Attendance at shopping centers may stop growing due to the negative impact of the consequences of the terrorist attack at Crocus

Attendance at shopping centers may stop growing due to the negative impact of the consequences of the terrorist attack at Crocus


After a long period of moderate recovery, the increase in traffic in shopping centers in Moscow and St. Petersburg may cease due to the negative impact of the consequences of the terrorist attack at Crocus City Hall. In the second quarter of 2024, analysts predict stagnation, although attendance at large venues is still 10% lower than a year earlier. The next wave of traffic decline will not allow shopping center owners to increase rental rates under existing contracts, and retailers will open new stores less frequently.

The negative impact on the retail real estate market of the terrorist attack at Crocus City Hall may lead to the fact that the Mall Index (reflects the number of visitors per 1 thousand sq. m of retail space) in Moscow and St. Petersburg will not grow in the second quarter, analysts predict Focus Technologies. According to them, in the first quarter the market continued to show a slow recovery trend: site attendance increased by 2% year-on-year. “If the situation had developed normally, the positive trend would have continued and by the end of April-June we would also have seen an increase in the Mall Index by 2-3%,” says Mikhail Vasiliev, head of research and consulting at Focus Technologies.

The terrorist attack at Crocus City Hall and the subsequent closure of entertainment areas in shopping centers led to a decrease in attendance at such facilities in Moscow by 30-35%, and in Russia as a whole – by 15-20% (see Kommersant on March 25). Now, according to Mr. Vasiliev, the negative effect remains in large shopping centers: last week in Moscow their attendance was 10% lower than in the same period last year. Although, according to him, in small objects a small increase remains.

According to Svetlana Kuzmina, director of the retail real estate department at Accent Capital, in the Sokolniki shopping center the decline in attendance was felt for one week after the terrorist attack. But negative consumer sentiment still persists, she notes. President of the Magic Group (develops Slava Concept department stores) Alexander Peremyatov believes that the terrorist attack significantly set back the retail real estate market, neutralizing the positive effect accumulated over the past year.

Senior Director of CORE.XP Marina Malakhatko calls the reduction in attendance of public places after major tragedies an obvious reaction. She draws attention to the fact that traffic has decreased not only in shopping centers, but also, for example, in theaters. Vice President of the Union of Shopping Centers Pavel Lyulin expects that it will take the market as a whole a couple of months to restore traffic to last year’s levels.

However, not all market participants are pessimistic. Stockmann CEO Gennady Levkin says that in his chain’s department stores, revenue and attendance fell by 60% on March 23, on March 24 the gap leveled out to 40%, and by March 31 the figures had recovered. Baon President Ilya Yaroshenko says his stores’ performance has also recovered, although it has not yet reached last year’s levels.

The retail real estate market in Moscow and St. Petersburg was hit hard, first by the pandemic, and then by the mass departure of foreign brands from the market. Thus, in the first quarter of 2024, the Mall Index was on average 25% lower than in the pre-crisis 2019. But due to the gradual adaptation of consumers to the current market situation and the emergence of new brands, the dynamics remained positive for a long time (see Kommersant on March 13). This contributed to a reduction in the vacancy of retail space. Thus, in Moscow in January-March 2024, according to Nikoliers, the share of empty space was 7.6%, decreasing by 8 percentage points (pp) year on year. In St. Petersburg, a decrease of 3.2 percentage points, to 6.2%.

According to the managing partner of Vanchugov and Partners, Alexey Vanchugov, the next wave of decline in attendance is unlikely to lead to a breakdown in agreements under the concluded lease agreements, but will likely weaken the position of shopping centers in negotiations on increasing rates as part of the renewal of contracts. “It will be more difficult for landlords to justify their position,” he notes.

Marina Malakhatko assumes that the rate of filling shopping galleries will decrease in the future: “Companies that underwent active expansion last year will have to build their production.” Pavel Lyulin attributes the slowdown in the opening of new stores to the high cost of loans for business development and the washing out of promising premises from the market. “What remains is illiquid, expensive sites or those that landlords reserve for certain concepts,” he argues. Regional director of the retail real estate department of NF Group, Evgenia Khakberdieva, notes that almost no new properties are being introduced and existing premises are only being redistributed between tenants.

Alexandra Mertsalova, Polina Gritsenko


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