Commercial Vacancy Rising in St. Pete
Rental rates in St. Petersburg shopping centers have fallen by almost one-third since the fall, and vacancy rates range from 10 percent to 30 percent, analysts say. According to figures from Colliers International, 146 shopping centers were operating in St. Petersburg with a total area of 3.7 million square meters at the end of last year. Seventeen new centers were opened in 2008, with a combined 445,000 square meters of space, or 240,00 square meters less than planned, said Roman Yevstratov, deputy head of Colliers International's commercial real estate department.
In the first quarter of 2009, 120,000 square meters were finished, primarily in projects that were delayed for completion in 2008, said Anton Vikharev, a senior consultant at Maris | Part of the CBRE Affiliate Network. Another 370,000 square meters are planned to be completed by the end of the year, he said, although Yevstratov said he thought that in all likelihood, no more than 170,000 square meters would be built this year.
Many developers have reconsidered their plans because of the crisis, analysts said. Some are trying to sell their projects, while others are indefinitely freezing them, said Nikolai Pashkov, of Knight Frank St. Petersburg. He said he thought that work on about 20 percent of current and planned shopping centers was frozen. Adamant has halted new projects because of rising interest on bank loans. Yevrogarden, which owns the Zelyonaya Strana hypermarket chain, is offering in a Dutch auction 3 hectares on Pulkovskoye Shosse where it had planned to develop a $20 million shopping center. Yelena Tsareva, the company's marketing director, said the decision was made "because of the crisis."
Since last fall, land prices in St. Petersburg have weakened by 30 percent, and they could drop another 15 percent by this fall, said Valery Borzilov, financial director of LenspetsSMU. Mercury, which had been slated to finish the reconstruction of the Leningrad House of Trade by March, has made a request to the authorities to push the finish date back to 2010. Mercury general director Alexander Reyebok said the project would be finished and its conceptualization would not be changed.
Nikolai Kazansky, of Colliers International, said he thought that it would make sense to retarget the project toward a lower-income segment since luxury goods were not in high demand in St. Petersburg even before the crisis. Yevstratov estimated that visits to shopping malls in February and March have fallen 15 percent, based on retailers' traffic. Vikharev said there were 10 percent to 30 percent fewer shoppers, depending on the type of complex. Leaseholders, too, have been forced to correct their development plans. Pashkov said many companies would now rather pay a fine for breaking their contracts than opening a store.