C&W To Market All IKEA Mega Malls In Russia

3 Jun, 2005, Moscow

Swedish retailer IKEA has instructed Cushman & Wakefield Stiles & Riabokobylko, the Russian arm of property consultant Cushman & Wakefield Healey & Baker [C&W/H&B]as exclusive marketing agent for all its new Mega malls in Russia.

IKEA is planning to construct four new shopping centers in Russia in 2005-2006 with a total area of more than 500,000 sq m. They will be constructed in St Petersburg, Nizhniy Novgorod, Ekaterinburg (Siberia) and in the south-eastern Moscow suburb of Kotelniki, on the Moscow Ring Road, or MKAD.

Such a massive regional expansion by a Western developer is unprecedented in Russia. Each of the new Mega malls will comprise about 100,000 sq m of total area. They all have the same concept and almost identical floor plans. Anchor tenants are also similar and will include an IKEA store, hypermarket, DIY store, electrical goods store and a department store. An entertainment component is planned to be included into some of the new Mega malls in future.

The announcement of the four new Mega malls follows on from IKEA's first regional Mega project, in Kazan, the capital of Tatarstan. The mall, with 110,000 sq m of total floorspace, will open its doors by the end of 2005 and is 100 per cent pre-leased. The concept of this project is different from the first two Mega malls in Moscow. Although it presupposes the same elements, the floorspace was reduced according to the requirements of a narrower market.

The experience of Kazan has shown that it is the formula that will work for IKEA's projects of regional expansion in St Petersburg, Nizhny Novgorod and Ekaterinburg as well. The third Moscow Mega will follow the model developed of the malls in the Russian regions rather than that of IKEA's two first shopping centers in Moscow, Mega I and Mega II.

Cushman & Wakefield Stiles & Riabokobylko (then Stiles & Riabokobylko) began its relationship with IKEA in 1998, when the firm was asked to do market research to determine market capacity and potential retailers for the first Mega mall.

Natalia Oreshina, C&W/S&R's Retail Director, recalls: "The initial plan envisioned a large retail park with several big box stores and a relatively small gallery, similar to developments of IKEA in the rest of Europe. However, the market suggested that Moscow would support a different model."

To develop the model, Stiles & Riabokobylko, with the support of C&W/H&B, organised site tours and meetings with the shopping center managers of the most interesting developments in Europe. "As the result of the tours," Natalia continues, "IKEA came to the conclusion that the format of the center should be a super-regional mall, because the city of Moscow with a 12-million population required a 'first, biggest and best formula'."

IKEA's second shopping center in Russia, Mega II, broke the records already set by the Swedish retailer's first development in southwest Moscow. Mega I, with 180,000 sq m of total floorspace, makes it the largest shopping center in Russia and in Central Europe. After one year, the customer attendance of the first mall in Moscow reached 35 million annually, and the success of the center and the format were clear and IKEA embarked on plans for a new Mega mall in the north of Moscow, next to its existing IKEA store. Most of the retail space at Mega II was leased in less than three months.

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