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Retail market overview | 2020

1.

Updated: February 14, 2021

In 2020, the weighted average (WA) rental rates reduced on main high streets. The WA rent on Pekini Street decreased by 9% and stands at USD 32.6 per sq m, while on Aghmashenebeli and Chavchavadze avenues declined by 5% and 3%, amounting to USD 24.4 and USD 29 per sq m, respectively.

The weighted average rent on Rustaveli Avenue increased by 6%.

Weighted Average Rent on High Streets (USD, sq m, net of VAT), 2019-2020
2019
2020

2.

Updated: February 14, 2021

The vacancy rate significantly increased on high streets.

The vacancy rate on Aghmashenebeli Avenue increased from 10% to 16%. At the end of 2019, the figure stood at 5% on Rustaveli avenue, increasing up to 13% as of 2020. Pekini street also saw a growth, from 7% to 9%.

Insignificant change has been recorded on Chavchavadze Avenue.

Vacancy Rate on High Streets (%), 2019-2020
2019
2020

3.

Updated: February 14, 2021

The weighted average rent of new contracts signed during the pandemic is 36% lower than the weighted average rent in 2019. The figure experienced a dramatic 50% fall on Aghmashenebeli avenue, from USD 25.8 per sq m to USD 12.8 per sq m. A prominent 40% decline was observed on Rustaveli Avenue, standing at USD 19.6 per sq m. Pekini street saw a massive 38% decline, while the WAR has decreased only by 3% on Chavchavadze Avenue.

The weighted average rent of new/renewal contracts in 2020 (Apr-Dec) vs. the weighted average rent in 2019
2019
2020

4.

Updated: February 14, 2021

In 2020, 169 tenants exited from Tbilisi high streets, with the total area of 11,385 sq m. 57% of this space (6,532 sq m) was located on Chavchavadze and Aghmashenebeli avenues. Dunkin’ Donuts, Finca Bank, Ovs Kids, Parfois, Flo are among tenants who closed a branch on high streets in Tbilisi. It is noteworthy, that not all of them were closed due to the pandemic.

The number of units and the total area of tenants exiting Tbilisi high streets in 2020 (unit, sqm)
Area
Units

Expectations and opportunities

Development of online shopping in the short and mid-term will help retailers to reduce losses, and investing in this direction may be justified. However, the development of e-commerce services in Georgia remains a challenge.
It is likely that the current business model will change, and the concept of fixed payment will partially and temporarily disappear. In order to keep tenants, landlords should work towards establishing more flexible lease terms and fixing rental rates to turnover.
The vacancy rate of street retail is expected to increase if the lockdown is extended. The social distancing culture will likely be maintained, and, therefore, there will be a demand to work in isolated spaces. Some part of vacating street retail spaces city-wide, and offering those spaces as flexible co-working areas, is a possible solution for this purpose.
Fitness operators have the opportunity to move to open spaces. With the support of the municipality and the relevant infrastructure, fitness operators can partially shift their activities to open areas.