How repairs in central Moscow affect street retail demand and rental rates
Welhome Real Estate Consulting, a real estate consulting company, has prepared a report on the situation with the offer of retail real estate in Moscow.
According to analysts, the citywide renovation program “My Street”, which started in May and is due to end in August this year, has changed the supply-demand ratio in retail real estate on the main streets of the capital. The Moscow authorities’s project affected more than 50 streets in the Central Administrative District, including Tverskaya, Novy Arbat, Petrovka, Bolshaya Yakimanka and others.
Vacant areas
Currently, the largest share of street-retail format free space is offered throughout the Garden Ring; this is approximately 22% of the total supply of premises on the Garden Ring. This figure is due, first of all, to the significant length of this trade corridor, where not all rooms are located near metro stations, public transport stops and convenient parking lots. Further on the level of vacant space is Kuznetskiy Most Street, where the vacancy rate is about 18%. The lowest vacancy of street-retail format premises is observed on Maroseyka and Myasnitskaya streets, 3% and 6%, respectively. It is worth noting that the landscaping of these streets was completed in the 2015 year.
In all the trading corridors of Moscow among the premises offered for rent, commercial premises prevail. This is followed by free-of-charge premises located, including, in basements and on the 2 floors of buildings. The third place among the vacant facilities is occupied by premises suitable for cafes, restaurants and leisure facilities. The smallest among the proposals for the rental of premises for beauty salons, medical clinics and bank offices.
The structure of the supply of premises in the trading corridors of Moscow for the purpose of the premises
Source: Welhome Real Estate Consulting
In the supply structure of street retail premises, premises in the range from 100 to 200 sq. m - about 30% of the total supply. One fifth of the total offer consists of premises ranging from 300 to 500 sq. M, which is due to their low liquidity compared to more compact premises and, accordingly, the high cost of rent. A similar share in the total supply is made up of premises ranging from 200 to 300 sq.m. The smallest on the market are street-retail facilities of more than 500 sq.m in area, about 7% of the total supply, as well as the smallest and most liquid premises up to 50 sq. m (11% of the total supply).
The structure of the supply of premises in the trade corridors of Moscow by area,
% of the total supply
Source: Welhome Real Estate Consulting
Rental rates
At the average rental rate, based on data from Welhome, the most expensive single premises in the 1st half of 2016 are offered at a rate of up to 266 thousand rubles. per sq. m on Nikolskaya street. The most budget premises on the central shopping corridors are offered for rent for 25 - 37 thousand rubles per sq. m per year. It is worth noting that in a number of premises that have been exhibited since the beginning of 2016 and have not yet been commissioned, there is a drop in requested rates, which indicates a gradual decrease in the pricing policy of lessors and the market's search for optimal indicators of the cost of premises in the central shopping corridors.
Aleatherg rental rates in the central shopping corridors of Moscow
|
Shopping corridor |
Minimum rental rate, rub. per sq. m |
Maximum rental rate, rub. per sq. m |
|---|---|---|
|
Nikolskaya St. |
75 000 |
266 000 |
|
Stoleshnikov per. |
61 000 |
253 000 |
|
New Arbat St. |
45 000 |
156 000 |
|
Garden Ring road |
25 000 |
125 000 |
|
Petrovka St. |
44 000 |
120 000 |
|
Tverskaya st. |
36 000 |
120 000 |
|
Maroseyka St. |
27 000 |
96 000 |
|
Kuznetsk bridge st. |
37 000 |
94 000 |
|
Arbat St. |
40 000 |
83 000 |
|
Myasnitskaya St. |
26 000 |
71 000 |
Source: Welhome Real Estate Consulting
Demand
According to Welhome, the 1 half-year of the 2016 year is characterized by the maximum demand for premises located in the immediate vicinity of transport infrastructure, where pedestrian traffic is highest. It is also noted that tenants of retail real estate in Moscow have become more loyal to premises with basements.
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