retail property market
TRANSCRIPT
Moscow
RETAIL PROPERTY MARKET REVIEW
MOSCOW Q1 2012
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2 / COMMERCIAL REAL ESTATE / RETAIL / Q1 2012
Moscow
OLGA ZBRUEVA Head of Retail Department Tenants Division at ASTERA an alliance member of BNP Paribas Real Estate
TRENDS
Business activity on the Moscow commercial real estate market remains high.
The situation in the mall segment can be characterized as stable. The low
supply volume and high demand for retail space keep the vacancy levels of
retail properties on a close-to-zero level. Rental rates level did not change
significantly in the considered segment.
Under the existing conditions of a new supply deficit, the appeal of already
functioning shopping malls for prospective tenants is growing. Mall owners
aim actively at increasing the effectiveness of their business at the expense of
tenant rotation, marketing and loyalty programs.
The low volume of the new quality supply in mall properties makes retail
operators consider street retail. The demand in the street retail segment
focuses on the premises which not only meet operator’s particular
requirements, but also do not drain the budget.
When it comes to street retail properties with high income potential, retail
chains are rapidly replacing their non-chain competitors. In particular, non-
chain shops, pharmacies, and cafés are being replaced by chain retailers with
the same business profile. Low marginal operators (for instance, children’s
goods and service operators) are displaced from major highways and
substituted by retailers working in more profitable segments.
Rental rates level for street retail premises has reached its maximum.
Notwithstanding the long-time market exposition, a lot of properties do not
find their clients because of incompatibility of rental level with the actual
market expectations. As a rule, it is a compromise on rental rates between an
owner and a tenant which leads to an actual deal.
Considering the high operator activity and increasing demand for retail
properties, rental rates in retail sector have a 5-15% growth potential,
especially those for liquid premises in shopping malls and street retail
segment. However, taking into account that requirements to premises are
also tightening, no serious rental rate growth is expected
The deficit of quality retail space and high level of competition in Moscow
encourage retailers to explore Moscow suburbs and regions. Satellite cities of
Podmoskovye become a development platform for retail chains: banks, food
stores, pharmacies, house goods shops, public catering businesses, which
rent both in malls and street retail.
SUPPLY
VACANCY
RENTAL RATES
CAPITALIZATION RATE
KEY INDICATORS
Key indicators of Moscow retail market development (shopping malls),
Q1 2012 Total stock of retail premises in Moscow at the end of Q1 2012
Total area, sq.m 6,028,090
Leasable area, sq.m 3,296,550
Stock commissioned in Q1 2012
Total area, sq.m 119,079
Leasable area, sq.m 41,047
Source: ASTERA, an alliance member of BNP
Paribas Real Estate
Key indicators of Moscow retail market
development (street retail), Q1 2012
Average rental rates*, USD/sq.m /p.a.
Inside the Garden Ring 1,900-2,500
Between the Garden Ring and the Third Ring
1,400-2,000
Between the Third Ring and Moscow Ring Road (dormitory districts)
700-1,300
Source: ASTERA, an alliance member of BNP
Paribas Real Estate
*Rent levels and sale prices are influenced by different factors such as proximity to subway stations, size and condition of premises etc., which are not reflected in the chart
3 / COMMERCIAL REAL ESTATE / RETAIL / Q1 2012
Moscow
SUPPLY
New retail real estate projects commissioned in Q1 2012
In Q1 2012 Moscow quality retail space volume increased by 119,079 sq.m due
to the commission of Kaleidoscope shopping mall. The volume of the new supply
in Q1 2012 is in line with Q1 2011. However, this supply is not sufficient to meet
the existing demand for quality retail space in Moscow.
New supply of retail space, Q1 2012
Name Type Address GBA, sq.m GLA, sq.m
Kaleidoscope Shopping
mall Khimkinsky Boulevard, 7-23
119,079* 41,047
TOTAL 119,079 41,047
Source: ASTERA, an alliance member of BNP Paribas Real Estate * The mall is commissioned, official opening is expected in June 2012
According to the official plans announced by developers, commission of 12 new shopping malls with a total area of 481,935 sq.m is expected in Moscow by the end of 2012. Commission terms of several projects (River Mall, Outlet Village Kievsky) were shifted to 2013 in the beginning of 2012. If the commission terms of all the announced projects are complied, the total volume of quality retail space in the capital will amount to 6,515,000 sq.m (GLA – 3,614,000 sq.m).
Mall projects expected to be commissioned by the end of 2012*
Name Type Address GBA, sq.m GLA, sq.m
Goodzone Shopping mall 12 Kashirskoe av. 120,000 70,000
RIO Shopping and entertainment
centre 109 Leninsky pr. 76,000 45,000
Otrada, 2-4 phaes Shopping and entertainment
centre 5 Pyatnickoe av. 55,000 50,000
Outlet village Belaya Dacha
Outlet Kotelniki 40,800 38,000
Fashion House Moscow
Outlet Leningradskoe av. 38,800 28,765
Parus Shopping mall 1 Novokurkinskoe av. 35,500 18,000
Moscvorechye Shopping and entertainment
centre 52 Kashirskoe av. 30,000 19,780
Panfilovsky Shopping mall Panfilovsky pr., Zelenograd
24,820 13,300
Sviblovo Shopping mall 27 A,B,G Snezhnaya st. 18,215 6,200
MC Shopping mall 36 Mikloukho-Maklay st. 18,000 12,400
Sombrero Shopping mall 152А Varshavskoe av. 17,000 6,500
Shopping mall on Profsouznaya
Shopping mall 118Profsouznaya st. 7,800 5,500
TOTAL 481,935 313,435
Source: ASTERA, an alliance member of BNP Paribas Real Estate * Provided data is based on the plans officially announced by developers at the time of the publication
Dynamics of new retail space commission, 2008 – Q1 2012
Source: ASTERA, an alliance member of BNP Paribas
Real Estate
A new shopping mall in Moscow, Q1 2012
Kaleidoscope shopping mall
Classification of Existing shopping malls in
Moscow by retail space volume,
Q1 2012
Source: ASTERA, an alliance member of BNP Paribas
Real Estate
790
10461196
349
119
0
200
400
600
800
1000
1200
1400
2008 2009 2010 2011 Q1 2012
13%
47%
18%
21%
Super regional
Super community and regional
Neighborhood
Community
Moscow
DEMAND
Most of the commercial real estate market players continuously demonstrate a high level of activity. Chain retailers actively search for new areas to develop their business, plan new store openings; some of them experiment with new retail formats.
New plans of entering the market
In Q1 2012 some companies announced their plans to enter the Moscow market:
Miratorg group (Russian meat processor) plans to launch a supermarket
chain in Moscow.
Former co-owners of Lenta supermarkets plan to open 30 wholesale stores
similar to American shops Costco and Sam's Club.
X5 Retail Group announced its plans to resume the development of its
convenience store chain Kopeyka.
Eldorado’s acquisition of Beringov retail chain became a major event on
the home electronics market.
Brands planning to enter the market in Q1 2012
Brand name Business category
Miratorg Public catering
Novaya Gollandiya Flowers
Enel Warehouse
Cosi Public catering
Cosmopolitan Fine Jewellery & Accessories Accessories
Kari Footwear
SIA Home Fashion Home goods
Toridoll Corp Public catering
Source: ASTERA, an alliance member of BNP Paribas Real Estate
Search for new formats
In early 2012 the tendency of trying new formats continued among retailers.
36.6 company plans to launch a new brand Aptechny sklad for a part of its
existing pharmacies
OTP Bank announced the opening of circa 50 new mini-offices OTP-light in
2012
Meat processing factory Pavlovskaya Sloboda (under Velkom brand) has
started developing two new chains: retail stores and fast-food restaurants
Real-hypermarket presented the first store in the new format of a “city
hypermarket” in Shchyolkovo city of the Moscow region.
New ground for development Retailers continue with their ambitious development plans in Russia’s regions
A5 group creates a franchising program for its pharmacies aiming to enter
regional markets
Detsky mir plans to open new stores in the Moscow region as well as the
oil and gas regions
Kira Plastinina clothing brand plans to enter small cities
In the spring of 2012 Svyaznoy plans to open flagship mobile stores under a
new brand Enter in the Moscow region as well as in Voronezh and Tver
Demand structure
Properties under 100 sq.m remained most popular in Q1 2012 (53% of total demand). At the same time, an increase of demand for 100 – 250 sq.m premises in shopping malls is observed (23% of total demand volume).
Tenants demand distribution
according to the retail premises format in shopping malls in Q1 2012
Source: ASTERA, an alliance member of BNP Paribas
Real Estate
Public catering companies were the most active tenants of street retail segment premises located on the major retail zones. In dormitory districts there is a continuous development of lower-to-medium price segment restaurants and food supermarkets, pharmacy chains and childhood goods shops.
Tenants’ demand distribution in Moscow by type of business in street retail segment,
Q1 2012
Source: ASTERA, an alliance member of BNP Paribas
Real Estate
4% 5%
15%
23%27%
26%
over 1000 sq.m. 500-1000 sq.m.
250-500 sq.m. 100-250 sq.m
50-100 sq.m. under 50 sq.m
Public catering
24%
Banks4%
Clothing and
footwear 16%
Consumer goods
8%
Services11%
Foods17%
Miscella-neous13%
5 / COMMERCIAL REAL ESTATE / RETAIL / Q1 2012
Moscow
Key leasing deals
Major deals in mall segment. Moscow. Q1 2012.
Tenant GLA, sq.m
Shopping mall
Address
Inditex 5,000 Vesna Altufyevskoe highway
Kronverk Cinema 4,000 Vesna Altyfyevskoe highway
O’KEY-Express 2,000 Sombrero 152А Varshavskoe highway
MaxFitness 1,400 Erevan Plaza 13 Bolshaya Tulskaya st.
Domarket 1,000 MC 36 Mikloukho-Maklay st.
Kanzler 1,500 Mega Belaya Dacha Kotelniki
Source: ASTERA, an alliance member of BNP Paribas Real Estate
RENTAL RATES
Rental rates level for street retail premises in Moscow has reached its maximum.
Notwithstanding the long-time market exposition a lot of premises with prime
location don’t find their clients because of incompatibility of rental level with the
actual market expectations. As a rule, it is a compromise on rental rates between
an owner and a tenant that leads to the actual deal.
Rental levels in shopping malls remain stable for both anchor tenants and trade
gallery operators.
Vacant area
The stable demand for retail space and lack of new supply in the city centre lead
to a further decrease of vacancy level in Moscow. Given the current construction
speed, this can cause a considerable deficit of retail properties in Moscow in a
two-year prospective.
Vacancy rate dynamics in Moscow shopping malls,
Q1 2009 – Q1 2012, %
Source: ASTERA, an alliance member of BNP Paribas Real Estate
Anchor tenants’ rental rates by business category in Moscow shopping malls
in Q1 2012
Business category Rental rate*, USD/sq.m/p.a.
Cinema 120-250
DIY 100-150
Foods 120-400
Home goods 250-400
Children’s goods 300-600
Home electronics 200-400
Clothing and footwear 400-600
Source: ASTERA, an alliance member of BNP Paribas Real
Estate * Rent rates are indicated excluding VAT and operational
expenses
Major tenants of trade galleries in Moscow shopping malls in Q1 2012
Business category
GLA, sq.m Rental rate*,
USD/sq.m/p.a.
Public catering 50-300 800-3,000
Clothing and footwear
50-200 700-3,000
Cosmetics and perfumes
50-300 1,500-3,000
Accessories 30-60 1,500-3,000
Mobile phones 30-80 2,500-4,000
Source: ASTERA, an alliance member of BNP Paribas Real
Estate
* Rent rates are indicated excluding VAT and
Operational expenses
Average rental rates for street retail premises
in major Moscow trade zones in Q1 2012
Trade corridors Rental rate,
USD/sq.m /p.a.
Tverskaya st. 2,000-7,000
Petrovka st. 2,000-4,200
Arbat st. 1,800-3,000
1st
Tverskaya-Yamskaya 1,700-3,000
Kutuzovsky av. 1,700-2,800
Leningradsky av. 1,300-3,000
Mira av. 1,300-2,100
Maroseika st. 2,000-2,800
Bolshaya Dmitrovka st. 1,800-3,000
Pyatnickaya st. 1,200-2,000
Leninsky av. 1,100-3,000
Kuznecky Most st. 1,800-2,900
Myasnickaya st. 1,200-2,800
Source: ASTERA, an alliance member of BNP Paribas
Real Estate
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Q1 2009
Q2 2009
Q3 2009
Q4 2009
Q1 2010
Q2 2010
Q3 2010
Q4 2010
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
6 / COMMERCIAL REAL ESTATE / RETAIL / Q1 2012
Moscow
ABOUT ASTERA
ALEXEI FILIMONOV Managing Director [email protected]
ALEXANDR SHELUKHIN Investment director [email protected]
ALEXEI RYABICHEV Head of Office Real Estate Department [email protected]
OLGA ZBRUEVA Head of Retail Department Tenants Division [email protected]
Office in Moscow Office in St. Petersburg Office in Kiev
Tel.: +7(495) 925-00-05 Fax: +7(495) 981-05-65
Tel.: +7(812) 703-00-03 Fax : +7(812) 703-00-04
Tel.: +380(444) 501-5010 Fax: +380(444) 501-5011
www.asteragroup.ru [email protected]
ASTERA an alliance member of BNP Paribas Real Estate, an international consulting company, provides professional services in commercial and élite residential real estate. The company has been operating on the Russian market since 1992.
ASTERA has offices in Moscow, Saint-Petersburg and Kiev.
BNP Paribas Real Estate is a leading international real estate company. BNP Paribas Real Estate is among the top European consulting companies by turnover.
The alliance with BNP Paribas Real Estate gives ASTERA an opportunity to represent its clients abroad and bring foreign investments to Russian development projects.
ASTERA – LEADERSHIP BASED ON QUALITY AND PROFESSIONALISM
Over 500 implemented projects of strategic and investment consultancy
‘In-house’ exclusive data base comprising 30,000 projects of retail, office, warehouse and elite residential real estate
Over 6,000,000 sq.m of commercial real estate space have been realized by ASTERA consultants since 1992
Over 8,500 transactions concluded on the commercial real estate market of Russia and Ukraine
Over 4,000 companies, including the major international and Russian financial, investment, retail and industrial corporations and chains are now clients of ASTERA