According to experts, each residential complex has 10% of highly liquid retail space, for which there is a real hunt, and 90% of “so-so” areas, some of which have been sold for years due to their unattractiveness. Is it possible to talk about a real deficit in such a situation?
The role of retail space included in the residential complex is becoming more and more noticeable in the metropolitan market, and some experts say that today the sale of non-residential premises accounts for an impressive portion of the developer’s revenue, practically competing with the sale of housing directly. Is there enough retail space for everyone, potential tenants and buyers? Are they forced by the pressure of scarcity to “grab” not what they need, but what they are given? First of all, it is worth clarifying one important point on the shore, says Pavel Lyulin, vice president of the Union of Shopping Centers.
Pavel Lyulin, Vice President of the Union of Shopping Centers, “In my opinion, the classic shopping malls and retail premises in the residential complex belong to different sectors of the same market. It is not entirely correct to say that demand in one segment is higher or lower than in another, since a professional tenant chooses based on location, attendance and availability of his buyer and does this in all sectors, while an unprofessional tenant chooses based on his understanding of the market, proximity to home, availability of available space, and so on.. And there are more professional tenants in classic shopping malls.”
Photo: PIC
Agreeing both with the fact that developers’ interest in retail space as part of residential projects has grown, and with the fact that the creation of commerce in residential complexes has been strongly influenced by changing consumer preferences and the concept of a 15-minute city, and with the fact that today the availability of useful commerce is a powerful advantage of residential projects (especially in Moscow with its distances Dmitry Mozharov, Director of Development at Plus Development, considers it necessary to make a reservation when talking about the shortage: in most mass-market projects, the share of commercial space often does not exceed 3-5%. And that’s okay.
Dmitry Mozharov, Director of Development at Plus Development, “It is clear that in such a situation, competition for sites in good locations will be high, especially when it comes to small spaces of 50-100 square meters. The growing popularity of online commerce and delivery reduces the need for traditional large stores, but increases the demand for premises for pick-up points, last-mile warehouses and other formats related to e-commerce. At the same time, we have not yet seen a pronounced deficit. It is likely to become more pronounced in 2027-2028, as many developers are currently postponing the launch of new projects in anticipation of more comfortable banking conditions. Now it can be noted that, for example, in new areas of Moscow (such as Kommunarka, Filimonkovsky and others), the demand for commercial premises often exceeds supply, as these territories are actively populated, and the infrastructure has not yet had time to develop. At the same time, there may be no shortage in more mature areas with already established infrastructure, as the supply is more balanced.”
“Everyone wants to buy a high-quality facility: with high traffic and good visibility, in the center of the residential complex, on a walking road, at the entrance, a corner room, a place near a supermarket… But there are few of them, and commerce occupies the entire area of the first floors. As a result, only 10% of profitable premises and 90% of illiquid ones exist in each residential complex. It is unlikely that a good tenant will choose the latter. There is a shortage of really high-quality premises. All major professional players complain about difficulties in acquiring liquid properties,” Nikita Kornienko, CEO of the commercial real estate investment platform Simple Estate, continues the “scarce” conversation.
Nikita Kornienko, CEO of the commercial real estate investment platform Simple Estate, “The market is full of illiquid areas that have been sold for years, and developers do not reduce their price. Unfortunately, a private investor runs the risk of acquiring such a space, believing the tales of a developer who finds it more profitable to sell than to suffer with such a lease. Developers often dream of a good infrastructure inside the residential complex: fitness centers, children’s facilities, hospitals. But the same fitness center is willing to pay three times less per square meter than a supermarket. Money wins, and we see forty alcohol markets, thirty pharmacies, ten grocery stores in one complex, and at the same time there is a shortage of kindergartens, social infrastructure, gyms, clinics, and so on.”
And, according to Stanislav Sagiryan, a shareholder and member of the Board of Directors of RKS Development Group, demand for highly liquid retail space in residential complexes already exceeds supply. “Starting in 2020, there has been a steady increase in demand for commercial premises in Russia. Commercial spaces have become a sought—after asset that investors are actively investing in, so there is a shortage of such facilities on the market,” the expert says. And this circumstance, in his opinion, will certainly affect the development approaches of the near future.
Stanislav Sagiryan, shareholder, member of the Board of Directors of RKS Development Group, “The design of commercial premises on the first floors of residential buildings should take into account the functional purpose, convenient layout and urban planning requirements. Of course, developers usually prefer selling commercial real estate instead of renting it to quickly raise capital, reduce risks, and simplify management. And in 2025, developers in their strategies for creating functional residential complexes will take into account changing consumer preferences and the situation with economic stability.”
“Regardless of the class and scale of the residential complex, rental rates, as well as decisions on the sale of commercial space, always depend on market conditions and a specific development strategy. In 2025, the decisions of developers will be influenced by all the same factors — the general market and a specific strategy, but taking into account new trends such as the development of online commerce, changing consumer habits, demand for catering and a number of others,” sums up Pavel Lyulin.
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