Retail floorspace supply accelerates and Tbilisi remains Georgia’s primary contributor,- says the report prepared by the global real estate service company’s local representation Colliers International Georgia together with Enterprise Georgia.
In 2017, the total volume of retail floorspace in Tbilisi, Batumi, and Kutaisi amounted to 1.42 million sq m, reflecting a 12% increase when compared to 2016. The largest portion (79%) is found in the capital city. Though still dominated by bazaars, modern shopping centers continue to increase their share of the market year-over-year (y-o-y). According to the project pipeline, by the end of 2019, modern shopping center floorspace will exceed that of bazaars.
The grand opening of the much-anticipated Galleria Tbilisi shopping center accounted for an additional 25 K sq m of space. Located in the heart of the city, the shopping center offers variety choice of entertainment and leisure activities, such as cinema, bowling, food courts and fashion stores. The number of specialized shopping centers also rose by 110,000 sq m, due in large part to the opening of Tbilisi Sea Plaza.
Batumi also experienced an increase in retail supply in the middle of the year, with the opening of Black Sea Mall and Metro City Forum which added another 20 K sq m total of modern shopping center floorspace. In contrast with Tbilisi and Batumi, Kutaisi’s retail floorspace remained unchanged.
In 2017, net take-up on Tbilisi’s retail market amounted to approximately 54,000 sq m, reflecting a 35% increase as compared to the previous year. This uptick was caused primarily by the opening of Galleria Tbilisi and the expansion of several brands. The fashion category holds the vast majority of the occupied area (31%), represented with new entrants such as H&M, CK Jeans, Lacosté, Trussardi, Karl Lagerfeld, Guess, and Armani Exchange. Expansion of the local DIY brand Gorgia accounted for an additional 8 K sq m in Gldani Plaza and City Mall Gldani.
Batumi has seen a massive 12 K sq m absorption of retail area in modern shopping centres. The brand Carrefour opened their first location, while Goodwill opened a second branch. Before 2016, McDonald’s was the only international fast food retailer, but in 2017, several popular chains opened for business including Subway, Wendy’s, Dunkin’ Donuts, and Burger King.
Increasing supply has affected performance indicators. In 2017, weighted average rents fell slightly when compared to 2016. In modern shopping centers, the figure dropped to USD 14.6, and on high streets it fell to USD 28.7, due in large part to an increase in competition and large-scale absorption. On high streets, vacancy rates experienced a positive trend in Tbilisi and Kutaisi, while in Batumi there was an insignificant increase.