According to JLL preliminary estimates, the volume of new Moscow retail supply for 2015 is 7% lower YoY – it comes to 560,000 sq m (GLA). Even despite a record first quarter volume of completions in Moscow – about 250,000 sq m entered the market, the next three quarters were characterized by negative dynamics in terms of new shopping center deliveries.
Originally forecasted 2015 supply (450,000 sq m) had been expanded by adding Zelenopark SEC in Zelenograd to Moscow stock. Such shopping centers as Columbus, Mari, Kuntsevo Plaza, RIO on Kievskoye Highway, Centralny Detskiy Magazin on Lyubyanka and others were delivered in 2015 in Moscow.
The downward trend in terms of new deliveries and new shopping center construction will continue in 2016. “According to our expectations, around 460,000 sq m of new quality shopping centers is likely to be completed in the next 12 months, which is 18% lower than 2015 results. It should be noted, that 90% of 2016 completions will come from postponed projects,” Maria Shpakova, Retail Market Analyst, JLL, Russia & CIS, noted. Such shopping centers as Riviera, Moremall Moscow, Polezhaevskiy, Riga Mall, second phase of Metropolis are in the announced pipeline for 2016.
Limited debt financing
“Objective reasons for the slowdown in developers’ activity in Moscow market and Russia as well are limited debt financing together with comparatively low retailers’ demand in newly opened shopping centers. Today retailers are looking for premises in the most attractive and historically successful projects with strong track record or in almost completed projects,” Tatyana Kluchinskaya, National Director, Head of Retail Department, JLL, Russia & CIS, explained. She continued: “As a result, today it takes two years to fully launch a project while previously this period was about half a year. This is supported by high vacancy rate in shopping centers which have opened in past two years: thus, in the beginning of Q4 2015 the vacancy rate for shopping centers delivered in 2014 and 2015 accounted for 19.4% versus market average 7.5%.”
At the end of 2015 Moscow shopping center density increased up to 388 sq m per 1,000 inhabitants compared to 345 sq m year ago. If the forecasted number of shopping centers is completed, Moscow will have 423 sq m per 1,000 inhabitants in terms of shopping center density.