Money-Growing: Enviable Consistency

However, Prospekt Mira is one of the few retail streets catering for middle class consumers. The avenue is home to a variety of small shops with stable tenancies in place. In recent years, reports of new large-scale projects that are to be launched in the area have begun to emerge, but for the time being they exist largely on drawing boards.

Prospekt Mira begins at the Garden Ring on Sukharevskaya Square and stretches towards northeast Moscow where it turns into Yaroslavskoye Shosse [motorway]. The avenue is not the longest in Moscow; it is possible to cover its 8 kilometers on foot in about two hours. Stores and small shops, cafes and restaurants, gaming centers, banks, drug stores and travel agencies line up one after the other on both sides of this broad street.

This relatively young retail corridor is always bustling, with throngs of pedestrians and traffic.

Prospekt Mira appeared on the Moscow map in the era of Khrushchev’s Thaw, in 1957. “The avenue incorporated several streets that followed one after the other: 1st Meshchanskaya, Troitskoye Shosse, Bolshaya Rostokinskaya, Bolshaya Alexeyevskaya and part of Yaroslavskoye Shosse. The name, as it was wont to say in those times, ‘signified the success of the cause of peace, the wide scale of the nascent international peace movement and the foreign policy of the Soviet state’,” reads a popular Web directory on the history of Moscow, “Click on Moscow Streets”.

Olga Yasko, head of retail real estate research at Colliers International, says that Prospekt Mira belongs to a group of retail streets that ranks second in terms of appeal and prices, after Tverskaya, Arbat, and Kutuzovsky Prospekt.

And yet, Prospekt Mira is the main thoroughfare in northeast Moscow. “Of course, being a busy street with heavy pedestrian and traffic flows, it does appeal to tenants and buyers of retail space,” Yasko says. The total volume of retail properties here now stands at approximately 50,000 square meters.

Place Your Bids

Market surveys show that rental rates vary greatly throughout Prospekt Mira. Jones Lang LaSalle sets the average rate in the corridor at approximately $1,200 per square meter per year. “Our observations show that rental rates range from $500 to $1,200 per square meter,” says Yasko of Colliers.

A retail property of 230 square meters near 75 Prospekt Mira may be offered for rent at 1,000 euros per square meter, while properties on the stretch beyond 100 Prospekt Mira towards Yaroslavskoye Shosse are cheaper.

Yulia Drovyannikova, retail real estate consultant at Jones Lang LaSalle, notes a lively trade in the areas near metro stations.

A 500-square-meter property near 108 Prospekt Mira is rented out at 1,100 euros per square meter.

The highest rental rate has been registered on the stretch near Olympic Plaza – at the Prospekt Mira metro station – given the intensity of pedestrian flows in the area, according to Penny Lane Realty

Sale prices range from $2,500 to $8,000 per square meter, though such sales are much less common than tenancy deals, says Yasko.

Alexei Malyushkin, commercial real estate analyst at Penny Lane Realty, says the street retail format prevailing on Prospekt Mira is shaped by numerous individual stores; properties of 100-300 square meters are in high demand while supply is scarce in certain areas.

For example, this year a 300-square-meter property was put up for sale near the Rizhskaya metro station at $7,700 per square meter – a rate comparable to sale prices on Novy Arbat, or Kuznetsky Most – while most properties on that section of Prospekt Mira sell at $6,000-7,500 per square meter.

Retail properties near Rizhskaya sell at $1,000 to $1,100 per square meter. Sale prices for locations between the Garden Ring and the Third Ring Road are growing steadily – at a rate of 3-5% annually – as that part of the road is popular.

Colliers sets Prospekt Mira’s vacancy rate at 3-5%. As of today, some 500 square meters of retail properties are vacant, according to Penny Lane Realty. Up to five retailers want tenancies there. Rental deals of retail properties are rare here making tenant turnover low.

Multifarious Avenue

Many agree that Prospekt Mira is a bustling thoroughfare. However, it also has its dead zones, says Yulia Drovyannikova. The section between 80 and 100 Prospekt Mira is just such an example.

Retail real estate expert with Paul’s Yard, Andrei Mashkov, believes that Prospekt Mira ranks 4th or 5th in terms of popularity among Moscow’s retail streets, after Novy Arbat, Tverskaya, Kutuzovsky Prospekt and smaller corridors, such as Pokrovka and Myasnitskaya.

The most popular part of Prospekt Mira lies between the Garden Ring and the Third Ring Road.

Market analysts point out three sections where properties enjoy the greatest demand from potential tenants and buyers. Those are the areas near the Garden Ring, at the intersection of Prospekt Mira and Protopopovsky Lane, and near the Rizhskaya metro station.

The demand for commercial properties beyond the Third Ring Road is low. Those properties are largely occupied by sole proprietors and small privately-owned firms or large household goods stores targeting the heavy traffic flow that brings buyers. The pedestrian flow is particularly busy around the VDNKh metro station.

In the opinion of Alexei Malyushkin, in terms of commercial activity and the public amenities available here, Prospekt Mira belongs to Moscow’s leading retail areas. However, in terms of prestige and image, it is considerably inferior to Tverskaya Street, and Kutuzovsky or Leninsky avenues.

Prospekt Mira is dominated by Stalin-era buildings. The corridor partially runs through commuter areas of standard apartment blocks. In the central part, Stalin-era buildings and more recent developments dating back to the 1970s-1980s prevail, notes Yulia Drovyannikova. The number of non-residential properties is high.

Middle Class Targets

Expensive retail brands shun the avenue. Prospekt Mira’s retailers target mostly middle-income consumers residing in the areas adjacent to the avenue; commuter areas along Yaroslavskoye Shosse are home to people with even lower incomes.

Prospekt Mira houses offices of many large firms, says Drovyannikova. Their employees also buy goods on Prospekt Mira. Other customers are those driving along the avenue to and from work every day.

The avenue is also home to a variety of bank offices, many of which are near the Alexeyevskaya metro station, and sports goods stores, including Sportmaster and Deltasport. Popular retail chains, such as the City shoe chain, perfumery chains like Arbat Prestige and L’Etoile and the clothing chain Sela have outlets on Prospekt Mira. The presence of restaurants, grocery stores and gaming arcades and casinos is also notable.

Major shopping and leisure centers operating in the area are Metro at 211/1 Prospekt Mira, Azbuka Vkusa (58 Prospekt Mira), the 702-seat Kosmos movie theater (109 Prospekt Mira), M.Video (91/1 Prospekt Mira) and Stock Center (176 Prospekt Mira), says Olga Yasko.

The section between the Garden Ring and the Third Ring Road is occupied by retail brand shops and chain outlets such as FotoCenter.ru, Coffee House, Kenguru, City, Raiffeisen Bank, and Globex Bank, says Alexei Malyushkin.

Public catering outlets are numerous near Alexeyevskaya due to the proximity of the metro station of the same name. Penny Lane Realty analysts assume that retailers account for 50% of all the tenancies on Prospekt Mira; banks and other financial institutions make up 15% while cafes and restaurants account for 35%.

A new brand expected to arrive on Prospekt Mira soon is Takko, an Indian youth-oriented clothing chain offering quality merchandise comparable to that of Sela. Takko nurtures ambitious plans to open 50 new outlets in the capital each year.

The location also appeals to public caterers. Veselye Vareniki and Dymov are to open their outlets here shortly. Dymov plans to launch a new concept – a caf? with a shop offering books, audio and video products on its premises.

Negligible Majors

Large shopping malls are few and far between here, says Malyushkin. They include the shopping gallery Sadovaya Galereya on Sukharevskaya Square, and Olympic Plaza near the Prospekt Mira metro station. Also, there is the Krestovsky supermarket at Rizhskaya, famous for a wide choice of imported beers. The Olimpiisky sports complex rents out part of its premises to discounters.

The 11,914-square-meter Krestovsky opened way back in 1976. The 5,000-square-meter Olympic Plaza was commissioned in 1998, Colliers reports.

Sadovaya Galereya, with a total area of 12,000 square meters, and 3,600 square meters of retail space, opened in 2001, according to Cushman & Wakefield / Stiles & Riabokobylko. Properties of 120-130 square meters are let at $1,200 per square meter. The mall hosts the Mexx, Bustier, L’Etoile and Motivi outlets.

Nonetheless, the avenue offers good prospects for retail developers. Plans to erect a second Krestovsky are in the offing; the project to develop a multifunctional complex at VDNKh, near the famous Soviet-era sculpture of Industrial Worker and Collective Farm Girl, has long been discussed. Also, a major retail park is about to be commissioned in the district of Rostokino.

Retail Park to Replace Market Stalls

According to Colliers’ market surveys, the 150,000-square-meter Rostokino project, featuring 117,000 square meters of retail properties, is to be commissioned in 2006. The new development will replace what was once the Rostokino market, near Medvedkovskoye Shosse.

Should this large-scale project be implemented in full, it could well become the largest retail center on Prospekt Mira, comparable only to the capital’s largest shopping malls Mega I and Mega II.

Those ambitious plans were first announced three years ago. In 2003 the media reported that one of the participants in the project – the company Kashirsky Dvor-Severyanin – had bought the state-owned company Rostokino and secured the lease to an 18.5-hectare plot of land from the Moscow Land Committee.

At the same time, the founders of the project spoke of their plans to sign tenancy deals with such retail operators as Obi and Real. The future mall is supposed to include a hypermarket, a home goods store, an office center and leisure facilities with a movie theatre and bowling alleys. A year ago, the owners even disclosed the amount of projected investment – approximately $100-150 million.

Anna Savenko, retail project manager at Jones Lang LaSalle – the company that represents the project on the market – said the work on the project is continuing, but all the details concerning the concept and the size of investment are being kept confidential at the request of the owners.

Roman Nikitin, senior commercial property consultant at Dominique Renard, versed in Rostokino affairs, says that for the time being construction work has not even begun. The project is still on the drawing board pending approval of the technological characteristics.

The issue of electricity supply facilities has still to be settled. The total space of the future park, in line with the present concept, amounts to 220,000 square meters, including a 130,000-square-meter retail area, a 30,000-square-meter entertainment center and a parking lot of 60,000-80,000 square meters.

Lengthy Preparations

The development of a modern retail center near the entrance to the All-Russian Exhibition Center is another ambitious idea. The 60,000-square-meter mall will require investment of approximately $60 million, according to Colliers. The construction was to be launched back in 2003.

In line with the plan approved by the Moscow city hall in 2001 (Decree No.549-PP of June 19, 2001), the landmark Soviet-era sculpture of a worker and peasant girl is to undergo restoration which will see it re-positioned on the roof of the new mall that will be erected on the same spot.

JSC MPAS (Multi-tier Underground Parking Lot), set up by a group of investors, was named as the investor for the project. After numerous delays, construction work has still not got underway. Market analysts blamed the hold-up on a failure to attract investment.

According to Roman Nikitin, the owner of the project still cannot say exactly when construction will begin. To all appearances, the existing project will undergo changes, both in terms of scale and the amount of investment. There is no guarantee that construction work will begin anytime soon. MPAS was unavailable for comment.

What the Future Brings

The old shops operating on Prospekt Mira will most likely be re-profiled in the future, but medium-priced brands will still prevail, maintains Yulia Drovyannikova.

Consultants believe that the avenue is unlikely to attract a large number of expensive brand shops, given the social environment of the area.

But major retail chains targeting middle-income buyers will take an interest in the corridor. In Alexei Malyushkin’s opinion, Prospekt Mira will retain the position it now enjoys in the rating of Moscow’s retail streets for years to come.

Every now and then the Moscow government allots plots of land for property development along the avenue, particularly, in areas with dilapidated buildings. For example, Moscow city hall and the federal government have ordered the redevelopment of several old mansion houses at the beginning of the avenue, near Sukharevskaya Square. The authorities plan to attract private investors to those projects.

Among the properties subject to redevelopment is one at 6/1 Prospekt Mira. The Moscow City Duma has okayed privatization of properties at 1/7 (4), and 3/1 (buildings 1 and 2) as well as 184 and 186 Prospekt Mira. The properties at 12 and 14 Prospekt Mira are listed in the federal decree whereby Moscow took over protection of federal properties.

The town-planning program for the development of the territories along Prospekt Mira envisages creating the so-called “system of public territories” within a couple of years. In particular, city hall intends to complete reconstruction work at Sukharevskaya and Rizhskaya Squares, and on Troitskaya Street and Olimpiisky Prospekt.

Pedestrian zones are set to appear in the vicinity of Sretenka Street, Suvorovskaya and Rizhskaya Squares and in front of the Olimpiisky sports complex. In the future, underground multifunctional complexes may emerge at Sukharevskaya and Trubnaya Squares and under the squares around the Rizhsky train station.