Cushman & Wakefield, the world's largest privately-held commercial real estate services firm, today announced preliminary results for the office sector in Moscow. According to Cushman & Wakefield, Research, the Moscow office market has remained stable for two consecutive years.
Despite the negative influence of the macroeconomic trends, the office market in 2012 experienced high demand, good supply and stable office rents. "The market is changing at a structural level" according to Lada Belaychuk Deputy Head of Research at Cushman & Wakefield, Russia.
New office development is keeping to a similar pace to 2011, with more than 50 office buildings with total area of 650,000 m² being completed. More than 1.8 mln m² of office space is be to delivered in 2013, but according to Cushman & Wakefield the real forecast delivery in 2013 will not exceed 600,000 m². About 70% of projects that are announced to be delivered in 2013 will actually be constructed and but not start operation next year.
Moscow City Business District will increase its share of the Moscow stock 8 out of 10 the largest (with a total area of 50,000+ m²) office buildings planned for delivery in 2013 in Moscow are situated in Moscow City or in close proximity. Projects in Moscow City account for almost 40% of stock to be delivered in 2013, among them Eurasia Tower (92,000 m² of leasable area) and Mercury Tower (87,600 m² of leasable area). Another landmark office complex to be delivered in 2013 is White Gardens (leasable area of 63,000 m² in two buildings) in the Belaruskiy submarket.
According to Cushman & Wakefield forecasts, more than 2 mln m² of office space will be leased in Moscow in 2012. The market experienced tenant activity slowing down in the fall, that has influenced the overall year results. Still, this figure slightly exceed, the results of 2011 when 1,95 mln m² of offices has been leased or sold.
"Tenants are thinking short term, and are mainly interested in ready to move solutions, - comments Mikhail Mindlin, Head of the Office Group at Cushman & Wakefield if the macroeconomic trends will turn negative, tenant demand will shrink considerably. But bearing in mind positive economic forecast for Russia in 2013 we expect the same level of demand, but only subject to a positive economic situation."
This year structure of demand has not changed dramatically with bank and finance sector being most active. IT and Pharmaceutical follow the lead.
Stable office rents positively influence the office market. The average class A office rent equals $790 m² per year (VAT and OPEX excluded), growing 5% per annum ($750 in 2011). The growth of class A rents could be explained not only by an increase of asking rents, but leasing of less expensive options. As an example, at the beginning of the year but building have could find offers for less than $800, but by the end of the year this offers has been let and office space is offered for more than $800 for m² Average Class B office rent was stable throughout the year and equals $450.
"The Moscow office market is in dynamic balance of demand and supply. Moscow still lacks high quality buildings that are not only convenient for business but possess such qualities as architectural excellence and integration into urban the environment. We believe that 2013 will open doors to such projects that will be delivered next year" comments Lada Belaychuk, deputy head of research at Cushman & Wakefield.
Source: Cushman & Wakefield