In January, there was a revival in the retail and office real estate markets

In January, there was a revival in the retail real estate markets of Moscow and St. Petersburg: with the start of working days, analysts recorded an increase in traffic to shopping centers and retailers’ turnover. Deals are actively being concluded in the street retail segment, although finding vacant premises in the center is not always easy – vacancy rates are recorded at low levels. In the office market, the continued activity of tenants coupled with the restrained strategy of developers regarding the commissioning of new objects leads to a shortage of quality space, especially when it comes to large blocks.

The Mall Index (reflects the number of visitors per 1 thousand sq. m of retail space) in Moscow shopping centers based on the results of the first three weeks of the year (January 1–21) increased by 1% year-on-year, the dynamics in St. Petersburg are more pronounced – plus 4% , Focus Technologies calculated. A positive trend emerged closer to the middle of the month. In the first week of the year, according to its data, in Moscow the Mall Index lagged behind last year’s by 8%, in St. Petersburg by 3%. But the dynamics were probably dictated by the established cold weather. Workweek indicators continue the trend towards stabilization and slow recovery, Focus Technologies notes.

Trade revival

Anna Mankova, senior director of the Commonwealth Partnership’s retail real estate department, notes an increase in turnover of 5-15% year-on-year in retail stores operating in shopping centers – this is true for both top-end properties and regional ones. Although the expert doubts that rental rates for retail premises in Moscow will increase by more than 10% this year.

Beginning of the year in the Moscow street retail market Irina Kozina, director of the NF Group’s profile area, calls it dynamic, noting that there are currently no prerequisites for a decrease in activity. Vacancy, according to her forecasts, will stabilize at 9–10% – a figure that can be considered quite low for the segment. It is with the lack of high-quality free space on the central shopping streets that Ms. Kozina attributes the 34% reduction (to 80) in the number of openings of notable catering establishments at the end of last year.

Marina Markova, head of the street retail department of the Magazin Magazin company, notes that cafes and restaurants now form about half of the demand for premises in Moscow, another half comes from showrooms and clothing stores. In St. Petersburg, according to the head of the retail real estate department of the consulting company NF Group in the city, Anna Lapchenko, activity can be traced in the same segments. “But if the gastronomic component of the market has continued to grow steadily for many years, the frenzied activity of fashion retailers has been clearly evident since last year,” she says. The volume of transactions in St. Petersburg, according to the expert, will also be constrained by the limited supply of quality space due to low vacancy.

Office shortage

At the Moscow office market, according to the head of the department of services for owners of CORE.XP, Kirill Babichenko, 6.8% are now empty and the figure is showing a downward trend – there are not enough large blocks on the market. The expert suggests that the volume of transactions this year will decrease by 5-6% compared to last year’s record level, but will still remain quite high – 1.8 million sq. m. m per year. Nikoliers notes that 56% of office space being prepared for commissioning in Moscow this year has already been sold or leased to end tenants. And the preferred method of implementation for the remaining areas is sale. Because of this, analysts estimate that only 16.7% of 2024 office construction will be available for lease.

Mr. Babichenko adds that the commissioning of new properties on the Moscow market as a whole is slowing down – this may contribute to a shortage of quality space in 2026–2027. Now the average office rental rate in Moscow, according to Nikoliers, is 22.1 thousand rubles. for 1 sq. m per year. For class A objects the figure is 26.2 thousand rubles. for 1 sq. m per year, class B – 18.3 thousand rubles. for 1 sq. m per year. But prices are greatly influenced by location. Thus, outside the Moscow Ring Road, according to Nikoliers, you can rent an office for an average of 12.3 thousand rubles. for 1 sq. m per year. Analysts also predict an increase in value within the boundaries of “old” Moscow.

Director of the CORE.XP branch in St. Petersburg Oleg Dmitriev does not see any pronounced activity in the city market. The expert explains that the number of premises furnished by foreign companies that have left Russia has noticeably decreased, and players who planned to resolve the issue of relocation have, in most cases, already done so. He does not exclude that in the future the market will be affected by the completion of long-term lease contracts concluded by large production structures: not all of them will be extended.

Although Nikoliers notes that renting a new office in St. Petersburg is not so easy now: the shortage of quality office blocks is 5 thousand sq. m. m.

Developers are reluctant to launch new projects, and those already planned for commissioning have been completed. The average rental rate in the city, according to analysts, is now 1.7 thousand rubles. for 1 sq. m per month for class A offices and 1.2 thousand rubles for class B. Nikoliers predicts an increase in indicators this year due to low vacancy.

Alexandra Mertsalova