Q1 2019. This increase is primarily due to the lack of quality space in these locations and the appearance of new expensive units, for example, due to the delivery of one block of large premises (218 sq m of 418 sq m) at 15 Petrovka St, the rental rates of the second block increased (200 sq m of 418 sq m). In addition, a new high-quality offer appeared on 24/1 bldg 1 Bolshaya Nikitskaya St. On other streets, rental rates decreased by an average of 10-15% due to an increase in vacancies and the entry of fewer quality premises on the market. MAP 1: Rental rates on the central streets of Moscow, RUB/sq m/year March2020 | Moscow International retail market Q1 2020 | Moscow Colliers Petrovka St 68,000–135,000 RUB/sq m/year Tverskaya St Stoleshnikov Ln 65,000–110,000 RUB/sq m/year 180,000–251,000 RUB/sq m/year Bolshaya Nikitskaya St Myasnitskaya St 70,000–133,000 RUB/sq m/year 86,000–138,000 RUB/sq m/year Kuznetsky Most St 129,000–176,000 RUB/sq m/year Novy Arbat St 65,000–125,000 RUB/sq m/year Arbat St 56,000–130,000 RUB/sq m/year Pyatnitskaya St 58,000–75,000 RUB/sq m/year Based on the analysis of premises from 100 – 300 sq m Source: Colliers International 7 MAIN AVENUES International retail market Q1 2020 | Moscow Colliers March2020 | Moscow Based on a study of 567 objects (85,700 sq m) on space on highways include the following categories: main corridors, the vacancy rate for the year on grocery (19%), beauty and health (18%) and food & Kutuzovsky (16%) and Lomonosovsky (4%) avenues beverage (15%). increased by an average of 2 p.p. An exception was Michurinsky (9%), where the rate decreased by 2 p.p. The average rental area on Kutuzovsky was 158 sq m, The increase in the vacancy rate on highways was on Lomonosovsky this was 140 sq m and on due to the closure of food & beverage operators, Michurinsky it was 153 sq m. grocery stores, bank branches and professional cosmetics stores. The structure of tenants on main corridors is the opposite of the structure of tenants on central shopping streets. The top three in terms of leased TABLE 2: Indicators on main avenues RENTAL RATE, AVERAGE AREA of LEASED VACANCY RUB/SQ M/YEAR PREMISES, SQ M AVENUE 2019 2020 MIN MAX 2019 2020 Kutuzovsky 14% 16% 23,500 83,200 159 158 Lomonosovsky 2% 4% 29,400 78,000 123 140 Michurinsky 11% 9% 35,100 82,000 150 153 CHART 6: Structure of occupied space by category of tenants on each of the avenues, % Lomonosovsky Ave 13% 17% 19% 9% 19% 23% 0,5% 1% Michurinsky Ave 14% 20% 18% 23% 24% 1% Kutuzovsky Ave 16% 18% 10% 14% 15% 9% 11% 7% 0% 20% 40% 60% 80% 100% Accessories Banks Beauty & health Food & Beverage Fashion Grocery Other Household goods Services Source: Colliers International 8 OPENINGS In Q1 2020, an interesting opening was the new Greek restaurant Eva by Lucky Group. The restaurant with modern Greek cuisine was opened in premises on Bolshaya Gruzinskaya, where previously there were such restaurants as Go East by Uilliam Lamberti, Litro by Taras Kiriyenko, Yernik and Yulina Kitchen by Yulia Vysotskaya.