Commercial real estate market for September 2023

The retail real estate market, which continues to recover from shocks, is approaching a new stage. The replacement of departed players is being replaced by the calibration of new brand concepts and testing of alternative formats by local players. Although the trend poses a risk of freeing up space, consultants are still counting on a general decrease in vacancy. But there are no prerequisites for rates to rise. A similar picture is emerging in the office real estate market, where stable demand also does not lead to higher prices.

The retail real estate market continues to slowly recover from the shocks it experienced. In the second half of September (week from 18 to 24) the Mall Index (reflects the number of visitors per 1 thousand sq. m of retail space) in Moscow exceeded the value for the same period last year by 1%, in St. Petersburg – by 5%. The gap with pre-crisis September 2019 in both cities was 28%. This data is provided by Focus Technologies. Analysts attribute the more positive dynamics in St. Petersburg to the established good weather, which often contributes to an increase in attendance at shopping centers: many of them are located near historical and cultural sites.

New trade vector

Regional director of the retail real estate department of NF Group, Evgenia Khakberdieva, notes a decrease in the share of empty space. In Moscow The vacancy level at the end of the third quarter may be 10–11% versus 12.2% in the second, and by the end of the year it will drop to 9%. In St. Petersburg at the end of September, the figure decreased by 1–2 percentage points by the end of June, to 7–8%, and at the end of the year it could be only 6%. Tatyana Divina, head of the Commonwealth Partnership’s research and analytics department, makes a more conservative forecast, expecting vacancy in Moscow to remain at 12–13%. The expert explains that the market has successfully passed the first stage of replacing departed brands, restraining the increase in the share of empty space.

Ms. Divina considers the next task for new brands to be calibration of the concept and adaptation to local specifics, for developing Russian players – active scaling of the business and testing of new formats. In her opinion, the future vector of market development depends on the success of this process.

“There is a possibility of rotation of operators who have come to replace departed brands, but we expect this process to proceed gradually,” says the expert.

Evgenia Khakberdieva does not yet see any prerequisites for an increase in rental rates in shopping centers. “There have been sporadic deals in the market at higher rates for fit-out spaces that were previously occupied by international brands,” she notes. In Moscow, the maximum figures now, according to her, reach 180 thousand rubles. for 1 sq. m per year in large facilities and 100 thousand rubles in regional ones.

High demand streets

Rates remain stable for street retail premises, says Marina Markova, head of street retail at the Magazin Magazin company. Although the demand of potential tenants in the third quarter, according to her, exceeded the figure for the same period last year. “This is explained by the development of retailers, their desire to open flagship stores, and the emergence of new restaurant concepts,” she lists.

Denis Bobkov, director of the marketing and analytics department at Asterus, also noted positive trends in the street retail segment, pointing to the market’s adaptation to current conditions. This trend, according to the expert, could lead to a decrease in vacancy in Moscow in December by 0.5 percentage points year on year, to 14%. The dynamics may be accompanied by a moderate increase in rates, by 3-5% year on year, he adds.

Office stability

In the office market Moscow in July-September, according to Irina Khoroshilova, head of the office real estate department at CORE.XP, the volume of office rental and purchase and sale transactions amounted to 603 thousand square meters. m. This is more than twice the value for the same period last year – 274 thousand sq. m. m. Although the vacancy level has remained virtually unchanged over the year and now stands at 8.3%. Nikoliers calls the Moscow office market active in the third quarter, explaining that the main demand during this period was formed by state-owned, construction companies and service sector market players. The largest volume of transactions, according to consultants’ observations, were concluded in the central and western parts of the city.

In St. PetersburgAccording to the observations of the director of the Maris market research department, Alena Volobueva, the gross volume of empty offices decreased by 5%. But this dynamics is explained mainly by restrained commissioning and fairly high absorption of space in the second quarter. In July-September, according to Ms. Volobueva, the volume of demand, according to preliminary estimates, was 18% less than the same period last year.

Tenant activity, according to expert observations, is concentrated primarily on class B premises.

“This is due to the erosion of liquid vacant supply and an increase in rates in the more expensive segment,” she explains.

Average office rental cost in Moscow, according to CORE.XP, is now 25.7 thousand rubles. for 1 sq. m per year for class A premises, 18.1 thousand rubles – for class B. In St. Petersburg Based on the results of the first half of the year, Maris analysts estimated the rental rates at 2.14 thousand and 1.41 thousand rubles. for 1 sq. m per month respectively. Alena Volobueva explains that the requested rates show stability throughout the year. The expert does not expect any significant changes in values ​​until the end of the year.

Alexandra Mertsalova