The situation on the commercial real estate market by the end of 2023

At the end of 2023, shopping centers failed to record a pronounced increase in traffic. In Russia, their total traffic year on year increased by only 1%, in Moscow it even decreased slightly. We are talking about a noticeable increase in attendance only in small facilities – by 7% per year. For the street retail segment, the year turned out to be more positive, ending with a sharp reduction in the share of vacant space and a 10% increase in rates due to the activity of local fashion brands. The situation on the office real estate market shows cautious optimism: the cost of premises is slowly growing, and vacancy is decreasing.

The Mall Index indicator (reflects the number of visitors per 1 thousand sq. m of retail space) in Russia at the end of 2023 increased by 1% year on year. The gap with the level of 2021 is 7%, pre-pandemic 2019 is 21%. This data is provided by Focus Technologies. In Moscow, the Mall Index in 2023 was lower than the level of 2022 by 1%, 2021 by 7%, and 2019 by 25%. In St. Petersburg, the value was 1% higher than last year’s figure, a gap with previous periods of 8% and 25%, respectively.

Trade Stability

Mikhail Vasiliev, head of research and consulting at Focus Technologies, attributes this year’s relatively subdued results to the high base of early 2022: in January-February, the departure of popular brands and external factors had not yet put pressure on consumer behavior. When comparing data for April-December with the same period last year, one can see an increase in the Mall Index by 1-3% both in Russia as a whole and in the largest cities of the country.

The most positive dynamics this year were shown by small-format objects, which were less affected by the departure of international brands, while large-format objects showed negative dynamics.

Thus, the attendance of shopping centers with an area of ​​5-20 thousand square meters. m in Moscow over the year grew by 7%, more than 40 thousand sq. m. m – on the contrary, it decreased by 6%, according to Focus Technologies. In St. Petersburg, according to Mr. Vasiliev, the situation is similar. In 2024, the expert expects a stabilization of traffic to shopping centers rather than a significant increase. In Moscow, the Mall Index over the year may increase by 0-3% year-on-year, in St. Petersburg – by 1-3%, he calculates. “The return of visitors to the shopping center will be facilitated by the processes of economic adaptation,” says Mr. Vasiliev.

CORE.XP states that the retail real estate market as a whole has passed the peak of vacancy. Thus, in Moscow, at the end of the year, an average of 9.7% of the space in shopping centers is empty, which is two percentage points less than a year earlier. In 2024, the value, according to consultants, will not change significantly; the average vacancy level will be 9.2%.

Streets becoming more expensive

Vacancy in the street retail segment, according to Irina Kozina, director of the NF Group profile, in Moscow now 10.1%. For pedestrian streets, the indicator, according to the expert, decreased by 11.7 percentage points over the year, to 7%. For transport and pedestrian traffic – by 4.2 percentage points, to 9.6%. On major highways, 11.9% of the space is now empty, which is 3.3 percentage points less than a year earlier. The fewest empty premises are on Arbat (1.7%) and Kamergersky Lane (3.5%), says Ms. Kozina.

The decrease in vacancy is due to the high activity of local brands: this year, according to NF Group, 30 companies opened their stores on the central shopping streets of Moscow. At the same time, Ms. Kozina talks about the high activity of restaurateurs: they occupy 44.5% of the space inside the Garden Ring. Marina Markova, head of street retail at Magazin Magazin, says that rental rates in the segment have increased by an average of 10% this year. The most expensive area is inside the Boulevard Ring, where premises are up to 100 sq. m. m are rented out for an average of 13.5 thousand rubles. per sq. m per month. In New Moscow the figure is 2.2 thousand rubles. per sq. m.

In St. Petersburg, according to the head of the retail real estate department of the consulting NF Group in the city, Anna Lapchenko, fashion retailers also showed the main activity this year. During the year, 33 new stores were opened, which is twice as much as last year. 87% of the space was rented by Russian retailers. Ms. Lapchenko expects high activity from fashion brands in 2024.

Office restoration

In the office real estate market MoscowAccording to Victoria Goryacheva, deputy director of the Nikoliers office real estate department, at the end of the year 7.4% of the space is empty, this is the minimum figure for the last two years. The expert expects a fairly active absorption of space in 2024, suggesting that the main demand will be generated by representatives of the public sector, the financial market, and the professional services sector. Average rental rates for class A offices in Moscow, according to Nikoliers, are now 35.3 thousand rubles. per sq. m per year, year on year the value increased by 9.2%. The general market situation contributes to the growth of rates, notes Ms. Goryacheva.

In St. PetersburgAccording to the director of the Maris research department, Alena Volobueva, vacancy has also decreased and will amount to 8% by the end of the year. Demand on the market remains stable, and the increase in new speculative supply remains restrained, the expert explains. Most often, offices in St. Petersburg, according to Ms. Volobueva’s observations, are rented by companies in the financial and IT sectors, while the activity of oil and gas companies is declining. On average, renting class A offices in the city now costs 2.1 thousand rubles. per sq. m per month, B – 1.4 thousand rubles. “The trend of restrained positive dynamics has been maintained steadily over the past year and a half,” notes Ms. Volobueva.

Alexandra Mertsalova