Friday, 11 September 2026
Russia’s shopping-centre market is moving away from an era defined by continuous expansion. After decades in which developers added large amounts of modern retail space to Moscow, St Petersburg and major regional cities, the development pipeline has contracted sharply. The result is a market in which the future of existing shopping centres is becoming more important than the construction of new ones.
Only around 109,000 square metres of shopping-centre space was completed across Russia during the first half of 2026, according to industry estimates, roughly half the volume delivered during the same period a year earlier. Although additional projects are expected to open during the second half, total annual development is forecast to remain below 2025 levels. The change is about more than volume. The type of retail property being developed is also evolving, with large destination shopping centres becoming less prominent while smaller neighbourhood schemes and retail incorporated into residential or mixed-use developments account for a growing proportion of new projects.
In Moscow, much of the development scheduled for 2026 follows this smaller and more locally focused model. These centres are designed primarily to serve surrounding residential populations rather than attract consumers from across the metropolitan area. That represents a significant departure from the large regional malls that characterised earlier stages of Russia’s retail-property expansion. High construction costs, expensive financing and uncertainty surrounding retailer demand all make large speculative developments harder to justify. Building another major shopping centre requires confidence that enough retailers will commit to space and that consumer spending will support the project for many years. In the present environment, that calculation has become considerably more difficult.
For owners of existing shopping centres, however, reduced development does not automatically mean stronger performance. Less competition from new projects should theoretically protect established properties, but vacancy data during the first half of 2026 shows that the market is becoming more challenging rather than uniformly tighter. Vacancy in Moscow shopping centres increased during the period, with different market estimates placing availability above the levels recorded a year earlier. Further increases are possible during the remainder of 2026 as retailers continue reviewing their store networks and landlords compete for occupiers.
Rental conditions also demonstrate that the scarcity of new development has not yet translated into widespread pricing power for landlords. Retailers have become more selective about locations, store sizes and lease terms, particularly where existing centres cannot demonstrate sufficient customer traffic. This is creating a widening divide between successful shopping centres and properties that increasingly struggle to remain relevant.
The strongest centres have several advantages. Established locations can offer large catchment populations, proven consumer traffic and transport connections that would be expensive for a new competitor to reproduce. When few new shopping centres are being developed nearby, these characteristics become even more valuable. But age is becoming increasingly important. Many Russian shopping centres were developed during earlier waves of retail expansion and are now approaching the point at which cosmetic refurbishment may no longer be enough. Layouts designed around the shopping habits and tenant structures of ten or fifteen years ago do not necessarily correspond with the requirements of retailers and consumers in 2026.
The transformation of the tenant base since 2022 has accelerated that challenge. Domestic retailers have expanded into some locations previously occupied by international chains, while brands from other markets have entered selectively. Yet the replacement process has not produced a simple one-for-one substitution of former international tenants. Retailers are increasingly making decisions building by building. Successful centres can attract new concepts and encourage existing tenants to expand, while weaker centres may discover that even substantial rent incentives are insufficient to persuade retailers to occupy large units.
Fashion provides a good example. Clothing retailers remain an important source of leasing demand and accounted for a substantial proportion of new openings during the second quarter of 2026. At the same time, fashion has also been responsible for numerous store closures. The apparent contradiction reflects a sector in which retailers are simultaneously opening in stronger locations and withdrawing from weaker ones. For shopping-centre owners, this means tenant demand increasingly depends on asset quality rather than simply the availability of space.
The changing role of physical retail is also forcing landlords to reconsider what consumers expect from a shopping centre. A property consisting predominantly of shops is competing not only with other malls but also with online retail. Consumers require additional reasons to visit. Food and beverage concepts, entertainment, fitness, health services and other activities are consequently becoming more important. Food halls and restaurant areas can increase the amount of time customers spend within a property, while entertainment facilities can attract visitors who might otherwise have little reason to travel to a shopping centre.
For some assets, the transformation will require considerably more than replacing individual tenants. Large units may need to be subdivided, former department stores can require entirely new uses, and circulation areas, entrances and public spaces may need redesigning. Food, entertainment and leisure components can also require expensive changes to ventilation, servicing and building infrastructure. This creates a new capital requirement across the sector. During the expansion phase of Russian retail property, investment was largely directed towards acquiring land and constructing additional shopping centres. The next cycle could direct considerably more money into rebuilding and repositioning existing properties.
That change creates opportunities as well as risks. Owners of dominant malls may be able to strengthen their competitive positions precisely because fewer large projects are being developed. A well-located centre with strong traffic and an adaptable building can potentially capture retailers that would previously have considered new developments.
Neighbourhood centres may also prove resilient. Their dependence on supermarkets, pharmacies, services, restaurants and everyday consumer requirements provides a different demand profile from destination malls heavily exposed to discretionary spending. Smaller centres integrated into densely populated residential districts can therefore remain attractive even as the wider retail market changes.
The difficult segment could be the middle of the market: shopping centres that are too large to operate primarily as convenience destinations but insufficiently strong to function as dominant regional malls. These properties may require the greatest investment to remain competitive. Some will be capable of repositioning through new tenant mixes and refurbishment, while others may need more fundamental redevelopment.
Excess retail space can potentially accommodate fitness centres, medical facilities, educational uses, entertainment, offices or other commercial activities. Where planning and site conditions permit, parts of older shopping-centre properties could eventually be redeveloped for residential or mixed-use purposes. The value of some retail assets may therefore increasingly depend on their real-estate potential rather than their existing shopping-centre income alone. Investors assessing older malls will need to consider the land, location, transport connections and redevelopment possibilities alongside conventional measures such as occupancy and rental income.
This could reshape investment strategies. A fully occupied dominant mall may represent a relatively defensive income asset. An ageing centre with declining traffic could instead become a repositioning opportunity requiring substantial capital and active management. A poorly performing property on strategically located land might ultimately be more valuable as a redevelopment site than as a shopping centre.
Russia’s reduced development pipeline therefore does not mean that the retail-property market is becoming static. It could produce precisely the opposite effect. With fewer new centres being constructed, competition increasingly shifts inside the existing stock. Landlords must compete through refurbishment, tenant selection, entertainment, food, services and the overall quality of the customer experience rather than simply through adding more retail floor space.
The outcome is likely to be greater differentiation between assets. Strong centres can become stronger because competing supply is limited. Average properties will require investment to protect their positions, while weak malls risk falling further behind unless their owners are prepared to reconsider what the buildings should become.
Russia’s next retail-property cycle may consequently be defined less by how many shopping centres it builds than by how successfully it reinvents the hundreds already operating across the country. For investors, the opportunity is shifting with it: from financing expansion to identifying which existing properties possess the location, customer base and physical flexibility required for a second life.
Source: CIJ.World Research & Analysis Team
