Review of the commercial real estate market in Moscow for January-February 2011

Recommendation points

• General dynamics of the Moscow commercial real estate market
• In January, 110 thousand square meters were built in Moscow. m. of new office buildings
• Rent of offices in Moscow will continue to rise in price
• What awaits the commercial real estate market in 2011

The ongoing growth of the country’s economy and its recovery from the crisis have created favorable conditions for the recovery of domestic business. As a result, demand for commercial real estate is growing in Moscow. However, due to the reduction in new construction of office and retail space during the crisis, there is a significant shortage of space. As a result, in some segments there is an increase in prices and rental rates.

Discuss

• General dynamics of the Moscow commercial real estate market
• In January, 110 thousand square meters were built in Moscow. m. of new office buildings
• Rent of offices in Moscow will continue to rise in price
• What awaits the commercial real estate market in 2011

Igor Razzhivin. Theater passage in the evening. 2010

General dynamics of the Moscow commercial real estate market

According to analysts of the consulting company RRG in January 2011, no major changes occurred in the capital’s commercial real estate purchase and sale market. However, a number of long-term trends that emerged back in the 2nd half of 2010 were confirmed. Among the main trends, we note the high demand for retail space in the center of Moscow, rising prices in the office segment and a decrease in the level of vacant space in class A and B + offices..

The maximum share in the supply structure in January was still accounted for by office premises (48% of all commercial premises). 2nd place – production and storage facilities – 27%, then go – retail space – 16% and free premises – nine%.

A total of 1,099 properties worth $ 8.848 billion were put up for sale in the capital’s commercial real estate market in January, the total area of ​​which – 2106 thousand sq. m.

Experts noted in January a significant decrease in the supply of commercial real estate. Compared to December, in quantitative terms, the supply decreased by 16%, and in terms of total area – by 15%. This decrease was due to the large number of holidays, and the owners have only 2 last weeks of the month left to advertise their properties. If we compare it with the same period in 2010, then we can state that the supply remained practically at the same level..

The weighted average price in comparison with December 2010 increased in January by 3% and amounted to $ 4202 per sq.m. however, these changes are most likely associated with the fall in the US dollar by the same 3%.

In January 2011, the total supply of retail space in the center of the capital decreased by 15%, which is proportional to the total “holiday” decrease in the offered commercial real estate. Outside the Garden Ring, the decrease in supply by the number of properties in January was 13%.

Long-term price dynamics for the retail segment of the market remains quite stable.

Office space in January compared to December 2010 in the center increased by 4%, while outside the Garden Ring the price increased by 2%. Note that this market segment began to recover from the crisis much later than the trading one. However, at the moment there is a clear trend, characterized by a gradual rise in prices for office space in the capital. The volume of offers of offices by number in January decreased by 18% and by total area – by 16%.

Production and storage facilities Is the only type of commercial real estate on the market that is still stagnating. The volume of supply of these objects in January 2011 decreased by 26% in terms of quantity, and in terms of total area – by 14%. A total of 84 objects were offered on the capital market, with a total area of ​​855 thousand square meters. m.The price of industrial storage facilities also fell, the decrease was 4%.

As for February 2011, as of the 20th day of the current month, the volume of supply of objects on the Moscow commercial real estate market compared to the same period last month increased by 14.3% in quantitative terms, and the total area of ​​objects put on the market decreased by 5, 2%. A total of 865 commercial real estate objects with a total area of ​​1404 thousand square meters were offered for sale. worth $ 6 billion.

Alena Dergileva. New life of Old Arbat. 2007

The weighted average price in February decreased by 2.7% and amounted to $ 4089 per sq. m. In the structure of the commercial real estate market in the capital in terms of total area, the leading place is still held by office premises, whose market share was 59.2%. The second place is occupied by production and storage facilities, their share – 21.8%, share of retail space – 12.2%.

In terms of total cost, office space is also in the lead in the structure of the Moscow market (their share – 66.4%). Then comes the retail space? 18.1%, and the share of industrial and warehouse premises was? 8.3%.

In January, 110 thousand square meters were built in Moscow. m. of new office buildings

According to the international consulting company Cushman & Wakefield, in Moscow in January 2011, almost 110 thousand square meters were commissioned. m. of new class A and B office space.

At the same time, only one class “A” office building (“Prisma Business Center”) was built with an area of ​​10 thousand sq. M. So, the total volume of offered high-quality office real estate in the capital is currently 11.8 million square meters. m. According to the forecasts of the company’s analysts, despite the relatively high performance in January, by the end of 2011 the total volume of new construction is unlikely to exceed 600 thousand sq. m..

Let us recall that in 2010 in the Russian capital, almost 700 thousand square meters were built and commissioned. m. office buildings of class “A” and “B”. That is 60% less than in 2009. Consequently, there is a clear trend in the decline in the volume of office real estate construction. There are very few new projects. The construction of many facilities currently being commissioned began before the crisis. And the need for high-quality office space is only growing.

Vladimir Kachanov. Rain on Petrovka. 1981

According to analysts at Paul’s Yard in Moscow, the most demanded at the moment are office premises with “A” class finishing in the city center and traditionally popular districts – Southwest and West.

Rent of offices in Moscow will continue to rise in price

According to the forecasts of Alexey Bogdanov, director of the office real estate department and partner of S.A. Ricci / King Sturge, rental rates for Moscow offices of class A and B + will grow by about 4% every quarter. The analyst also said that due to the significantly increased demand for high-quality office space, rental rates in class B- will also grow, according to his forecasts, the growth will average 2% per quarter.

According to S.A. Ricci / King Sturge, since the beginning of 2011, rental rates for office space in the Russian capital have already increased by almost 15%. The most rapid growth in rental prices is observed for offices located in the Garden and Boulevard Ring zones. Average rental rates here are for class A offices – $ 700 per year per sq. m, class “B +” – $ 600 per year per sq. m. and in the area of ​​class “B-” – $ 420 per year per sq. m.

The rental rate for office buildings in the zone of the third transport ring, for class “A” objects is – $ 460 per year per sq. m, for objects of class “B +”, “B-” – respectively $ 350 and $ 230 per year per sq. m. Within the Moscow Ring Road, rental rates for offices of classes “A”, “B +”, “B-” were respectively $ 400, $ 360 and $ 190 per year per sq. m. m.

Note that the current rental prices for office space in Moscow have already reached the level of spring 2009, when prices were still far from the collapse. And the general upward trend in prices continues. According to Denis Kolokolnikov, General Director of the RRG consulting agency, the gap between the cost of office space in the center and on the outskirts of Moscow not only reached, but also exceeded the pre-crisis period, when objects in the center of the capital were twice as expensive or more. According to the expert, now there is a difference of more than 135%. During the lows, the price gap was only 90%. This is confirmed by the significant growth in demand for office space in the center due to the limited potential for the growth of new space..

Apollinary Vasnetsov. Old Moscow. 17th century town square

In 2011, according to the forecasts of S.A. Ricci / King Sturge, the number of sales and lease transactions will increase, as well as the number of lease renegotiation transactions will decrease. In addition, the average volume of leased office space will grow. The most active participants in the market will be companies from the banking, industrial and financial sectors. The large number of current purchase and sale and lease transactions with the participation of large industrial enterprises makes it possible to continue the current trend.

In 2011, according to experts, such large Russian banks as Sberbank of Russia, Rosselkhozbank and Raiffeisen Bank are considering the possibility of acquiring / leasing new office real estate in the capital. Some industrial companies also do not exclude the possibility of renting or purchasing new office space..

What awaits the commercial real estate market in 2011

In 2011, the trends outlined last year will continue. The crisis is gradually losing ground, so that the demand in the commercial real estate market is likely to intensify. It is likely that there will be a shortage of vacant space and, as a result, prices and rental rates in some market segments will rise..

Rental rates for high-quality office properties can grow by 10-15% during the year. At the same time, the rent of retail space is unlikely to rise in price. This is due to the significant volume of commissioning of new shopping centers.

In general, the balance of supply and demand will be observed, as has already been said, demand will grow, but it will not return to the pre-crisis level in 2011.

A small share of new good quality real estate properties appearing on the market in all market segments will be in demand first of all, these areas will be quickly acquired and filled by tenants.

A forced interruption in the construction of new premises during the crisis may lead to the fact that the market may face a shortage of premises in some market segments.

In general, it can be noted that in 2011 the capital’s commercial real estate market will gradually continue to reach the pre-crisis level of prices and supply in almost all segments.

The investment market is also forecast to recover. Both property owners and potential buyers will become more active and willing to compromise. As a result, an increase in investment projects in the commercial real estate market is likely..