Street Retail
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STREET RETAIL 2020 knightfrank.com/research Experts from Knight Frank distinguish three locations of street retail premises: pedestrian streets with high pedestrian traffic*; central retail streets with transport and pedestrian traffic**; main avenues. The report examines in detail the situation in each submarket. STREET RETAIL Conclusions Supply By the end of 2020 the total By the end of 2020 the total street retail In tenants structure by area the largest street retail space amounted to space amounted to 587,000 sq. m, the volume of premises in transport and 587,000 sq. m, the average average size of premises amounted to pedestrian streets with area 100-200 sq. size of premises amounted to 194.4 sq. m, the increase of new supply m is 25% and 27% respectively. More 194.4 sq. m, the increase of new was 0.5%. than 50% of premises on all types of supply was 0.5%. streets have area amounted up to 300 The volume of trade space in central Catering segment is the leader in sq. m. pedestrian streets of capital amounted tenants profile which has following Food & beverage operators with 47.1% to 110,800 sq. m. New supply didn’t shares: 47.1% on pedestrian share is the leader in tenants group on increase over year. streets within Garden Ring, pedestrian streets (has decreased by 0.6 38.1% on transport and Over the year the volume of new p. p. over year). Fashion retailers account pedestrian streets. supply amounted to 1,400 sq. m and for 25.2% of total space (increase by 1.3 By the end of 2020 the share of 2,000 sq. m respectively on central p.p.), gifts and souvenirs account for free trade premises on pedestrian transport and pedestrian and main trade 4.4%. Tenants shares in other profiles streets is record-breaking since corridors. does not exceed 4.8%. 2015. It is worth noting that buildings Within Garden Ring catering facilities at 7 and 20 Tverskaya St., as well as are mainly represented in premises with 4/5 Nikolskaya St. are undergoing area 100 to 200 sq. m. (24%) and 200 reconstruction. to 300 sq. m. (21%). The minimum Street retail supply dynamics, 2020 to 2019 +0.5% 587 583.6 194.4 194.4 2019 2020 2019 2020 A *On 14 pedestrian streets (or sections of streets) that are in the greatest demand from retail operators: Arbat, Kuznetsky Most (partially), Nikolskaya, Rozhdestvenka (partially), Kamergersky Pereulok, Stoleshnikov Pereulok, Tretyakovsky proezd, and several areas in Yakimanka and Zamoskvorechye districts. **On 47 central trade corridors located within Garden Ring (including streets of Garden Ring) that are in the greatest demand from retail operators. Source: Knight Frank Research, 2021 2 STREET RETAIL percentage (8.9%) of restaurants is placed in premises with area of more Tenants structure by area, sq. m, H2 2020 than 1,000 sq. m. Cafes and restaurants on pedestrian, transport and pedestrian streets were mostly affected by self-isolation regime 8% 14% in Moscow: their share in tenants group has decreased greatly by the end of 2020. 12% Their volume decreased by 5.5% relative to volume on the key pedestrian streets of 13% Moscow by last year. 19% 27% Among the chains that have reduced their 20% 2% outlets are Dve Palochki restaurants, Coffee House coffee shops and Burger 18% 11% King fast food restaurants. Cafes and 24% restaurants not being the part of chain like «Brasserie Most» on Kuznetsky Most and several operators on Arbat were also 57% closed. «Shokoladnitsa», «John Jolie», «Bread and Wine», «Jean-Jacques» 16% being the part of chains shut down on 16% 10% 16% transport and pedestrian streets. Fair 12% 20% amount of restaurant concepts shut % down on Maroseika St., Myasnitskaya 11 St., Pokrovka St. and Pyatnitskaya St. 21% 21% On the other hand supermarkets and Pedestrian specialized stores have increased their presence by 6% on pedestrian streets of capital. New openings include «Vkusvill», SPAR, «Dobryninsky», «Pyaterochka», «Miratorog», «Alenka» Source: Knight Frank Research, 2021 and «Pirat-Marmelad» stores. The tenants breakdown by profiles The tenants breakdown by profiles The tenants breakdown by profiles on the pedestrian streets, 2020 on the transport and pedestrian on the main avenues, 2020 streets, 2020 Крупные магистрали 0.3% 0.9% 1.6% 13% 2.4% 13.8% 13% 19% 1.8% 3.4% 2.5% 38.1% 9.5% 2.8% 1.5% 2.4% 47.1% 8.5% 9.3% 3.4% 17.6% 8.1% 2.9% 11.3% 10.1% 4.8% 7.7% 4.4% 5.5% 7.9% 2.5% 0.3% 11.2% 14.8% 25.2% 8.1% 2.5% 7.5% 6.9% 5.6% 0.5% 3.8% 0.7% 0.1% Food&Beverage Food roducts Bank inanc Insurance Apparel Jewellery Beauty hop Gift Souvenir Assories Household oods Other Pharmacy ptics Vacant aces Services ncludin edica ervice Leisur oncept entertainmen por obbies) Source: Knight Frank Research, 2021 3 STREET RETAIL Vacancy Dynamics of the vacancy rate on the street retail market, 2020 vs 2019 There was a significant increase in vacant Доля вакантных площадей, % street retail premises in almost all trade corridors of Moscow by the end of 2020 2019 2020 due to serious restrictive measures. The most affected were pedestrian, transport Main pedestrian trade corridors and pedestrian streets, where tourist and Arbat St. 3.3% 14.2% business traffic was concentrated, and Bolshoy Tolmachevsky Pereulok 0.0% 0.0% tenants’ profile was mainly represented Kamergersky lane 3.4% 18.8% by catering companies and non-food stores (clothing, footwear, etc.). Klimentovsky lane 3.0% 1.0% In 2020 there was an increase by 7 p.p. Kuznetsky Most 8.0% 13.0% on pedestrian streets, where the share Nikolskaya St. 10.6% 7.8% of vacant premises was 10.4% vs 3.4% Rozhdestvenka St. 11.1% 8.0% at the end of 2019. The most significant Stoleshnikov lane 7.6% 4.7% changes took place on Arbat St., in Kamergersky Lane, it is worth noting the Final total 3.4% 10.4% decrease in vacancy rate in Stoleshnikov Main central trade corridors Lane from 7.6% to 4.7%. Boulevard Ring 3.3% 9.4% The maximum vacancy rate increased Garden Ring 2.4% 12.6% on transport and pedestrian streets Central trade corridors 6.7% 16.2% by 9,6% and amounted to 16,3%, the Final total 4.9% 14.2% greatest share of vacant spaces increased on Bolshaya Lubyanka St., Bolshaya Main central trade corridors Ordynka St., Myasnitskaya St. and Bolshaya Lubyanka St. 16.0% 23.7% Ostozhenka St. Bolshaya Ordynka St. 20.6% 25.3% Currently the total volume of vacancies Bolshaya Yakimanka St. 26.5% 14.4% in street retail premises in city is about Maroseika St. 5.2% 13.9% 130,000 sq. m., which is equivalent to area of two large shopping centers. Myasnitskaya St. 6.5% 19.0% Neglinnaya St. 4.1% 9.3% Novokuznetskaya St. 2.1% 5.6% Rates New Arbat St., 14.5% 12.9% Ostozhenka St. 28.8% 32.4% By the end of 2020 the highest rental rates requested are equivalent to Petrovka St. 11.6% 12.5% premises located on Kuznetsky Most St. Pokrovka St. 4.5% 14.2% and Stoleshnikov lane. Pyatnitskaya St. 4.7% 13.5% The minimum rate in 2020 has not Tverskaya St. 9.0% 12,2% changed and amounted to 30,000 rubles Main streets per sq. m. per year. The maximum rate is Kutuzovsky Av. 21.6% 28.8% 235,000 rubles/sq. m. Leninsky Av. 8.8% 14.5% Decrease in upper limit of rental rate was noted in most key trade corridors of city: Mira Av. 9.6% 19.3% by 4%-26% depending on street. Leningradsky Av. 11.1% 18.4% Increase in upper limit of rental rate was Komsomolsky Av. 13.7% 11.9% noted on Petrovka St., Patriarch’s Ponds Source: Knight Frank Research, 2021 St. and New Arbat St. Increase in lower threshold was noted on Kuznetsky Most St., Nikolskaya St., Street retail vacancy rate dynamics, 2020 to 2019 Petrovka St., Novy Arbat St., Stoleshnikov Indicator 2019 2020 Dynamics Lane and Kamergersky Lane. Indicator increased due to entry into the market of Pedestrian streets 3.4% 10.4% +7 p.p. higher class premises. Transport and pedestrian streets 6.7% 16.3% +9.6 p.p. Major main streets 12.3% 18.7% +5.3 p.p. Source: Knight Frank Research, 2021 4 STREET RETAIL Dynamics of the rental rate on the street retail market, 2020 vs 2019 Rental rate (thousand rubles/sq. m/year), w/o VAT H2 2019 H2 2020 Change Name of street or trade area lower limit compared upper limit compared min max min max to previous year, p.p. to previous year, p.p. Kuznetsky Most St. 65 220 80 235 23% 7% Stoleshnikov Lane 100 270 120 200 20% -26% Nikolskaya St. 70 160 90 250 29% 56% Petrovka St. 45 120 50 170 11% 42% Tverskaya St. (from Okhotny Ryad subway station to 45 160 45 150 0% -6% Pushkinskaya subway station) Patriarch's Ponds St. 70 130 70 155 0% 19% Pyatnitskaya St. 35 125 35 125 0% 0% Arbat St. 60 125 60 120 0% -4% Mira Av. 30 145 30 120 0% -17% Myasnitskaya St. 65 145 65 115 0% -21% New Arbat St. 45 105 50 110 11% 5% Kamergersky lane 60 120 70 90 17% -25% Garden Ring 30 80 30 80 0% 0% Kutuzovsky Av. 35 80 30 70 -14% -13% * Data are ranked by upper limit of 2020.