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. Last Updated: 07/27/2016

Sedmoi Kontinent to Fix Up Central Market

MTThe dilapidated Central Market has been bought by Sedmoi Kontinent, which wants to turn it into a shopping and office center.
Sedmoi Kontinent is set to resurrect Moscow's long-defunct Central Market as a modern shopping and office complex.

The supermarket chain bought the building -- located between the Tsvetnoi Bulvar metro station and the Moscow Circus -- last month from Tveruniversalbank for about $5.5 million, Interfax reported. The market has been closed since the early '90s.

The bank obtained the market through the courts in January after a company named Central Market failed to return a loan, Alexandra Kozyreva, Tveruniversalbank's president, said by telephone last week.

However, the bank sold the market for considerably less than $5.5 million, she said, declining to give the sum.

Valentin Zapivalov, deputy general director of Sedmoi Kontinent, would not confirm the value of the transaction. "We learned that it was on the market and bought it, and we intend to invest $15 million," he said in a telephone interview.

Sedmoi Kontinent is hammering out an agreement with the Moscow city government about the land under the building. Zapivalov said negotiations are going well, and the company plans to begin work on the redevelopment in October or November. "We have not yet decided whether we will demolish it and then build a new building, or whether we will give it a revolutionary reconstruction," he said.

The shopping and office center will have 25,000 to 30,000 square meters of space spread out on seven floors, Zapivalov said. It will include a supermarket, restaurants, a cinema and a business center, with offices on the upper floors.

The site's location was a big selling point. The market was very popular in Soviet times because of its proximity to the metro station, central Moscow's shopping district and the circus, Zapivalov said.

"It's very hard to find good locations in the center of Moscow, and our analysis showed that the market was exactly what we needed," he said.

"It's a very desirable area right now; a lot of buildings are going up and a lot of offices. That's going to lend well to the business," said Chris King, director of business development at Colliers International.

However, parking is scarce in the area. "Many of our clients have cars, and we are working on solving that problem," Zapivalov said.

"It is possible we will use space behind the building. It won't be as big a parking space as for shops on the edge of the city," he said, referring to hypermarkets that foreign retailers are planning along the Outer Ring Road, or MKAD.

The Central Market will not compete directly with those hypermarkets, which serve a different clientele, King said.

One of the reasons for constructing markets along the MKAD is the lower cost of development. "On the outskirts, where people are driving to the hypermarkets, the prices would be considerably less. In the center, there is a convenience factor, and the prices will be somewhat higher," King said.

However, Natalia Oreshina, a retail consultant with Stiles & Riabokobylko, the Moscow-based associate office of Healey & Baker, stressed that prices should be kept low at the Tsvetnoi Bulvar site because of its location.

"I don't know if it should be an upmarket place. The people who come to the circus are not necessarily the richest," Oreshina said. "It should be targeted at people who are visiting the cinema and the circus."

Stores in the area are focused on affordability, she added.

The historical market is well known across Russia, partly because it was featured in the famous Soviet-era novel "The Age of Mercy," by Georgy Vainer. The novel was later turned into a film, "The Meeting Place Must Not Be Changed," starring singer Vladimir Vysotsky.

However, the market is not a protected monument, according to Zapivalov, and therefore, there are no obligations to preserve parts of the existing building. If any such status is confirmed, Sedmoi Kontinent will comply with laws regarding preservation, he said.

Zapivalov said Sedmoi Kontinent is undergoing rapid growth and will be able to finance the redevelopment of the market from its own resources. The chain has 17 stores and is planning to open another seven this year, Zapilov said.

Sedmoi Kontinent's sales in 2000 were $130 million, Interfax reported.

The company started with upmarket stores in the central city and then opened more stores in residential districts, where it adjusted its product mix and price levels to match its clientele in different locations.