Russian shopping centers, once dominated by international brands, now have a different landscape. According to Olga Jarullina, a partner at BlackStone Keeping Company, only 12 to 15% of available space in Russian shopping centers could be occupied by foreign brands if they were to return to the market, with a lower percentage in Moscow at 7 to 8%.
Jarullina believes that only those returning brands with a proven customer base can expect to secure premium locations, not luxury spaces, but high-demand areas with heavy foot traffic. Large Russian companies, already established in top shopping centers, are unlikely to give up their positions, according to Mosvich.mag.
Moscow’s top shopping centers currently have a vacancy rate of only 3 to 5%, with Russian, Turkish and Asian retailers quickly filling the space left by departing Western brands, Jarullina explained in an interview with RIA Novosti. The vacancy rate in premium shopping centers like the GUM on Red Square is almost non-existent, making it nearly impossible to open a new store there.
Meanwhile, the share of vacant space in high-end shopping centers in the capital is decreasing, according to Ekaterina Nogai, head of the research and analysis department at IBC Real Estate. Since the second quarter of 2022, 1.1 million square meters have been occupied by local brands, Nogai said.
Some local retailers, like Lime and 12 Storeez, have taken advantage of the situation to develop their businesses, opening new stores and flagship shops in prime locations.
Jarullina emphasized that the return of Western brands would not displace Russian companies, but rather increase competition and that the market has already changed, requiring foreign brands to adapt to the new conditions. For example, contracts for retail space in Russian shopping centers for Western brands would no longer be as easy to secure and all property owners of retail space would include strict clauses for the case of a tenant’s sudden departure in their agreements with Western parties.