The Transformation of Street Retail in 2026–2027: Trends and Investment Strategies
For investors, understanding these structural shifts is of critical importance: strategies that proved effective five years ago may today yield loss-making assets. Conversely, formats once regarded as niche now demonstrate impressive growth momentum and resilience. Ashtons International Realty, actively involved in supporting investments in Moscow's retail and commercial real estate, presents an in-depth review of the key trends and investment opportunities shaping this evolving landscape.
The Crisis of Large-Format Retail
Systemic Challenges
Traditional shopping centres are facing a complex, systemic crisis. National average vacancy rates have reached 18%, while certain second-tier malls are seeing figures well above 25%. Sales volumes in large shopping centres have declined by 12%, whereas local-format retail has grown by 30%. The pace of new openings — 30 to 40 brands per year — is insufficient to offset the volume of vacated retail space.
Structural Pressure Factors
The crisis stems from a convergence of factors. Competition from online marketplaces: Wildberries, Ozon, and Yandex Market are capturing an ever-larger share of the retail market, offering a breadth of assortment that no physical store can realistically match. Falling consumer activity: economic uncertainty is curtailing discretionary spending. The VAT increase in 2026 is placing additional pressure on retailer margins. The labour shortage is driving up payroll costs while simultaneously lowering service quality. Rising logistics and utility costs further compound the financial strain on operators.
We advise our clients against investing in large shopping centres with outdated concepts and declining footfall. The associated risks substantially outweigh the potential returns. The future belongs to neighbourhood formats and hybrid spaces.
The Hybridisation of Retail Spaces
A New Concept of the Shopping Centre
A defining trend is the transformation of shopping centres into multifunctional destinations. The emphasis is shifting away from pure retail towards the creation of a comfortable environment — a place where people come for experiences, social interaction, and services.
Emerging formats within shopping centres include: coworking and business spaces designed for freelancers and remote professionals; gastronomic clusters featuring signature cuisine in place of conventional food courts; wellness zones encompassing fitness studios, spas, yoga centres, and health facilities; entertainment spaces such as next-generation cinemas, trampoline parks, and educational centres; and service functions including marketplace pickup points, electronics repair, and beauty services.
Fitness as the New Anchor Tenant
A telling case study is DDX Fitness, which expanded rapidly from 65 to more than 140 clubs within a single year. Average daily attendance at a 2,000-square-metre facility exceeds 1,500 visits. Fitness clubs are emerging as resilient anchor tenants: they successfully occupy challenging floor plans, generate consistent footfall, and create synergy for neighbouring tenants.
Neighbourhood Formats: The Macro Trend of the Decade
The Rise of Convenience Retail
Neighbourhood shops now account for 45% of retail turnover, and this share continues to expand. The reasons are self-evident: minimising travel time — consumers are no longer willing to make the journey to a large shopping centre for purchases available within walking distance; everyday necessity — routine daily needs generate stable footfall; and integrated offering — shopping, services, cafés, and pharmacies converge in a single location.
Forecast for 2026: the supply of small formats is set to grow by 170%, while new construction of large projects will contract by 70%.
Retail in Residential Developments
One of the most resilient and predictable segments involves commercial premises on the ground floors of residential complexes with high population density. Developers are deliberately allocating ground floors to retail zones featuring separate entrances and expanded glazing.
The advantages for investors are substantial: guaranteed pedestrian traffic from residents of the complex; limited competition, as tenants serve their own local micro-district; minimal vacancy in complexes with occupancy rates above 70%; and predictable rental yields of 8 to 12% per annum.
Commercial premises in new residential developments represent our principal recommendation for investors in retail real estate. However, making the right selection requires expertise: population density, transport accessibility, and tenant mix all play decisive roles. We evaluate each location against more than twenty parameters.
Technological Integration
The Omnichannel Model
Online retailers are expanding into offline channels on a substantial scale: showrooms with limited assortments serve as venues for tactile product discovery; pickup points located within retail spaces function as generators of additional footfall; and the omnichannel model — order online, try on and collect offline — is becoming the industry standard.
AI and VR in Retail
The retail industry is integrating advanced technologies: artificial intelligence for personalising offers and managing inventory; VR and AR for virtual fitting experiences; and analytics platforms that forecast demand using big data.
The Evolution of Lease Relationships
Landlords are demonstrating increased flexibility. We are seeing rental rate stagnation or downward correction (excluding the premium segment), discounts offered to new tenants alongside reduced indexation, the adoption of step rent arrangements involving gradual rent increases, and the growing use of turnover-based models in which tenants pay a percentage of revenue.
Rental rates in the retail galleries of Moscow shopping centres stand at approximately 180,000 rubles per square metre per year, while anchor tenants pay around 50,000 rubles.
Tenant Rotation
The year 2026 is expected to bring a large-scale reshuffling of tenants: the closure of underperforming outlets, optimisation by major retailers, the departure of outdated formats from the fashion segment, and the continued expansion of local and national brands. Market activity is increasingly shifting towards the value segment and small- to mid-sized shopping centres characterised by strong pedestrian flows.
Investment Recommendations
Large shopping centres: the outlook is unfavourable, with vacancy rates of 18% and above — our recommendation is to avoid this segment. Neighbourhood shopping centres: steady growth, with supply expanding by 170% — we recommend investing. Retail in residential complexes: stable growth and yields of 8 to 12% per annum — we recommend investing. Hybrid spaces: high potential, though success requires specialised expertise. Service-oriented premises: growing demand, suitable for selective investments.
Forecast for 2027–2028
Over the medium term, we anticipate government regulation of online marketplaces, which may serve as a form of support for offline retail. The transformation towards a hybrid shopping centre model will reach completion, and rental rates will stabilise at a new equilibrium level.
The transformation of the retail sector represents a window of opportunity for well-informed investors. Ashtons International Realty provides comprehensive retail real estate analytics: location assessment, rental potential evaluation, transaction structuring, tenant selection, and asset management.
