Moscow lifts shopping centre supply by 41% in H1

Moscow saw shopping centre completions rise 41% in the first half of 2015 to a record 342,000 m2 compared to the year-earlier period, according to a new report by adviser JLL.

JLL claims the increase in retail space has pushed Moscow to the first place in terms of supply of shopping centres among European cities, overtaking Paris. In Q2 2015 the overall volume of quality shopping centres in the Russian capital exceeded 4,529,000 m2, compared to 4,497,000 m2 for Paris.

Madrid is in third place, far behind the leaders with only 2.5 million m2, while fourth place goes to St. Petersburg with 2.1 million m2.

Among the biggest shopping centres opened in H1 2015 in Moscow are Columbus (136,000 m2), Kuntsevo Plaza (66,000 m2), MARi (70,000 m2) and Centralny Detsky Magazin on Lubyanka (34,000 m2). As a result of new supply, the overall shopping centre vacancy rate in Moscow rose from 6.5% to 7.5% in Q2.

Despite the overall increase in the first half, the volume of new completions in the second quarter was down 49% year-on-year at 93,000 m2. This trend is expected to continue through to the end of the year, with JLL experts predicting that new completions in H2 will be four times lower than in H1 with only 78,000 m2 coming to the market.

As a result, annual completions in 2015 will fall by 30% compared to 2014 to about 420,000 m2, the adviser said.

Commenting on the trend, Tatyana Kluchinskaya, head of retail department, JLL, Russia & CIS, said she expected the overall volume of new retail space in Moscow to decrease in the next three years. A similar situation occurred in 2010-2013, when shopping centre completions in Moscow declined several times, but this figure later bounced back, she added.

Rental rates in shopping centers in Moscow remained flat during the second quarter, JLL said. Prime rents are $2,000-3,800/m2/year compared to average rents of $400-1,450/m2/year.