The ICSC Blog

Viva Las Vegas, Russian-style

By Bennett Voyles

Only a few decades ago, the odds against a Las Vegas–themed mega-mall opening up in Moscow, formerly the capital of world communism, would have been long indeed. But the idea has hit the jackpot among today’s Muscovites. The 1.4 million-square-foot Vegas mall, opened in 2010, now draws at least 50,000 visitors per day on weekdays and some 80,000 on weekends, proving to be a favorite destination in increasingly affluent Moscow. Vegas’ developer is Crocus Group, whose owner is Azerbaijan-born billionaire Aras Agalarov.

The mall nearly won an ICSC award for best new extra-large European center last year, losing out to sleek, new British giant Westfield London. Still, the nomination — a first for a Russian mall — was a big step for the Moscow market, as it brought Vegas “to the world of professional players,” according to Natalia Oreshina, owner of Art Properties, a leasing agent for Vegas. “We are competing with the best centers in the world.”

Among the Vegas amenities are some amusement park rides, including a 45-foot-high indoor Ferris wheel, plus themed shopping areas such as a Turkish-style bazaar, complete with carpets and street food. Perhaps the most unusual themed area is called Ginza Street: a simulation of the pulsating neon nightscape of downtown Tokyo.

Vegas is fully leased and home to a variety of global names, including Auchan, Gap, Next, Victoria’s Secret and Zara. Now Crocus wants to double down on the Vegas theme. Agalarov’s plans include opening two more Las Vegas–themed malls over the next two years, both of those in the Moscow metro area as well. Crocus has raised at least $928 million to proceed with development on those, according to published reports. If the Russian economy stays healthy, Crocus may not need much more luck pulling this off. Russian wages are rising rapidly — up 10 percent in the first eight months of 2012 alone — and not only for the top 1 percent: The number of those considered poor has fallen to 17.7 million from 21.1 million a year before, according to government data.

The news may be better still in Moscow proper, where income is roughly twice the national average, according to The World Bank. At roughly $20,000 per capita on average now, Moscow incomes now approach the levels of southern Europe. Best of all, only 0.6 percent of the work force in this city of 11 million is unemployed, the lowest number in two decades. And Moscow still has only about 2,700 square feet of shopping space per 1,000 inhabitants, in contrast to the roughly 4,000 square feet in Amsterdam and Berlin, according to Jones Lang LaSalle.
Other high rollers could split the Crocus pot, of course. A number of developers have aggressive expansion plans, according to Anton Korotaev, Moscow-based head of Russia-region retail consulting for Jones Lang LaSalle. Among the megamalls scheduled to open over the next two years are the 2.4 million-square-foot Avia Park and the 7 million-square-foot Galaktika Park leisure-shopping complex.

But with the Moscow vacancy rate at about 3 percent and rents running some $400 per square foot for small shops, according to Jones Lang LaSalle data, Crocus isn’t exactly seeing snake eyes.

Comments are closed.