Review of the commercial real estate market in St. Petersburg at the beginning of March 2011

Review of the commercial real estate market in St. Petersburg
Luigi Premazzi. Neva embankment near the Admiralty. 1876

To draw a real picture in this segment, there is not enough reliable information on the size of investments, because most transactions in the commercial real estate market are non-public and closed. According to the estimates of consulting companies, the volume of transactions in 2010 was from 400 to 500 million dollars, for comparison – in 2008 this figure was close to 1 billion dollars.

In the first months of 2011, some activity was noticed and real estate specialists talk about an increase in interest in large commercial properties, warehouses, office buildings and industrial premises, which means that there are prerequisites for an increase in the number of transactions and investment volumes. The receipt of new applications for the purchase and long-term lease of commercial premises inspires hope, and specialists from large St. Petersburg real estate agencies predict “hot” spring and summer 2011 on the business real estate market.

Retail space in the Northern Capital is in stable demand in the city center and in various districts of St. Petersburg. Large investment companies and trading concerns are constantly expanding the scope of their activities by opening new shopping centers, thereby balancing supply and demand for retail space. Some retail chains disappeared forever during the crisis years, others, for example, Lenta, Pyaterochka, O’KEY, Maksidom, Karusel, IKEA, TechnoShok, Perekrestok, Eldorado and others occupy a solid place and huge areas in all districts of St. Petersburg. Retail spaces in residential buildings and shopping centers located in the city’s central districts are gradually filling up. It should be noted that some commercial premises of universal purpose, for example, on Bolshoy Prospekt of Petrogradskaya Storona and Vasilyevsky Island, stood idle and were not used for a very long period for objective economic reasons..

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Most private and small entrepreneurs are looking for small premises to open shops, beauty salons, and other service businesses.

It is no secret that the demand for commercial premises in new houses can serve as a kind of indicator that “informs” the general mood in the real estate market as a whole. In February 2011, real estate experts noted an increase in the number of purchase and sale transactions and the activity of tenants in the Primorsky, Moskovsky, Frunzensky, Leninsky districts, where new houses are being regularly rented out and new business centers are being commissioned.

However, there is still an increased demand for premises of a small area for offices, small retail outlets, beauty salons, catering establishments, public services.

The publication reports that most of private and small entrepreneurs are looking for small premises to open shops, beauty salons, other service businesses and they make up 49% of the total. Buildings and non-residential premises are viewed for offices by 23%, the remaining 28% – leave applications for warehouse and industrial warehouse premises.

Vasily Ivanovich Surikov. Evening in St. Petersburg. 1871

If we compare the cost of small commercial premises in different parts of the city, we get the following picture:

  • Tsentralny district, intersection of Nevsky prospect and Mayakovsky street, a universal premises of 44 sq.m. is sold at a price of 1 sq.m. / 145,000 rubles.
  • Nevsky district, Metro “Prospect Bolshevikov”, premises in a new residential complex ranging from 70 to 300 square meters is offered at a price of 1 square meter / 99,000 rubles.
  • Krasnoselsky district, metro station “Prospect Veterans”, office space on the first floor of a residential building with an area of ​​100 to 400 sq.m. sold at a price of 1 sq. m / 78,000 rubles (commissioning of the object in 2012).
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Renting a retail and office space from 50 to 100 sq. M will cost an employer in the central districts of St. Petersburg from 1,500 rubles per sq. M, and in other districts – from 700-1,000 rubles per sq. M. subject to renting an area of ​​more than 100 sq.m. The most expensive rental of non-residential premises is observed in Vyborgsky and Frunzensky districts, the lowest – in Kirovsky and Krasnoselsky districts. Of course, these are general figures, there are objective reasons for increasing and decreasing the cost of renting commercial premises: lease period, prepayment, condition of the premises, technical characteristics of the building and others..

Shalaev Alexey. Nevsky Prospect. 2006

Another category of commercial real estate: warehouse or administrative and warehouse premises, which are offered in different areas of the city and at different prices. During the first months of 2011 in the commercial real estate market of St. Petersburg there appeared very attractive proposals in terms of cost, which quickly found new owners and tenants, because in this segment, demand outstrips supply. The cost of such premises consists of the total area, the availability of access roads, the city district, the existing communications and the adjacent land plot.

It should be emphasized that new construction and the continuation of construction work on objects that were “frozen” during the economic crisis in the segment of office and retail real estate have a significant impact on the commercial real estate market of St. Petersburg. Professionals predict that foreign investors will return to the St. Petersburg real estate market, assess the prospect of profitability from investing in Russian real estate and see real changes in many areas of Russian reality, in particular – in the construction of new shopping galleries, centers, mega shopping malls.

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A special category is Free Standing Buildings (SPBs), which are ideal for housing banks, office / administrative buildings, representative offices, medical centers and private educational institutions. St. Petersburg realtors continue painstaking work to find such objects, many years of resettlement of residents, transfer of areas to the category of non-residential real estate in order to ensure a constant demand for NEOs, and residents – comfortable housing in well-maintained areas.

Spring is a favorable time not only for the awakening of nature in the Russian open spaces, but also for all St. Petersburg real estate, which is experiencing new interest from potential investors for the benefit of the city and the country..

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