The History Of The Shopping Area, Part II: Commerce As Part Of The Residential Complex — From The First Floors To Individual Shopping Centers

Free-standing shopping malls that are part of residential complexes cannot, and should not compete with large urban shopping malls. They have their serious advantages and their loyal fans

Before continuing the conversation about the current relationship in the “residential complex — shopping center” pair, it makes sense to give a few statistical calculations. The first are contained in the material of the Kommersant newspaper and state that “the growth of online commerce and the withdrawal of large international retailers from the Russian market have reduced the attractiveness of shopping centers among developers. The volume of ongoing construction of such facilities across Russia decreased by 13% year-on-year, to 1.3 million square meters. Even in 2022, when the current geopolitical crisis was just beginning, the figure was higher — 1.6 million square meters, according to consultants (experts from CMWP. — BFM.ru). Today, developers are completing the implementation of a number of large projects launched in 2020-2021, but they are not starting new ones yet. This year, developers prefer small complexes, explains Polina Afanasyeva, head of the CMWP Research and Analytics Department.

And here are the research data provided by BFM.ru The Glavstroy Regions company. The all-Russian survey was conducted after new design rules came into force in the Moscow region, according to which it is no longer possible to make the first floors residential in apartment buildings that have been declared for construction: only commercial structures, household services and so on can be located there. The height of the first floors should now be at least 4.2 meters. Deviation from these norms is possible only in relation to houses with a height of no more than four floors.

Glavstroy Regions experts asked the Russians if they supported the Moscow region initiative. According to the data obtained, only a third of respondents (32%) evaluate the new rules negatively, while the rest treat them either positively or as a completely natural given.

The company also asked what exactly the respondents would like to see on the first floors of residential complexes. It turned out that objects in almost all directions are in demand. 29% of respondents spoke in favor of the HoReCa segment (coffee shops and restaurants, takeaway food, etc.). Leisure facilities and retail outlets shared the second place with PVZ (24% of votes each). Another 23% of the survey participants would like to have more beauty and wellness projects in the house – beauty salons, hairdressers, dental clinics and so on. Also, every third respondent admitted that he visits commercial facilities on the ground floors of his house daily or weekly, 42% — if necessary, 28% do not visit.

“The results of the survey turned out to be quite expected, retail has been meeting the customer halfway for a long time, using not only modern trends, strategies and technologies of retail trade, but also relying on accumulated experience. The time spent in a mall or shopping center can be significantly reduced by a modern consumer thanks to shops, cafes and order pick-up points located directly in the house. The norms adopted in the Moscow region will allow attracting new business ideas and expanding the pool of services provided to residents of new buildings, taking into account how their preferences change. And this, in turn, will make life on the territories of the residential complex more comfortable,” says Nikita Nikolaev, head of the rental department at Glavstroy—Real Estate.

And now a word to developers and their arguments about the importance of commercial infrastructure in the perimeter of residential complexes. About the reasons for the construction of free-standing shopping centers in their composition and the difference between these facilities and neighboring district shopping centers. And about what individual retail facilities on the territory of the residential complex are — a growing trend or still exceptions to the rules.

Anastasia Betskova, Head of the Commercial Real Estate Sales Department at FGC Group:

“Commercial real estate in the form of separate shopping blocks or a small shopping center of a district format as part of a residential complex that meets the needs of residents is a liquid story from the point of view of the development business and in demand from the point of view of the residents themselves. As a rule, we lay commercial (retail) premises on the first floors of residential buildings, but not only — these can be detached buildings and the first floor of parking lots. The share of commercial space can range from 3% to 10%, it all depends on the concept of the project, its location and the “passability” of the location. The internal shopping infrastructure, including a small shopping center within the residential complex, has an important advantage — the location is within walking distance for residents of the complex and nearby territories. The content of such a shopping center will be appropriate: mainly FMCG products and services (dry cleaning, beauty salon, etc.). In particular, a similar facility was built in our Danish Quarter residential complex. It is important to note that such a shopping center cannot be compared in scale and content with large shopping malls, where people go purposefully for shopping. Nevertheless, the presence of a developed commercial infrastructure within the residential complex is a growing trend that will only gain momentum.”

Kristina Nedrya, Director of Commercial Management at Stone:

“The availability of high—quality retail infrastructure is an integral part of a modern residential complex. Customer traffic is becoming more local, because today citizens increasingly prefer to make purchases and receive services within walking distance from home. The main advantage of local retail is accessibility and focus on the needs of residents. For this reason, when considering offers to buy apartments, they pay attention not only to the location, concept and planning solutions, but also to the availability of developed infrastructure in residential complexes. When working on the infrastructural content of our facilities, we always carry out a quantitative and qualitative analysis of the infrastructure already presented in the area. So, in Sokolniki, the historical district of Moscow, where we are implementing a business+ class residential complex, there is a shortage of high—quality retail infrastructure. Realizing its relevance for both our future residents and residents of the district, we decided to give part of the territory of the residential complex for infrastructure facilities. In particular, in addition to the classic retail located on the first floors of residential towers, the project includes two commercial and infrastructure blocks, access to which will be open to all citizens. Today, the trend to create such separate trade and infrastructure blocks is gaining popularity. However, their volume depends on the environment, the provision of the location with infrastructure facilities, as well as the portrait of the target audience. The trade and infrastructure block makes it possible to include more diverse functions and a wide range of tenants.”

Konstantin Bernatov, Director of Commercial Real Estate at the Zhelezno company:

“In our case, two factors worked with Znak residential complex in Kirov.
The first is the typology of the building, which does not imply the location of commercial premises of any profile on the ground floors. A free-standing shopping center provides more opportunities: it can definitely accommodate, for example, a restaurant that is interesting to most residents, but few people want to have a catering establishment right in the entrance, which, of course, is understandable. The second factor is that when we first started developing this area for development, it seemed to us that there was less need for commerce on the ground floors of residential buildings. Later, having planned the construction of a separate shopping center on the territory of the residential complex, we can say that we made up for what was missing right away. The main difference is the area of the shopping center itself. Obviously, the shopping center inside the neighborhood is not being built in order to compete with large urban shopping centers, its task is to provide all the necessary services to people living in a residential complex. The anchor functions of such objects will be completely different. For example, in a small shopping center inside the LCD, it is impossible to place a cinema, grocery hypermarkets or hardware stores, but this is not necessary. The inner shopping center does not compete with the urban ones, it exists due to the traffic of the area. However, we admit that our decision is rather an exception to the rule, since in most cases it is not typical for buildings to allocate free-standing shopping centers due to a shortage of land. We were in a situation where we could afford to “give a different typology” and not make the most of the territory. From the point of view of developers, I see a more rational approach not to build a separate shopping center, but to concentrate commercial premises in blocks, for example, on the ground floors. However, it also depends on many factors, for example, on the number of floors and materials of the house.”

Sergey Abuzyarov, Commercial Director of BEL Development Group:

“The main trend in housing construction today is to create full-fledged neighborhoods that allow local residents to live and work comfortably without leaving their location. Undoubtedly, “internal” shopping malls are increasingly appearing in this format. We are building a new residential neighborhood as part of the implementation of the KRT project in the Republic of Adygea. Geographically, the complex will be located near Krasnodar. At the same time, this is a new location for residents of the region, where, unlike Moscow, the market is not overheated and the demand for high-quality shopping centers is quite high. When designing the shopping center, the architects focused primarily on the concept of a family residential complex. Green Apple buildings are being built in the ideology of a “city within a city”, providing everything necessary for residents of the neighborhood within walking distance, and at the moment there is not a single modern shopping center of comparable scale in the location. We plan to focus on the entertainment component in filling the shopping center, as it will become a new point of attraction for residents of the entire district, rather a place of regional format, so we expect to see federal operators as part of the “anchors” and “sub-anchors”.

Finally, some more statistics, which may encourage developers, at least in Moscow, to more actively create free-standing shopping centers in their residential projects. According to the Core company.Xp*, the share of vacant space in Moscow’s shopping malls dropped to 5.2%, one of the lowest values in the last 10 years. Against this background, some retail chains face difficulties in selecting suitable premises.