In recent years, interest in street retail in new, developing residential areas has been noticeable in Minsk.

29.11.2022

This particular location holds immense appeal due to its proximity to abundant and untouched resources, as well as its convenient access to consumers. Furthermore, being in the early stages of neighborhood development, it enjoys a relatively low level of competitive pressure. However, it's important to note that street retail possesses unique characteristics and encounters its own set of challenges, cautions Andrey Aleshkin, the partner and executive director of NAI Belarus. He shared insights on the market dynamics during the third quarter of 2022 with Probusiness.io.

Supply: In some locations, we expect a significant increase in space.

Street retail in residential areas of Minsk primarily consists of newly constructed buildings. The older "bedroom communities," like Zialony Luh, South-West, Malinovka, and even the more modern Brilevichi and Kamennaya Gorka, were built with housing units that did not include ground-floor commercial spaces.

It was only with the advent of large-scale commercial residential developments utilizing monolithic and frame-block construction methods that street retail began to flourish in the new districts. Consequently, the primary hubs of street retail activity formed along prominent locations such as the first lines of Pobediteley Avenue (Lebyazhy district), Dzerzhinsky Avenue (Grushevka district and sections along South-West and Malinovka), and Pritytskyi Street (extending from the "Sportivnaya" metro station to the city outskirts). Notably, on Pritytskyi Street, there is a segment with well-established street retail in older buildings between the "Pushkinskaya" and "Sportivnaya" metro stations.

Significant expansion is anticipated in certain areas. For instance, several residential complexes are currently under construction along Dzerzhinsky Avenue, specifically in the first line of the avenue within the Grushevka area. One of these complexes will feature a two-story base encompassing the entire perimeter of the complex, resulting in a substantial increase in available retail space.

In the street retail of the new areas the most in demand are mass-market objects and everyday services

The demand for street retail space in new districts is consistently high. This can be attributed to the early stage of development, where nearly any commercial property can achieve success before larger specialized establishments open. Even as the market matures and competition increases, businesses either build a loyal customer base or adapt their concepts to remain in demand.

In the street retail of new districts, mass-market and daily service-oriented establishments experience the highest demand. In recent years, there has been a growing trend of locating order pickup points within street retail facilities, particularly in new districts. This is primarily because the stationary trade infrastructure is not yet well-established in these areas and the population is generally younger, more inclined to utilize e-commerce services.

Furthermore, a significant segment of street retail comprises stores specialising in building materials, finishing products, interior furnishings, and interior design studios. These businesses cater to the needs of individuals seeking such products and services.

Vacancy and commercial terms

Street retail spaces in the new districts are highly sought after, resulting in low actual vacancy rates across major locations. For instance, the first line of development in the considered corridors has virtually no unoccupied premises.

However, in certain complexes like "Minsk-World" and specific houses on Dzerzhinsky Avenue, there is some vacancy in recently constructed buildings. This occurs when street retail facilities, primarily designed for commercial use, remain unoccupied due to a lack of residents in the surrounding apartments. This situation is particularly notable in areas without consistent foot traffic from transient populations.

On average, the vacancy rates in street retail spaces within new districts range from 5% to 7%, starting from a minimal 2% to 3% in established corridors, and reaching approximately 10% to 12% in areas adjacent to ongoing construction projects.

In terms of market rental rates, typical prices range from 8 euros to 12 euros per square meter in less favorable locations, while in prestigious areas with developed infrastructure and a steady flow of visitors, rates can reach up to 16 euros to 22 euros per square meter.

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