The key feature of H1 2013 was the real deficit of quality supply, according to a new report from CBRE Russia Industrial and Logistics Research. According to the report over 70% of the premises that are in the pipeline for H2 2013 are already pre-let or pre-sold.
During H1 2013 consumers preferred to lease rather than purchase warehouse premises. Take-up in H1 amounted to almost 450 thousand m², which is 7.5% lower compared to H1 2012. Though, demand exceeded supply by 1.8 times in H1 2013.
About 76% of the deals were based on pre-lease format. 23 % of the H1 delivery in 2013 was based on build-to-suit format. However take-up structure is likely to change in H2 2013. Demand will follow supply structure; share of BTS projects in the total new delivery will grow.
Demand structure by business sectors in H1 2013 did not change from the previous quarter. Traditionally, a group of leaders included retailers, which took 30% from the total take-up, and distributors (29%) and logistics companies (21%).
Completions in H1 2013 amounted to 250 thousand m² of Class A warehouse space that is 28% lower compared to the first half of 2012.
Just a few warehouse projects were put in operation in Q2 2013 among which are production warehouse complex Leshkovo, 14 km from MKAD on Novorizhskoe highway, and industrial park PNK-Vnukovo, 19 km from MKAD on Borovskoe highway.
Despite clear deficit of the vacant space rental rates remain stable within range of $125-140 per m² per annum (excluding VAT and operational expenses), and vacancy rate remains on the same level for a year in the range of 1,06%.
However, 720,000 m² of class A warehouses are to be delivered by the end of 2013 in the Moscow Region, and that is twice as much as was in H2 2012. Thus, the total amount of warehouse space to be delivered in 2013 will reach 970 thousand m², and will reach the highest level since 2007, when more than 1.5 mln m² of class A warehouse space were put into operation.
Vasiliy Grigoriev, Analyst of Industrial and Logistics Market, Research Department, CBRE in Russia, commented:
“Though new deliveries in the I&L segment are typical for a boom stage, nevertheless, market players are quite cautious and deliberate. Developers prefer BTS projects or construction for a known client, avoiding large speculative schemes. Tenants and purchasers of warehouses which rent space for own needs start negotiations 6-9 months in advance, to ensure that they will have warehouse space by the required date. Majority of the newly building space is absorbed already at the construction stage.
Supply gradually grows up to the demand levels. As a result, players both on the demand and supply sides are quite comfortable with the current market status-quo”.