Rent of street retail objects in Moscow becomes cheaper

In the first half of this year, rental rates in the street retail market in Moscow fell to 13% yoy. Most of all, this affected the owners of overvalued real estate and premises on major highways. One of the reasons for this is the reduction by the main tenants of such facilities from among retailers, banks and communication stores of points of sale and branches due to the transfer of a large part of the business online. Experts believe that after the final termination by Western luxury brands of lease agreements for street retail premises on the central shopping streets of the capital, the rates for the segment as a whole will decrease significantly.

According to SimpleEstate calculations, in the first half of 2023 in Moscow, the cost of renting street retail premises with an area of ​​up to 300 sq. m. m decreased by 13% year-on-year, to 3 thousand rubles. for 1 sq. m per month, and for objects over 300 sq. m – by 3%, up to 1.8 thousand rubles. NF Group recorded a reduction in the rental rate on major highways – Kutuzovsky and Leninsky prospects, where the share of vacant premises increased.

The cost of acquiring such real estate has also been reduced. According to SimpleEstate, now objects up to 300 sq. m cost an average of 456 thousand rubles. for 1 sq. m, which is cheaper by 8% year on year, real estate over 300 sq. m – 238 thousand rubles. for 1 sq. m, or 5% less.

This trend arose, among other things, due to the reduction by the main tenants of such premises – banks and telecom operators – of their development programs and the transfer of a large part of the business online, explains Anton Belykh, CEO of DNA Realty. And non-food retailers, in addition to increasing online sales, began to open stores in shopping centers more often, the expert adds.

SimpleEstate CEO Nikita Kornienko sees the reason in overheated prices for small premises bought mainly by private investors. He cites the example of residential developers who sold street retail space in their complexes at inflated prices, promising high rental yields to buyers. But potential tenants today have certain expectations of lower rates, said Maxim Beletsky, director of leasing at KR Properties.

The most expensive street retail premises are concentrated on shopping streets in the center of Moscow, including Kuznetsky Most and Nikolskaya, where Western luxury brand stores operated. But the closure of their points of sale by such companies last spring has not yet had a negative impact on rental rates on such streets, says Irina Kozina, director of street retail at NF Group. Moreover, according to its data, rates in these areas increased by 5% year-on-year in January-June.

Western retailers from the luxury segment still have valid lease agreements, so the level of vacancies on the main streets is now insignificant, Ms. Kozina adds. But this position is precarious. “As soon as luxury brands finally terminate contracts, a serious correction of rental rates will begin in the street retail segment as a whole,” warns Marina Malakhatko, senior director of CORE.XP.

Since the beginning of the second half of 2023, takeaway coffee sellers have been actively renting street retail premises, they account for up to 11% of the total demand, notes Irina Burenko, Deputy CEO of R4S Group. According to her, last summer the main share – almost a quarter of all transactions – accounted for tobacco shops, but now – only 8%. This situation may be related to the recent tightening of market conditions for such players.

Nikita Kornienko expects that the street retail market will recover to pre-crisis levels within one or two years. Anton Belykh is confident that market segmentation will only increase: owners of illiquid premises will cut their rates as much as possible, while liquid properties will rise in price.

Daria Andrianova