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. Last Updated: 07/27/2016

Why Some Sites Just Don't Sell

MT1st Brestskaya Ulitsa's long-empty site
Just down the street from Belorussky Station, a small storefront hidden behind flower kiosks on Gruzinsky Val has seen various retail businesses come and go in quick succession. A liquor store and a bath oil boutique have now given way to a slot machines arcade, perhaps confirming the site's status as a retail write-off.

A couple of blocks away, where 1st Brestskaya Ulitsa meets Ploshchad Tverskoi Zastavy, another retail space that has been home to several short-lived businesses has long stood empty. A representative of the real estate agency advertising the site said the agency did not know its history -- but a saleswoman at a nearby kiosk said the last business there, a shoe store, left two years ago.

In a city where the retail sector is sizzling, such unsellable retail sites might seem rare. However, real estate agents say these two failed shopfronts are not unique: Large, luxurious shopping center developments can also struggle to attract and keep their tenants.

The locations themselves may be partly to blame for some of these failed businesses and empty storefronts. Problems with parking, access, visibility and design can all undermine even a well-planned business in a seemingly good location. A lack of public transportation, while not an issue at Belorusskaya, has doomed other developments.

"The main factor is proximity to public transportation," said Andrew Wixom, an independent real estate consultant. He said a store should be within a 15-minute walk from a metro or bus station.

A store should also be on a particular route, said Philippe Bogdanoff, a partner at Kirsanova Realty. "A classic location is where passers-by stop in," he said. "Eighty percent are going to be people who use the route regularly."

He recommended looking at everything within a 10- to 15-minute walk from a store to find out if the people who pass by the location are the kind of people who would patronize the business.

Access problems may have hurt the businesses around Belorussky Station. Wixom said the area is hard to navigate on foot, and Bogdanoff said it is also difficult to reach the area by car because of the layout of the streets.

"There's a complicated traffic situation," Bogdanoff said. "And even if you have 10 million cars passing by, it's irrelevant because there's no place to park."

He said high rents in the center of the city are often prohibitively expensive for most retail businesses. "You have to sell a lot just to cover costs," he said.

Yekaterina Kutumova, public relations manager at Colliers International, agreed. "Shops located in the center of Moscow on Tverskaya Ulitsa undoubtedly have a perfect location, but rent rates are too high and there is practically no parking," she said.

The location's visibility also affects a business' success, and it is especially important in retail, Wixom said. "A lot of people in this community haven't been cognizant of the issue of visibility," he said. "If you have no window space or ad space, passers-by will miss your shop."

Visibility is the reason Bogdanoff moved a Hertz car rental office from the Sokol area to a location near Belorussky Station. He said that since Hertz's client base is not walk-in and the location is so visible on Leningradsky Prospekt, on the way from Sheremetyevo Airport, the Hertz office would do more business there. "I knew exactly what I was getting myself into," he said.

Alexander Obukhovsky, senior retail development consultant at Colliers International, said design requirements go beyond the layout of the space.

"Russian developers try to build universal complexes and I'm not sure that's a great idea," he said. For retail, the maximum workable number of floors is three or four, he said, but an office building can be any size, so Russian developers often try to combine office and retail space, especially in the center of Moscow. The two just do not work well when combined, he said.

A host of other factors could be responsible for a location's unattractiveness. "It could be as obscure as the nature of the landlord," Wixom said. He said some landlords do not understand real estate and that difficult landlords are common. "Landlord relations have been problematic for tenants in the city."

Kutumova said it is important to consider the target market when choosing a location. "Think of such bedroom communities as Biberevo or Brateyevo -- there's no place for such brands as Brioni or Max Mara there, but mass goods, day-to-day goods or convenience goods, middle-class brands, supermarkets and fast-food establishments will find their consumers there," she said.