Retailers Wait Out Improvements

Yevgeny Razumny / Vedomosti

Wires were removed from under Tverskaya (taking trolleys service with them). For additional lighting, 138 old-fashioned street lights were erected. In the autumn, 86 trees were planted — linden trees have returned to Tverskaya after being cut down in the 1990s. New bus stops were put in with free Wi-Fi and electronic signs.

After the renovation of Moscow's streets, expensive boutiques and restaurants may disappear, to be replaced by more democratic venues for public browsing.

Moscow resembles a large construction site: on the ground and under the ground something is being built or repaired everywhere. The "My Street" improvement program this summer reached 52 streets, including thoroughfares Tverskaya, Mokhovaya, Novy Arbat, Taganskaya and Bolshaya Yakimanka, and the Boulevard and the Garden Rings. In some places work will continue into the fall. In total, 2000 hectares of urban space will be repaired this year. Muscovites are vigorously discussing street resurfacing while businesses calculate their losses and guess at what will happen next in public spaces.

In summer, pedestrians maneuvered between construction workers, guards and stacks of tiles, and motorists swore as they waited in long traffic jams on the main streets of the capital. On Tverskaya Street, sidewalks were replaced to make the section from Pushkin Square to Mokhovaya Street into one big promenade. The number of lanes remained unchanged (four or five in each direction). The new asphalt was laid using the seamless method, without joints, to last longer. However, now it has to be equipped with storm sewers, after rains caused flooding in the capital and badly tarnished the reputation of public utilities and designers. The necessary holes (at the curb) will be made using a new diamond drilling technique that does not damage the asphalt.

The border around Vozdvizhenka Square on Arbat Square was enlarged, lawns restored and walkways paved with granite tiles, 76 new energy-saving lamps were installed, along with 13 benches and 20 waste receptacles.The streets around the Arbat: Vozdvizhenka, Znamenka and others, were improved as well. In the autumn, 180 trees were planted; 1500 trees are promises for the Garden Ring.

No one wanted to browse in shops on dug-out streets or sit in a cafe to the sounds of drills and hammers. "Of course, during the work, pedestrian and automobile traffic declined," said owner of Eco-Office Andrei Kovalev. "All this has led to a decrease in customers and a drop in turnover for the retailers and restaurants on those streets. Food servers have suffered the most." "Some landlords have been forced to reduce rental rates for retail space this summer, or even close them," said Ekaterina Podlesnykh, head of the Russia street retail department at Colliers International. "For example, during the street repair, Zodiac and Luciano restaurants were closed on Smolenskaya Square." Some restaurants did not survive the improvements. "The owners of Chinese News decided to close the restaurant on Tverskaya. One reason was the long structure across the entrance to the premises," Podlesnykh said.

However, Maria Litinetskaya, managing partner of Metrium Group, believes that shops and restaurants targeted to a permanent clientele were not much affected by the decrease in customer traffic. "We are talking about the most fashionable establishments, such as Arkady Novikov's restaurant in the Ritz Carlton hotel. Or Cook'kareku on Sadovo-Kudrinskaya Street," she said.

On Novy Arbat, the pedestrian area was expanded by an average of 1.5 meters, preserving parking spaces and roadway. Wires were removed, lights replaced and a 150-meter-long bench was set up. It is doubles-sided and 700 people can sit on it back-to-back.

"Property owners believe that the difficulties of tenants associated with street repair are temporary in nature, so many did not reduce rentl rates," said Litinetskaya. "On the contrary, they are waiting for the completion of the reconstruction of the streets, which gives them an excuse to raise prices. For example, in 2014, after Pyatnitskaya was renovated, the average rental rate for commercial space increased by 23 percent, and after the reconstruction of Myasnitskaya in 2015 it rose 34 percent." "On the most popular streets, like Kuznetsky Most, we are seeing a slight increase in rental rates, within 10 percent," Podlesnykh added.

Street retail is being forced to change. "The general trend observed on previously reconstructed streets and those changing now is the transformation of street trade following the completion of work. Shops are catering to impulse buying, and restaurants are primarily focused on a young, active audience," Yulia Nikulicheva, department head at strategic consulting company JLL. "After all, the pedestrian flow of these streets is also changing. The city has more active young people and tourists."

On the Boulevard Ring, sidewalks have been expanded, and eventually the boulevards will be combined into a single continuous pedestrian route. This will be possible next year, when Gogolevsky, Pokrovsky and Yauza Boulevards will be reconstructed. Light-colored granite is being used in memory of the wall of the White City, on the site of which the Boulevard Ring now runs. It is assumed that the bright tiles will retain less heat than asphalt when it's hot.

In Podlesnykh's opinion, the process of democratization of street retail on Tverskaya started quite a while ago. Premium shops and restaurants are located mainly in the zone of influence of hotels in the international high-end segment, for example, Novikov's and the Cafe Russe in the Ritz-Carlton Moscow, Canali men's clothing store and the Frank Muller watches and jewelery boutique on the first floor of the Marriot Moscow Grand. "As for the street as a whole, we expect preservation of the trend in the growth of democratic venues and shops, as, indeed, the flow locals and tourists has increased significantly after the renovation of the street," Podlesnykh said. Among the key tenants on Tverskaya, Podlesnykh named the United Colors of Benetton, Cosmos Gold, Bosco Di Ciliegi, Reserved, Lush and Yves Rocher. The most famous shops here are the Yeliseyevsky supermarket and Moscow bookstore. There have been no particularly high-profile openings of democratic brands and restaurants in the current year, nor any high-profile closures. Among the new openings in the first half of 2016, the expert pointed out the flagship store LEF 27+2, a boutique of Swiss Tissot watches and Pushka karaoke bar. Two years ago, Zara and Escada left Tverskaya. "The space that housed Escada boutique is still empty," noted Podlesnykh. Nonetheless, rental rates on Tverskaya have increased since December 2015.