State Railways to Offer Retail Space in Stations

Russian Railways will offer retail chains an opportunity to rent space at 180 train stations throughout the country, RZD executive Sergei Abramov said Monday.

It is not yet clear how much space will available, as not all of the lots have been drawn up, he said.

The first auction will take place July 31. Space will be available for a variety of companies, including mobile phone retailers, ice cream stands and vending machines. Each auctioned lot will include space in several railway stations across the country, including Moscow, St. Petersburg, Kazan, Krasnodar, and Novorossiisk.

For example, a lot that includes 171,500 square kilometers of space for mobile phone retailers at 14 railway stations, including Moscow’s Kazansky Station, is being offered at 9.68 million rubles ($308,000) per year. The auctions are being held so that passengers at train stations across the country can have access to well-known brands selling high-quality products, Abramov said.

Although the crisis has brought rents for retail space down by 50 percent, train stations have become especially popular among retailers.

Lots could be bid up by as much as one-third from their starting prices, said Mikhail Getz, a managing partner at real estate firm Novoye Kachestvo.

Potential tenants have been reserved in their opinions about the offer, however. An executive at mobile phone retailer Svyaznoi said RZD’s offer was interesting, but the spaces available — some of which are as small as 5 square meters — are not large enough to accommodate their stores, which they say require a minimum of 25 square meters.

Moreover, it’s not hard to find retail spaces that are cheaper than the ones being offered by RZD, the Svyaznoi executive said.

The head of an ice cream company said the “places are good, but we’re only ready to pay 30 percent less.”

A top executive at a pharmacy chain said RZD’s prices were acceptable but noted that there was not a single drug retailer in the country that would be able to work in that many regions. He added that the auctions were unlikely to draw many participants, as it’s a risky time to take on large-scale projects.