A sharp increase in the commissioning of shopping centers is predicted in 2024 after the disastrous last year
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After a disastrous year for retail real estate last year, the volume of new construction in this segment could at least double in 2024, consultants predict. But mostly these will be single-point objects in new residential complexes and small regional format shopping centers. Developers are not yet in a hurry to announce large projects, still considering such investments to be risky.
For 2024, 313.1 thousand square meters have been announced in Moscow. m of new retail space, of which 50% will be delivered, is three times higher than last year, according to the Nikoliers forecast. Gazprombank expects that in the country as a whole this year 450-500 thousand square meters will be commissioned. m of leasable space – 2.5 times more than in 2023. Commissioning in Moscow will increase 3.8 times, to 190 thousand square meters. m, in St. Petersburg – 7.2 times, up to 130 thousand sq. m. m. IBC Real Estate expects that in 2024 130 thousand sq. m. will be commissioned in Moscow. m of retail space in St. Petersburg, according to NF Group, is 137 thousand square meters. m.
A sharp increase in the commissioning of shopping centers is predicted after last year’s minimum: the volume of commissioned space in Moscow, according to Nikoliers estimates, became the minimum in 20 years, decreasing year-on-year by 46.9%. But they are still talking about the beginning of the revival with caution. Many of the facilities being prepared for commissioning had previously been postponed for several years, warns Vladislav Fadeev, director of the Gazprombank Center for Economic Forecasting. Senior Director of the Retail Real Estate Department of CMWP Andrey Shuvalov draws attention to the fact that the overall increase is ensured by active housing construction: “New residential complexes are pulling the commercial infrastructure with them.” Development activity remains, but it is not comparable with the pre-crisis years, says Ekaterina Nogai, head of the research and analytics department at IBC Real Estate.
The overall increase in commissioning is planned against the backdrop of a reduction in the share of empty space. According to Nikoliers, at the end of 2023, 10% of retail premises in Moscow were vacant, down 4.9 percentage points (pp) year-on-year. Vladislav Fadeev expects that this year the figure in Moscow will decrease by 1.5-2 percentage points, to 9-9.5%, in St. Petersburg – by 1-1.5 percentage points, to 6- 6.5%. On the one hand, the vacant space of departed retailers continues to be filled, on the other hand, the reduction in vacancy will restrain the growth of the commissioning of new facilities, the expert explains.
Nikoliers partner Anna Nikandrova lists ongoing plans for the active development of fashion retailers as positive factors. The expert believes that due to the minimal commissioning of shopping centers in Russia over the past few years, there is now even a shortage of quality space for expansion. According to Nikoliers, 27 new international brands entered the market in 2023, the highest result since 2018. Another 26 brands plan to start operating in Russia in the near future, says Ms. Nikandrova.
Developers will mostly rent out small regional shopping centers, where the average area, according to Nikoliers, does not exceed 13 thousand square meters. m. Analysts add that nine of the 24 announced projects are ADG Group facilities implemented on the basis of old cinemas. The format of small objects is traditionally considered more resistant to negative trends. “The flow of visitors to regional shopping centers over the year has increased by 7–8%, demand is increasing, and once a year we index the rental rate,” says Guzel Gumerova, head of shopping centers at Astrum Real Estate.
Mr. Shuvalov calls objects with an area of 10–16 thousand square meters. m in the current conditions as efficient as possible in terms of rental income. Although many specialized operators still look at the market skeptically. Svetlana Kuzmina, director of the retail real estate management department at Accent Capital, believes that the construction of shopping centers has ceased to be a profitable business: “The market belongs to the tenant.” At the same time, the expert considers the existing supply in large and medium-sized cities to be saturated. Vice President of the Union of Shopping Centers Pavel Lyulin believes that the format as a whole is in crisis and “there are no prerequisites for changing the situation.” According to him, the payback on projects since 2013 has increased from three to four years to eight to ten.
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