Street-retail in Moscow lost another 3% of tenants

During the first half of 2015, the central shopping streets of Moscow lost another 3% of their tenants, and the total vacancy rate rose to 11%. It is becoming more and more difficult for street retail owners to retain tenants: amid the downturn in the commercial real estate market, retailers prefer to move their stores to shopping centers. In the first six months of this year, the volume of vacant space on the main shopping streets of Moscow within the Garden Ring increased from 8% to 11%, according to a study by Magazin Magazin. This result is worse than the initial expectations of consultants, who predicted in the first quarter that the level of vacant space would consolidate at around 9%. Bolshaya Dmitrovka lost the most tenants (the level of vacant space in three months increased from 6% to 20%), Pyatnitskaya (from 7% to 17%) and Petrovka (from 7% to 15%). Rental rates for the year have decreased by 20%, indicate in the "Store of shops". The trend towards a sharp increase in vacant space in the street retail segment was outlined against the backdrop of macroeconomic problems in the middle of last year. Now the consultants assume that the general situation on the real estate market has also begun to influence the demand. “Against the background of the record space commissioning, tenants now often make a choice in favor of opening in shopping centers,” explains Marina Markova, head of the street retail department of the Shop Store. According to JLL, in January-June 2015, Moscow developers commissioned 342 thousand sq. M. m of quality retail space is 41% more than a year earlier. At the same time, the level of vacant premises increased from 6,5% to 7,5% in new facilities. According to Knight Frank's estimates, rental rates in shopping centers in the first half of the year decreased by 5-20%, depending on the store profile.