Retail Moscow by Irina

A GUIDE TO THE RUSSIAN RETAIL PROPERTY MARKET

2014 - 2015

GLOBAL RETAIL ADVISING ON LANDMARK DEVELOPMENTS C&W MARKET SHARE LONDON

NEW YORK

New Bond Street

Madison Avenue

PARIS

SAN FRANCISCO

75%

48%

Rue du Faubourg Saint-Honoré

Union Square

39%

56%

MILAN

TORONTO

Via Montenapoleone

Bloor Street

HONG KONG

SEOUL

50%

71%

Central

AMERICAN DREAM USA C&W is appointed to lease the unique retail, destination dining, upscale arts and entertainment scheme, incorporating an NFL stadium, ski dome, observation wheel and Dreamworks theme park.

Myeongdong

38%

57%

* by m2 transacted in 2013.

BLUEWATER

BATTERSEA POWER STATION

PRADO SHOPPING CENTER

FRANCE

C&W acted on the sale of Bluewater Shopping Centre (30% + management control) for Land Securities at a price of £656m and £40m for the management rights.

C&W is appointed as joint retail and leisure letting agents on iconic 116 128 m2 London landmark.

Galeries Lafayette Group, a major retail business group in France, will open a new 9 400 m2 store inside the Doughty Hanson&Co owned Prado shopping centre. Galeries Lafayette store will offer over 4 floors a wide range of brands from the most prestigious to the most accessible.

CUSHMAN & WAKEFIELD

GALLERIA CHENGDU

PUERTO VENECIA

DUBAI FESTIVAL CITY

CHINA

SPAIN

UAE

C&W is appointed by Karden Land as the principal leasing agent on a 50 000 m2 mall which was the first international shopping mall development in Chengdu.

206 610 m joint venture between British Land and Eurofund. C&W introduced British Land to the opportunity and set up a team of advisers in both the UK and Spain.

This 261 679 m2 development is a world class waterfront urban community. C&W is appointed to provide strategic and international marketing advice and leasing of the 51 000 m2 luxury retail extension.

SAN FRANCISCO CENTER

UP SQUARE

ZLOTE TARASY

USA

KOREA

POLAND

C&W is advising Westfield on the development, leasing and consultancy of this 116 128 m2 development.

C&W was appointed as the exclusive leasing agent for this ground breaking 63 000 m2 mall located in the prominent city of Ulsan. The mall was the first international standard mall in the south of the country and was highly appealing to international retailers.

C&W was appointed as the operational management consultant and sole retail leasing agent on this project. The 225 000 m2 scheme is a mixed use urban development consisting of retail, multiplex cinema and offices.

GLOBAL RETAIL SUPPORTING BRANDS GOING GLOBAL

BERLUTI

MONCLER

PRIMARK

FRANCE - PARIS C&W advised Berluti on the 1 209 m2 lease acquisition on the Rue du Faubourg Saint-HonorĂŠ in Paris.

RUSSIA - MOSCOW C&W advised Moncler on the opening of the first Moncler shop in Moscow.

USA - BOSTON C&W advised on the letting of the entire former department store in Boston to Primark marking their entry into the USA.

CUSHMAN & WAKEFIELD

ERMENEGILDO ZEGNA

LONGCHAMP

UNIQLO

PORTUGAL - LISBON C&W advised on a new 1 000 m2 flagship store acquisition in Avenida de Liberdade, the prime luxury street of Lisbon, where Ermenegildo Zegna has been present since 1996.

FRANCE - PARIS C&W was instructed by MCS (Marlboro Classics) to find a tenant for their shop located on Avenue des Champs-Elysées in Paris. Total area: 542 m2 – Lease acquisition.

USA - NEW YORK C&W advised Uniqlo on a lease of 9 850 m2 at the corner of 53rd Street.

ТOPSHOP

SUPERDRY

PRADA

THE NETHERLANDS - AMSTERDAM

RUSSIA - MOSCOW

C&W advised on the flagship store acquisition on Kalverstraat, Amsterdam, and market entry advice on behalf of Topshop.

C&W provided strategic market entry advice on the acquisition of a flagship store in Amsterdam, the first of Superdry’s European flagship stores outside the UK.

C&W advised Prada on the opening of the first Prada shop in Moscow.

Moscow Retail Market

CUSHMAN & WAKEFIELD

MOSCOW RETAIL MARKET OVERVIEW

• In Moscow new construction volume for retail space is at a record level. In 2014 about 830 000 m2 of new retail space have been delivered, which is 25% higher than in 2013.

• Moscow remains the gateway to Russia for global retailers: Forever 21, Crate&Barrel, Maje, Sandro opened their first stores in 2014.

• At the same time, the demand for new retail space has decreased significantly. Vacancy rate in shopping centers with stable catchment area grew from 2.5% to 4%. New shopping centers are opening with 50% vacancy rate in the retail galleries. Retailers now have conservative growth plans.

• In 2015, we expect Superdry, House of Fraser, Harvey Nichols, Kidsmania and many others to commence operations.

• Rental rates have started to decrease in Moscow. In 2015, we expect the vacancy rate to grow to 8% (less in prime shopping malls).

• Sales for discounters like Kiabi, Tvoe, LFT remains strong, while anchors Auchan, Leroy Merlin, Decathlon and IKEA have announced significant expansions plans.

Moscow main market indicators 2014

2015

MOSCOW RETAIL MARKET RECENT PROJECTS BY CUSHMAN & WAKEFIELD

MEGA Khimki

KRASNY KIT Mytischy

OTRADA

VODNY VEGAS CITY

METROPOLIS Phase 2

SPARTAK

KRASNY KIT Krasnogorsk

DRUZHBA

AVIA PARK

ACTOR GALLERY

MOSCOW MALL

FILION ODINTSOVO GALLERY

REUTOV PARK

FASHION SEASON

AFIMALL

LOTTE PLAZA

RIVER MALL KOTELNIKI GAGARINSKY Phase 2

MEGAPOLIS MEGA Belaya Datcha

COLUMBUS MEGA Teply Stan

OUTLET VILLAGE Belaya Datcha

SALARIEVO

SKY MALL

PROJECT scope

0 < 50 000 m2 > 50 000 m2 10

Existing under construction

CUSHMAN & WAKEFIELD

SKY MALL

MOSCOW MALL 2

METROPOLIS Phase 2

GLA – 145 000 m Оpening - Q4 2017

GLA – 100 000 m Оpening – Q1 2017

GLA – 37 500 m2 Оpening – Q1 2016

The project’s concept combines the construction of a large shopping and entertainment complex with an outletcenter and leisure facilities. This project is located on Kievskoe highway, one of the busiest transport arteries, next to Vnukovo airport.

New generation shopping and entertainment center Moscow Mall will be located on Zhenigorodkoye highway in close proximity to the Third Transport Ring. The designing process of the mall assumes a fundamentally new approach to shopping centre layout.

The second phase of Metropolis shopping and entertainment center continues the vision of providing the most comprehensive fashion mix in Moscow. In addition, the concept includes a large restaurant area, a fresh food market and a fashionable fitness center with spa zone.

Our mission: Concept Development & Leasing

COLUMBUS

VODNY

GAGARINSKY Phase 2

GLA – 135 000 m Оpening – Q1 2015

GLA – 32 200 m Оpening – Q3 2014

GLA – 17 325 m2 Оpening – Q4 2017

Columbus shopping and entertainment center is located at one of the most important transport hubs in the city – Varshavskoe highway, next to Prazhskaya metro station. Columbus houses both well-known international and leading Russian brands: a hypermarket, a 14 screen multiplex cinema, a children’s entertainment center, over 250 stores, a foodcourt and over 25 restaurants. Our mission: Concept Development & Leasing

Vodny is a mixed-use office and retail center of 32 200 m2 (leasable space). It features 130 shop units (including a fashion gallery of international and Russian brands), a hypermarket and a cinema. The project was opened in October 2014.

The second part of SEC Gagarinskiy will be connected to the existing shopping complex and will include extended familyoriented entertainment facilities and a cinema.

Our mission: Concept Redevelopment, Leasing and Tenant Coordination

Our mission: Concept Development & Leasing

MOSCOW RETAIL MARKET RECENT PROJECTS BY CUSHMAN & WAKEFIELD

KRASNY KIT Mytischi phase 2

ODINTSOVO GALLERY

AVIA PARK

GLA – 47 000 m2 Оpening – Q4 2014

GLA – 35 000 m2 Оpening – Q3 2015

GLA – 231 000 m2 Оpening – Q4 2014

Krasny Kit is located 50 m from the railway station Mytischi and the bus station in the most dynamic city of the Moscow Region. 1 Phase was opened in 2006. Phase II incorporates 270 shopping units and 25 restaurants and cafes.

Odintsovo Gallery shopping and entertainment center will be the first professionally conceived and designed retail project in the city. The project is located at the entrance to the city, on Mozhayskoe highway, 5 km from Moscow. Odintsovo Gallery will provide daily shopping and entertainment facilities for the local population.

The project will become one of the largest shopping centers in Russia and Europe. The shopping center will have 4 floors and a 2-level car park. The anchor tenants are Auchan, Hoff, Media Markt OBI, a sports store, large department stores, an entertainment center, and a multiplex cinema.

Our mission: Leasing

Our mission: Concept Development & Leasing

VEGAS CITY

OTRADA

REUTOV PARK

GLA – 95 000 m2 Оpening – Q4 2013

GLA – 220 000 m2 Оpening – 2011-2016

GLA – 41 000 m2 Оpening – Q1 2014

Vegas City is located in the north-west of Moscow on the territory of “Crocus City”. This 5 level shopping center will house a skating-rink, a cinema multiplex and different theme zones like Times Square and Fashion Avenue.

Otrada is located on Pyatnitzkoe shosse in the Mitino area. Phase 1 was opened in December 2011 and the center is constantly expanding. The first two levels are occupied by electronic goods, home appliances, major fashion brands, restaurants, an entertainment zone, a cinema, a fitness center and a parking.The center will include the biggest aquapark in Russia.

This shopping center is located on Reutov’s Nosovikhinskoe Highway, within walking distance of the metro station Novokosino. The anchor tenants include a hypermarket, a home appliances and electronics store, a sports goods store, a multiplex cinema and a food court area. The three levels will feature more than 140 operators.

Our mission: Concept Development & Leasing

Our mission: Concept Development & Leasing 12

Our mission: Concept Development & Leasing

CUSHMAN & WAKEFIELD

ACTOR GALLERY

FASHION SEASON

RIVER MALL

GLA – 4 892 m2 Оpening – Q3 1996

GLA – 22 126 m2 Оpening – Q1 2012

GLA – 97 000 m2 Оpening – Q4 2015

Actor Gallery is a prime property comprising a total area of 18 315 m2 located on one of the most prestigious and valuable streets in the world. The building houses both a business and a retail centre with direct access to the undeground parking and the metro.

Fashion Season is part of Moskva multifunctional complex that includes luxury Four Seasons hotel, office centre, apartments and underground parking. It is the premier place for shopping, dining and leisure in the historical city centre, with an outstanding collection of top retail brands.

The shopping and entertainment center will be located on the Third Transport Ring. The project initially planned in 2005 has been enlarged and adapted to new market requirements.

Our mission: Concept Redevelopment & Asset Management & Leasing

Our mission: Concept Development & Leasing

SPARTAK

KOTELNIKI

SALARIEVO

GLA – 80 000 m2 Оpening – Q4 2017

GLA – 92 000 m2 Оpening – Q2 2016

GLA – 140 000 m2 Оpening – Q2 2016

C&W has developed the concept of the Spartak shopping center which will be a part of Tushino airfield development interconnected with new metro station and the new Spartak sports stadium.

The concept of the project is a complex solution for the integration of a transport hub: Kotelniki metro station, parking, bus station and shopping center.

Salarievo is part of a transport interchange hub in new Moscow. It will combine a shopping mall with a bus/metro/parking hub.

Our mission: Concept Development

Our mission: Concept Redevelopment

Regional Retail Market

CUSHMAN & WAKEFIELD

REGIONAL RETAIL MARKET - A BRIEF OVERVIEW RECENT PROJECTS BY CUSHMAN & WAKEFIELD MEGA June Felicita MEGA Oktyabr

Zolotoy Bereg

Saint-Petersburg Sergiev-Posad Moscow

Kristal Star City Mall

MEGA

Predmostnaya Bograda June

Ekaterinburg Tyumen

Kazan Nizny Novgorod

MEGA Burunduki

8 March MEGA

Samara Saratov

TAU Gallery

Novosibirsk

Orenburg Volgograd

Barnaul

Krasnoyarsk

Gulliver Vesna

Rostov-on-Don Volgamall

MEGA Vertical Mega-City

Krasnodar

Projects

Population

MEGA MEGA

Existing

5 mln <

Under Construction

1 < 5 mln 0 < 1 mln

RUSSIA KEY FACTS

PEOPLE

Population of Russia

143.7 mln

INCOME

Average income per person

566 $/month

RETAIL

Retail turnover

719.5 bln $/year

E-SALES

Per year/ person

$89.5

* Federal Statistics Service.

RUSSIAN MARKET OVERVIEW • Russia is generally undersupplied with shopping centers with 120 50 m2 of quality retail space per 1 000 inhabitants. However retail is distributed unevenly with some cities like Krasnodar and Surgut having over 600 m2 while other cities barely reach 50 m2. • Russia has the largest pipeline in Europe with 141 shopping centers under construction with a total GLA about 5.5 million m2 – this is 30% of existing stock. • In 2015 consumer market will face a major challenge: middle class growth is stagnating while the lower middle class boosted by government spendings will gain purchasing power. • Russia has impressive development potential compared to the UK and France having 264 and 267 m2 per 1 000 inhabitants respectively. 15

REGIONAL RETAIL MARKET RECENT PROJECTS BY CUSHMAN & WAKEFIELD

STAR CITY MALL, Tyumen 2

GLA – 75 000 m Оpening – Q4 2013

GLA – 42 000 m2 Оpening – Q2 2015

Star City Mall will be the only shopping and entertainment center in the north-east of the city, in a fast developing residential area. The project will include more than 160 shops as well as a hypermarket, a multiplex cinema, a restaurant zone and a foodcourt.

The shopping and entertainment center Krystal is a modern and successful project in Tyumen, which combines a high-quality array of anchor tenants, shopping gallery operators, entertainment and catering.

TAU Gallery will be the pre-eminent center in Saratov. The shopping and entertainment center will be located in the center of the city, in a highly populated residential area. The project will include a hypermarket, a cinema, a sporting goods store and a foodcourt.

PREDMOSTNAYA, Krasnoyarsk 2

TAU GALLERY, Saratov

GLA – 54 000 m Оpening – Q4 2015

Our mission: Concept Development & Leasing

RETAIL PARK BURUNDUKI, Novosibirsk 2

8 MARCH, Ekaterinburg

GLA – 62 000 m Оpening – Q1 2017

GLA – 72 400 m Оpening – Q2 2017

GLA – 68 000 m2 Оpening – Q1 2017

The concept of the shopping and entertainment center was conceived in the framework of the Enisey river embankment development. The shopping center will comprise a hypermarket, a cinema, an entertainment center, retail gallery shops, cafes, restaurants and a food court.

The Retail Park will be opened in an actively developing part of Novosibirsk, the capital of Siberia. In addition to anchor tenants (DIY, hypermarket, furniture store, sport goods supermarket) the project includes various entertainment concepts: an oceanarium, a cinema, an entertainment center for kids and an interactive museum.

The concept of a four-level modern mall center is located in the heart of Ekaterinburg. Anchor tenants include: a hypermarket, a W&B supermarket, sports goods, a cinema, and an entertainment zone.

Our mission: Concept Development

KRISTAL, Tyumen

Our mission: Concept Development

CUSHMAN & WAKEFIELD

OUR SERVICES ADVISORY

LEASING & MARKETING

• Land plot analysis • Development and optimization of shopping and entertainment center concepts: − territory planning (AutoCAD); − floor plans (AutoCAD); − sections (AutoCAD); − 3D model (SketchUp). • Functional zoning of floor plans and merchandising • Rent revenue estimation • Concept support in collaboration with architectural and project development companies

• Development of strategic marketing & leasing programs (shopping centers, street retail) • Sale transaction support • Maximization of property value and occupancy levels • Advising new retailers on market entry

CLIENT

ENT GEM NA

Leas tion in Marke g ting

Pro Ca pe

AS SE

MA kets T Mar agement al n pit ty Ma r

PROJECT DEV EL Coord O P ina

T EN M

L a n d plot

I d e a & C o n c e pt CO

NCE

PT DEVELOPME

CAPITAL MARKETS

PROJECT MANAGEMENT

• Investment sales • Sale and leaseback transactions • Mergers and acquisitions in real estate • Debt resource management: debt funding, restructuring, raising debt capital for completed projects and projects under construction • Structuring of joint ventures on project and corporate levels

• Technical consultancy at the pre-lease/purchase stage • Project Management (design, fit-out, construction) • Technical due diligence • Construction project analysis • Space Planning (test-fit) • B.O.M.A. measurement • Pilotage • Green Certification

CUSHMAN & WAKEFIELD’S RUSSIAN RETAIL TEAM KEY CONTACTS МAXIM KARBASNIKOFF Partner, Head of Retail Services

ЕKATERINA ZEMSKAYA Partner, Head of Retail Agency

maxim.karbasnikoff@eur.cushwake.com Tel: +7 919 105 7911

ekaterina.zemskaya@eur.cushwake.com Tel: +7 919 105 21 01

Maxim Karbasnikoff has more than 13 years experience in the retail property market in Russia. Maxim’s track record includes advising and leasing over 22 Shopping Centers in Russia and several major Capital Market transactions such as the JV agreement of Vesna Altufievo, the forward sale of Filion and the investment sale of Galeria Saint-Petersburg (in excess of USD1Bn).

EVGENIYA OSIPOVA Associate

ANDREY SHUVALOV Associate

evgeniya.osipova@eur.cushwake.com Tel: +7 919 105 79 05

andrey.shuvalov@eur.cushwake.com Tel: +7 903 256 21 74

Evgeniya is responsible for project implementation for several key clients. Her responsibilities are project management, managing a team of brokers and liaison with clients during the leasing process. Currently, Evgeniya is working on 7 projects: Zvezdniy (Tyumen), Gallery Odintsovo (Odintsovo), Druzhba and Metropolis Phase 2 (Moscow), Reutov Park (Reutov) and Avia Park (Moscow).

Andrey Shuvalov is a highly qualified expert in the field of commercial real estate consulting and development with over 10 years experience. He has particular expertise in the development of shopping centers and mixed-use projects.

ANASTASIA KUZNETSOVA Associate

ZULFIYA SHILYAEVA

anastasia.kuznetsova@eur.cushwake.com Tel: +7 919 105 21 02

zulfiya.shilyaeva@eur.cushwake.com Tel: +7 916 501 41 92

Anastasia is responsible for the coordination of a leasing team and liaison with clients during the leasing process. Currently, she is working on Columbus in Moscow close to the Prazhskaya metro station and TAU Gallery in Saratov. Anastasia has over 8 years experience in commercial real estate.

Ekaterina is responsible for managing and growing the firm’s shopping centre leasing activities. Ekaterina has more than 10 years experience in the retail real estate market. Ekaterina has successfully leased numerous award-winning, large scale projects in Moscow and the regions, including the following projects: Royal Park in Novosibirsk (2007), Galeria Krasnodar II Phase (2008), Galeria in Saint-Petersburg (2010), Leto in Saint-Petersburg (2011), Aura in Novosibirsk (2011), Aura in Surgut (2012), MoreMall in Sochi (2012), Oz Mall in Krasnodar (2012).

Associate

Zulfiya’s main responsibilities are managing the leasing of Sky Mall and Vodny in Moscow, Krasny Kit in Krasnogorsk and in Mytischi, coordination of the leasing teams and liaison with clients during the leasing process. Zulfiya has been working in commercial real estate since 2007.

We are the center of retail

Cushman & Wakefield Ducat Place III, Gasheka Street 6 Moscow, Russia 125047 +7 (495) 797 96 00 www.cushmanwakefield.ru