. Last Updated: 07/27/2016

Tverskaya Rents in Europe's Top 10

MTTverskaya Ulitsa's average annual retail rent is $3,500 per square meter, which is still less than half that of the Champs Elysees.
Retail rents on Tverskaya Ulitsa jumped as much as 40 percent over the past year, making Moscow's shopping mile the 10th-most expensive street in Europe for renting retail space, a new survey has found.

In a global ranking of 45 countries' most expensive shopping streets, Tverskaya puts Russia in seventh place, even higher than in 2003, when it was eighth, according to the annual "Main Streets Across the World" report, prepared by real estate consultants Cushman & Wakefield Healey & Baker.

With average retail rents of $3,500 per square meter per year, Tverskaya tops Tokyo's Ginza ($3,348) and Zurich's Bahnhofstrasse ($2,395) but still is dwarfed by New York's Fifth Avenue ($10,226) and Paris' Champs Elysees ($7,648), which hold the top two places in the survey by country.

Moscow's retail market is among the world's top performers. Citywide, rents for stores have grown 13.1 percent since last year, the report said, "reflecting the buoyant retail sector, which continues to experience an exceptional level of activity."

By comparison, rental growth amounted to only 5.1 percent in Western Europe and 8.1 percent in the Asia-Pacific region.

"However, with new supply now emerging in Moscow, competition will increase and rents are stabilizing," the study said.

"To date, Moscow has been the primary target for retailers, but numerous domestic and international chains are now seeking to establish a presence in other large cities."

Of the four Russian locations mentioned in the report, three were in Moscow -- Tverskaya Ulitsa, Manezh Square ($3,000 per square meter per year) and Novy Arbat ($1,600).

St. Petersburg's most expensive street, Nevsky Prospekt, trailed far behind at a modest $550, slightly less than rents on Tallinn's Viru Street.

Opinions are split on whether rates on Tverskaya Ulitsa will continue to grow.

Rates may have already peaked, said Natalya Oreshina, retail property consultant at Stiles & Riabokobylko, the local affiliate of Cushman & Wakefield Healey & Baker.

"Existing rental rates are not supported by [an equally high] turnover at that location. Therefore we are seeing a high rotation of stores on Tverskaya," she said.

Other experts disagreed.

"As far as Tverskaya is concerned, we expect its rental rates to grow for at least two or three more years," said Yulia Nikulicheva, deputy director at Jones Lang LaSalle in Moscow.

She added that several deals recorded in 2004 -- including the recent lease of stores at 12 Tverskaya -- are already in the vicinity of $6,000 per square meter per year.

Although some rents jumped by 40 percent, the year-on-year average hike for the street was more in the vicinity of 10 percent, Nikulicheva said.

For many luxury brands it is a matter of principle to maintain a high profile in the capital, Nikulicheva said. "It is very important for major international brands to have a flagship store on Tverskaya."

Many retailers are even willing to endure losses as long as they occupy an exclusive location, said Maxim Gasiyev, retail director at Colliers International.

"Rental rates will likely continue growing, as the retail market continues to boom [and] no new shopping space is coming online along Tverskaya," Gasiyev said.

Tverskaya is by far the priciest street among former communist countries, with retail rents more than 50 percent higher than Prague's Wenceslas Square and nearly three times as much as Budapest's Vaci Utca, the study found.

The report is based on data collected in June 2004 by Cushman & Wakefield's offices and affiliates on 229 prime locations worldwide. Rental rates did not include service charges and local taxes.

The worldwide average of rents surveyed was $1,600 per square meter per year.

Most Expensive Shopping Streets by Country
'04'03CountryCityStreetAnnual rent per sq. meter
11United StatesNew York5th Avenue$10,226
22FranceParisChamps Elysees$7,648
33Hong KongHong KongCauseway Bay$6,126
44BritainLondonOxford Street$5,564
510IrelandDublinGrafton Street$4,103
85AustraliaSydneyPitt Street Mall$3,449
106South KoreaSeoulMyeongdong$3,241
1818Czech RepublicPragueWenceslas Square$2,190
2929HungaryBudapestVaci Utca$1,270
3637LithuaniaVilniusGediminas Avenue$924
4444EstoniaTallinnViru Street$602
Source: Cushman & Wakefield Healey & Baker