Street Retail Market Saint Petersburg 2020 - 12.1% vacancy rate 10 to 30% decrease in rental rates
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12.1% 10 to 30% 13.8%
vacancy rate decrease annualized
in rental rates rotation rate
Street Retail
knightfrank.com/research
Market
Saint Petersburg
2020
6
A new retailer
IKEA first
Eurospar entered
small-format
St. Petersburg market;
store was opened
SPAR Middle Volga
at 23 Nevsky Ave in
LLC is engaged in its On July 23, 2020,
St. Petersburg.
development. the Governor of
St. Petersburg signed
a Law to prohibit
serving alcohol in
bars, pubs, and other
KEY EVENTS establishments with
an area below 50 sq m
The Italian luxury located in apartment
brand Brunello buildings (effective
Cucinelli moved from January 1, 2021).
The government B. Konyushennaya St
of St. Petersburg to 113 Nevsky Ave
imposed stricter where they rented
coronavirus measures the space of about
for the New Year 500 sq m.
holiday period.
In accordance with
a new revision of
Governor’s Decree
No. 121, catering
outlets were closed
for guests between Many businesses that used built-in commercial
December 30, 2020 premises have almost entirely stopped operating
and January 3, 2021. due to COVID-19 restrictions. Most of them were
fully closed on March 26, 2020. The restrictions
were somewhat eased in June and fully lifted
on July 27, 2020.
Key metrics. Dynamics*
Average Change
property size, Vacancy rate in vacancy rates Rotation Leading tenants’
sq m. (% of sq m) 2020/2019, p. p. rate**, % sector
Primary shopping corridors
135.0 12.7 ▲ 6.1 12.4 ▲ Public catering
in the central districts
Secondary shopping corridors
105.5 12.8 ▲ 6.5 13.4 ▼ Public catering
in the central districts
Primary shopping corridors
86.0 11.0 ▲ 3.9 15.2 ▲ Grocery stores
in bedroom communities
Secondary shopping corridors
100.4 8.5 ▼ -0.2 15.3 ▲ Grocery stores
in bedroom communities
Pedestrian shopping corridors 96.5 12.9 ▲ 6.9 16.5 ▲ Public catering
Pedestrian shopping corridors are streets with a pedestrian flow in the central districts of the city, such as M. Sadovaya St, 1st Sovetskaya St, Telezhny Lane, M. Konyushennaya St,
6-7-ya Liniya V.O.
Primary shopping corridors in the central districts are the main streets in these districts, as well as avenues featuring the highest car and pedestrian traffic and main business activities
concentrated around them, such as Nevsky Ave, Bolshoy Ave P. S., Kamennoostrovsky Ave, and Moskovsky Ave.
Secondary shopping corridors in the central districts are streets in these districts that are adjacent to the primary shopping arteries of the city that feature the highest car and
pedestrian traffic or are located in close vicinity to them. These include B. Morskaya St, B. Konyushennaya St, Rubinshteina St, Vladimirsky Ave, M. Morskaya St, Mayakovskogo St, Vosstaniya St,
Kirochnaya St, Zagorodny Ave, Gorokhovaya St, Sadovaya St, Sredny Ave V.O., Ligovsky Ave, Nekrasova St, Zhukovskogo St, Belinskogo St, Kazanskaya St.
Primary shopping corridors in bedroom communities are large non-central arterial streets that connect together several districts of the city. They feature the concentration of business
activities and/or a significant amount of residential development projects, both completed and in progress in the adjacent areas. Some of the examples include Leninsky Ave, Slavy Ave,
Komendantsky Ave, and Prosveshcheniya Ave.
Secondary shopping corridors in bedroom communities are streets in densely populated bedroom communities, which mainly have residential buildings, such as Entuziastov Ave/
Industrialny Ave, Baltiyskaya Zhemchuzhina quarters, Optikov St / Turistskaya St.
* As compared to 2019
** The calculation of rotation rates only takes into account premises occupied by tenants in compared the periods
Source: Knight Frank St Petersburg Research, 2021
Supply
In 2020, the total area of street retail The most demanded premises are
spaces was 614.9 thousand sq m. This less than 100 sq m (63% of all spaces
represents 0.6% growth from the available in the market). Properties
previous year on account of converting from 100 sq m to 200 sq m account for
some premises within the shopping 26% of the total supply. The remaining
Anna Lapchenko
corridors in bedroom communities into 11% are accounted for by larger spaces
Head of Street Retail
commercial outlets. The downward with an area of 500 sq m and more.
Knight Frank St Petersburg
trend of the average area size of the The breakdown of tenants continues
occupied spaces continued throughout to be led by three sectors: public
In 2020, the street retail market has
the reporting year: 109.3 sq m in 2020 catering (30%), groceries (13%), and
proven to be flexible and resilient to
against 110.5 sq m in 2019. The downward clothing (9%). At the same time,
external impacts, regardless of the full
trend of the amount of spaces rented the area occupied by catering and
suspension of business in commercial
is driven by splitting larger properties clothing decreased by 9.5% and 7.6%
premises in Q2 and partial restrictions
into several units or creating multi- respectively, compared to 2019 results.
in Q4 2020. Due to a well-considered
format facilities where several tenants On the other hand, in terms of volume
policy of rental charges pursued by
share a property with a single entrance. of spaces occupied, the food retail
most landlords in the period of bans on
This trend is particularly noticeable in sector increased its presence by 5.6%
business, the rotation rate remained
bedroom communities, in local streets on account of the expansion of chains
within the range comparable with the
where the average property size dropped (such as VkusVill, Eurospar, Vkuster,
levels registered in 2019, reaching
6.5% down to 100.4 sq m over the year. Magnit, etc.).
13.8%.
2020 was marked with tough calls
and challenges that not all market
Top-10 profiles of tenants who opened stores in 2020
players were able to handle. Thus, the
Public catering 28% volume of spaces occupied by café and
Grocery stores 16% restaurant tenants decreased by 9.5%,
Clothing 9% banks and microfinance firms by 13.9%,
Pharmacy. Optics. Orthopedics 8% and telephones by 12.4%.
Office. Sales office 5% At the same time, internet retailers,
Beauty salon 4% such as OZON, CDEK and Wildberries,
Banks. Microfinance Services 3% took advantage of the restrictions to
Household goods 2% launch an active expansion strategy
Construction materials 2% and increased their market presence
Medical services 2% more than two times in 2020. Also,
Others 20% worth mentioning is a 1 percentage
point increase in the share accounted
0% 10% 20% 30% 40%
for by fashion retailers in total new
Source: Knight Frank St Petersburg Research, 2021
openings compared to 2019. It was
possible on account of brands, such
as Brunello Cucinelli, Bretling, and
Canali in Nevsky Ave, Sandro, Maje, and
Top-10 profiles of tenants who closed stores in 2020
Paul&Shark in Bolshoy Ave P. S., which
Public catering 34% play a significant role for the market.
Grocery stores 10% A decrease in rental rates was an
Clothing 9%
expected outcome of the restrictions
Beauty salon 5%
for the market. Shopping corridors
Banks. Microfinance Services 5%
in bedroom communities were least
Pharmacy. Optics. Orthopedics 5%
affected due to the generation of traffic
Household goods 3%
by local residents, in particular, in
Jewelry 3%
connection with shifting to remote work
Services. Photo services 3%
routines. The greatest decrease was
Shoes 3%
registered in the city’s central locations
Others 22%
because of the decreasing a numbers
0% 10% 20% 30% 40% of office workers and a substantial drop
Source: Knight Frank St Petersburg Research, 2021 in the tourist traffic.
Distribution the amount of premises by ranges of occupied areas
number of occupied premises average area of premises
total of 4,000 2,000 sq m
1,861
3,500
3,000 1,500
2,500
2,000 1,000
1,500
666
1,000 500
379
500 247
139
0 52 0
less than 100 sq m 100–200 sq m 201–300 sq m 301–500 sq m 501–1,000 sq m over 1,000 sq m
Source: Knight Frank St Petersburg Research, 2021
Overall, the number of opened stores
was 25% less than the closed ones. Top 10 profiles in the structure of tenants, by occupied area
Public catering operators traditionally
dominate in the breakdown of both Public catering 30%
opened and closed tenants, accounting
Grocery stores 13%
for 28% and 34%, respectively.
Clothing 9%
Some of the newly opened cafes and
Banks. Microfinance Services 6%
restaurants include Kazan Mangal,
Medical services 5%
Taproom, DoDo Pizza, Volkonsky in
Nevsky Ave, Hachapuri I vino, Kakha Beauty salon 4%
Bar in Bolshoy Ave P. S., Bar Darmadzhi Household goods 4%
in Kamennoostrovsky Ave. The city’s Pharmacy. Optics. Orthopedics 4%
main restaurant street Rubinshteina Cosmetics and perfumery 2%
was not aside from the new openings, Construction materials 2%
there was opened GUCHI (Del Mar
Others 21%
Group), Flor, Monkey bar, Noir, and
others. 0% 10% 20% 30% 40%
Due to the rapid development of Source: Knight Frank St Petersburg Research, 2021
e-commerce during the pandemic,
delivery services of online stores, such
as OZON, CDEK and Wildberries, more
than doubled the leased spaces they Rotation rates by shopping corridor in 2020
rent in built-in commercial premises
Primary shopping corridors in the central districts
in 2020. It should be noted that pickup Secondary shopping corridors in the central districts
stores are developed not only in street Primary shopping corridors in bedroom communities
retail premises, but also use sub-leased Secondary shopping corridors in bedroom communities
spaces in drugstores and grocery stores. Pedestrian shopping corridors
During the unsettled epidemiological
situation, there was a rise in the
number of new pharmacies: in 2020,
the area of properties occupied by this
group of tenants increased by 15%.
12.4% 13.4% 15.2% 15.3% 16.5%
As for the decrease in the amount
of leased spaces, the banking and Source: Knight Frank St Petersburg Research, 2021
microfinance segment reduced their
areas by 13.9% (5% of the total tenants’
share in St. Petersburg). In addition On the fashion segment, changes For example, in B. Konyushennaya St,
to sex stores, the biggest drops primarily involve rotation in premium the Agona rented some of the premises
were observed for children’s goods, locations, such as Bolshoy Ave P. S., occupied by the Cashmere and Silk
jewelleries, and footwear stores. B. Konyushennaya St, and Nevsky Ave. boutique. The Brunello CucinelliProfiles of tenants with the largest and the smallest dynamics of changes in occupied space
Sex stores -36.1%
Children's goods -29.2%
Jewelry -15.6%
Shoes -15.3%
Tourism -14.1%
Banks. Microfinance Services -13.9%
Telephones -12.4%
Services. Photo services -11.7%
Public catering -9.5%
Education -9.1%
Clothing -7.6%
9.3% Pharmacy. Optics. Orthopedics
11.1% Service center. Repairs
16.0% Accessories
17.2% Tea and coffee
18.8% Automobile
19.2% Tobacco
26.5% Office. Sales office
-40% -30% -20% -10% 0% 10% 20% 30%
Source: Knight Frank St Petersburg Research, 2021
boutique moved from this shopping
corridor to Nevsky Ave. The Lorena
Antoniazzi and Herno stores were
closed, giving place to a Fabiana
Filippi boutique which moved from a
location in the same shopping corridor.
MINT clothing store was opened
in this location (which previously
rented premises in Liteyny Ave) also
as other brands such as Maje, Sandro,
and Paul&Shark. There is a trend of
high-profile and successful online
retailers going offline using rented
premises for opening show rooms.
Some of the examples include a new
accessories store by Millz Karta in Canali Boutique, 141 Nevsky Ave. Transaction by Knight Frank St Petersburg
B. Konyushennaya St, To Be Blossom in
Liteyny Ave and Bolshoy Ave P. S. A street review shows that in some In the main shopping corridors
Some tenants taking the advantage corridors the rotation rates grew slower in the central districts, the vacancy
of the situation with vacant premises in 2020 than in the previous year. This rates ranged from 9% (in the main
were able to move to locations better is in particular true about pedestrian part of Nevsky Ave) to 15% (in
suited for their business needs. and secondary shopping corridors in Kamennoostrovsky Ave) in the end
As at the end of the year 2020, the the central locations. of 2020. Among the most popular
rotation rate was on average 13.8%, As at the end of 2020, the total locations in secondary streets in the
which is 1.5 percentage points higher vacant area of street retail properties city centre, the lowest shares of vacancy
compared to 2019. It should be noted was 74.2 thousand sq m, which is an rates were seen in Rubinshteina St (5%),
that rotation in 2020 rates in the main 80% increase from 2019. The share of as it still remains highly sought-after
shopping corridors in both central vacant spaces was on average 12.1%, by tenants, and M. Morskaya St (4%).
locations and bedroom communities showing a 5.3 percentage point increase The highest vacancy rates are registered
higher than in the secondary compared to the previous year. Without in Nekrasova St (22%: with the major
shopping corridors in the respective taking into account those premises closures being Rostelecom, Volna café,
locations. The highest rotation was that were vacant in 2019, the area of Tili-Testo bakery, and Pietra bar) and in
observed in 6-7-ya Liniya V.O. (23.2%), properties vacated by tenants totalled Vladimirsky Ave (21%: the closed stores
Kamennoostrovsky Ave (19.7%), and about 50 thousand sq m or 8.7% of the include Togas, Samsonite, Thomas
B. Konyushennaya St (18.5%). total amount of street retail spaces. Munz, Green Box, and others).Rates
Ranges and dynamics of rental rates by shopping corridor
The restrictions imposed in the middle Average range
of the year and during the New Year of rental rates,
Street RUB per sq m
holidays caused significant losses to category Streets per month Dynamics
businesses which were forced to stay
Pedestrian M. Sadovaya (p) 3,000–5,440 ▼
idle or had their permitted working shopping
corridors 1-ya Sovetskaya (p) 1,700–2,800 ▼
hours (especially on the public catering
Telezhny Lane (p) 2,400–4,800 ▼
segment) considerably curtailed. The
main decline in the basic rental rates M. Konyushennaya (p) 2,000–3,500 ▼
from 10 to 30% was observed in mid- 6-7 Liniya (p) 2,000–4,400 ▼
2020. In the second half of the year, Primary Leninsky Ave 1,620–5,200 ▼
only some owners adjusted further shopping
corridors Slavy Ave 1,170–2,500 ▼
minor reduction in asking rates within in bedroom
communities Komendantsky Ave 1,530–4,320 ▼
a range of 2 to 5%.
Prosveshcheniya Ave 1,620–4,050 ▼
The smallest reduction in asking
rental rates was seen in bedroom Secondary Entuziastov/Industrialny 1,530–3,150 ▼
shopping
communities, in Rubinshteina St and corridors Baltiyskaya Zhemchuzhina 1,350–2,700 ▼
in bedroom
1-ya Sovetskaya St. However, if new communities Optikov/Turistskaya 1,170–2,700 ▼
rules for obtaining alcohol licenses (an
Primary Nevsky Ave 5,250–11,000 ▼
increased distance from a restaurant shopping
corridors Bolshoy Ave P. S. 1,600–3,840 ▼
and children’s institutions/medical in the central
districts Kamennoostrovsky Ave 1,280–4,160 ▼
facilities/educational establishments)
are introduced, rates for properties Moskovsky Ave 2,000–5,600 ▼
in the main restaurant street of Secondary B. Morskaya St 2,240–4,960 ▼
shopping
St. Petersburg may continue to go down corridors B. Konyushennaya St 2,800–7,200 ▼
in the future. in the central
districts Rubinshteina St 3,600–6,300 ▼
The largest decreased in asking
Vladimirsky Ave 2,400–3,600 ▼
rates occurred in the city’s main
M. Morskaya St 2,000–4,000 ▼
shopping corridor, Nevsky Ave, there
was a reduction from 30 to 33%. In Mayakovskogo St 2,000–3,200 ▼
Sadovaya St, rates dropped within a Vosstaniya St 2,000–5,200 ▼
range of 20 to 25%. As a rule, corridors Kirochnaya St 1,440–6,000 ▼
with the highest rates are more
Zagorodny Ave 2,160–3,600 ▼
sensitive to crises and higher rates
Gorokhovaya St 1,440–3,600 ▼
are always subject to more significant
Sadovaya St 2,800–7,500 ▼
drops.
Sredny Ave V.O. 2,000–6,400 ▼
Ligovsky Ave 1,520–5,040 ▼
Forecast
Liteyny Ave 1,520–4,800 ▼
Until the end of 2021, the main market Nekrasova St 1,840–3,200 ▼
trend will be for tenants to maintain Zhukovskogo St 1,760–3,200 ▼
their existing positions and be flexible Belinskogo St 2,800–4,800 ▼
in negotiations with owners in search Kazanskaya St 1,600–2,400 ▼
for the best conditions. As at the end of
Radishcheva St 1,360–1,600 ▼
2020, the catering sector accounted for
Pestelya St 1,360–2,000 ▼
a 6 percentage point lower share of the
total number of openings as compared
10–15% 16–20% 21–30% over 30%
to the same period of the previous year.
If restrictions resume even for a short Source: Knight Frank St Petersburg Research, 2021 * The rate is inclusive of VAT (20%)
period of time and a new decree on sale
of alcohol is enacted, the rotation will
continue on the segment of cafes and Street retail premises in bedroom Now we can expect that the rates are
restaurants which accounted for 29% communities of the city will be least likely to be reinstated until the end of
of the total number of premises that affected due to the generation of traffic 2021; however, it is unlikely that they will
changed tenants in 2020. by local residents. return to the pre-crisis level of 2019.STREET RETAIL
DEPARTMENT
♦ Impeccable business reputation
♦ Business ethics and transparency in our activities
more than
700
♦ Long experience working on the market of St. Petersburg (since 2005)
♦ Leadership on the street retail segment supported by our knowledge
of the market and compliance with international quality standards offers
♦ Maximum involvement of our consultants in addressing problems
of any level of complexity
Our services RUB 350
Representation of tenants and buyers:
million
in aggregate
▪ full-service transaction support transactions
▪ selection of premises; listing of available offers in 2020
▪ retail real estate market research
▪ cost-effectiveness projections based on competitive analysis
▪ market forecasts and rental rate projections
Representation of owners:
▪ full-service transaction support
▪ project marketing 25,000 sq m
▪ recommendations on pricing of spaces sold
▪ search for and selection of buyers/tenants
▪ tenant mix optimization services
▪ property utilization assessment
Anna Lapchenko
Head of Street Retail
anna.lapchenko@ru.knightfrank.com
Please contact us to learn more about our services or
clarify any questions you may have:
+7 (812) 363 22 22
spb@ru.knightfrank.com
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