The key features of 2012 were the minimal levels of vacancy, continuing deficit of quality supply and as a result high level of prime rents, according to a new report from CBRE Russia Industrial and Logistics Research.
Over 2012, demand for logistics space in the Moscow region showed strong growth. The total volume of space on which deals were signed last year, exceeded the volume of annual construction by more than 30%. Demand significantly exceeds supply and currently about 40% of space under construction have already been sold or leased based on contracts signed last year.
Over 2012, tenants and buyers signed leases and purchase agreements for a total of 912,000 m².
A fairly significant part (about 20%) of the delivery in 2012 was based on built-to-suit format. The largest properties, that were implemented in such a way, included, among others, warehouses, built for Adidas (65,000 m²), National Computer Corporation (total area 58,000 m²), and CentrObuv (49,000 m²).
The Retail sector took over 45% of warehouse space in the Moscow region. Both large western companies present on the Russian market and local retail players were operating successfully in this segment.
The volume of new delivery in Q4 2012 went down 9% to 163,000 m² versus Q4 2011. There were only two projects opened in Q4 2012: Infrastroy Bykovo, bld P, 19 km from MKAD on Novoryazanskoe highway, and PNK-Vnukovo, blds 8,9, 19 km from MKAD on Borovskoe highway. Overall in 2012, 697,000 m² of Class A warehouse space were delivered in the Moscow region, which is equivalent to 96% of the new construction in both 2010 and 2011.
Though warehouse space supply is far behind demand at the moment, more than 40% of space in the construction stage is already pre-let or pre-sold. Vacancy is at the minimal level of around 1%. Just to compare at the end of 2009 it was approximately 16.9%.
Strong take-up combined with a limited number of completions reflects on the prime rental rate.
Prime rents, which in Q2 reached $140 per m² annum (excluding VAT and operating costs), continue to keep this level during the past nine months. Therefore, despite the fact that Moscow is already in top-10 of the most expensive logistics markets some upward pressure on rental rates is expected in 2013.
Summarizing the above mentioned factors, at the moment, the Moscow region warehouse market is one of the most attractive segments for developers regardless of their chosen strategy. Development of the retail sector is going on actively and there is still a significant deficit of quality warehouse space in the capital region, which offers great opportunities for all market players.
More than 1.5 million m² of Class A warehouse construction has been announced for 2013, which is more than double the total new supply for 2012. The volume of new construction may reach its maximum level in 2013. According to the latest report by CBRE, developers will mostly be working in the northern part of the Moscow region, where last year there was the biggest deficit of warehouse space. The southern part of Moscow region will also be in demand.
Confirmed by the latest trends specified in the report the demand for high quality warehouse spaces will continue to grow. Approximately one million m² of logistic space will be leased or bought in 2013, according to the new figures released by CBRE.