Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Zvyozdochka Reopens to Grown-Up Clientele

Unknown
Zvyozdochka, a triangular, Soviet-era children's department store on Taganskaya Ploshchad, reopened Monday as a shopping center primarily aimed at middle-class adults.

Eduard Lvov, chairman of the board of directors of Zvyozdochka, said the building had been redeveloped by a private group of investors involved in the retail and property market, the largest of which is the Rosinter fast-food holding with a stake of about 20 percent.

Lvov said the group had been looking to invest in a large trade house in the city center and bought the building seven years ago, when such properties were very rare. The 1998 crisis delayed development plans for the shopping center, and now there are many trade houses throughout Moscow, he said.

Lvov declined to give the purchase price or the total cost of renovations.

The project used less-expensive materials to keep prices within the reach of Zvyozdochka's target audience, the middle class, whose pockets, Lvov said, are still not as full of disposable income as he'd like.

"We are not [a high-end shopping center like] Petrovsky or Smolensky bazaars," Lvov said. "We're hoping that business will pick up and that Russians' income will rise."

Lvov said the space has been fully let almost entirely to tenants occupying at least 100 square meters. He declined to give any rental rates, but said the rents were lower than other central shopping centers, like the 90,000-square-meter Garden Ring Shopping Center near Kursky Station. Zvyozdochka has all modern facilities, such as air conditioning, except an underground parking garage, Lvov said.

Based on comparable locations, Sergei Gipsh, head of retail at leading local realtor Colliers International, estimated that rentals cost $1,200 to $1,700 per square meter on the first floor, about $800 per square meter on the second floor and about $600 per square meter in the third-floor food court.

Lvov said work on the building was still under way and the last tenants would open for business in May.

Local renovation firm Iskra-Max began work on the project last year. The building has retained its historical facade, but Iskra-Max removed an inner courtyard and added extra stories so that the formerly 2,000-square-meter building now covers 6,000 square meters, of which 4,000 is rented retail space, Lvov said.

Before the revolution, a merchant lived on the second floor above the shop. In 1937, the building was reconstructed into a children's department store that sold toys and clothes to generations of Muscovites in the Soviet era. Lvov said that store had been the No. 2 store in Moscow for children's items after Detsky Mir on Lubyanskaya Ploshchad.

The shopping center retained the name Zvyozdochka, which means little star, partly because it was well known, he said.

Colliers International had made a layout proposal to Zvyozdochka. But Lvov said Zvyozdochka decided to stick to its own layout, which it knew inside and out after owning the building for seven years. He said it had been done in such a way that all retailers had been offered rectangular spaces.

A key part of Zvyozdochka's strategy is the fast-food area on the top floor. Lvov likened this to the food courts in Ramstore shopping centers and said Zvyozdochka was the only outlet for such food on Taganskaya Ploshchad.

He said he hoped word would get around about the food and that people on their way to the food court would walk past stores and be tempted to do a little shopping.

Lvov said Zvyozdochka was pleased with the mix of tenants, especially because they included McDonald's and Nike, two of the world's top 10 brands.

Rosinter will have some of its subsidiaries in the building with Rostik's fried chicken, Patio Pizza and Planet Sushi.

Colliers International brought its client the Swiss watch company Consul to the project. Among other tenants are fashion companies Benetton, Holding Center and Modny Bazaar, leather accessory firm Petek and bag retailer Robinzon.

Lvov said the process of selecting tenants had taken about nine months. Zvyozdochka vetted each client, visiting other outlets to check on their performance, and ensured an appropriate mix.

He said Zvyozdochka stands right next to the Taganka trading center, but is not in direct competition because that center had a different mix of clients operating from smaller shops.

Gipsh of Colliers said Taganskaya Ploshchad was one of the busiest pedestrian areas in Moscow with several major roads entering it and two metro stations. One drawback is the lack of parking, especially during the daytime.

He said its location on the Garden Ring Road was very good.

"I think it will be successful," Gipsh said.

Natalya Oreshina, retail consultant with Stiles & Riabokobylko, the Moscow-based associate office of Healey & Baker, agreed the square has heavy foot traffic. Among its attractions, she listed the Library of Foreign Languages, the Illuzion cinema, coin collectors, a casino, the Taganka Theater and a supermarket.

She said retaining Zvyozdochka's Soviet-era name might not be in the developers' best interests because the store had been closed for so long that younger generations were probably unaware of it.

"I think they should have established a new brand or slowly moved to a new one," Oreshina said.