CBRE, the world's largest commercial real estate services firm announced that Ernst & Young (CIS) B.V. had chosen the location of its headquarters in Moscow under the long-term lease agreement till 2023. CBRE represented the tenant in this deal. The office of the major international audit and consultancy firm will continue to develop its business in office complex Avrora Business Park where the company has been located since 2003.
Several agreements were signed including a lease extension and a gradual guaranteed expansion to almost 30,000 m² that Ernst & Young will occupy over 10 years.
The main objective for CBRE, the consultant of this deal, was evaluation of market options relevant to the client's criteria, with a long-term solution of a gradual expansion within 10 years period. Ernst & Young requirements in office space are expected to grow 1.5 times by 2014 and only a few office centers in Moscow fit the client's need. Moreover the majority of current office supply is still under construction, which adds some risk for the company in current economic environment. During the process of negotiations the developer of this office complex, Forum Properties (the current landlord for Ernst & Young) proposed the solution that completely fits client's needs, in terms of modernization of the office space that is currently occupied by the tenant as well as the opportunities for the further expansion.
Avrova Business Park is located in the center of Moscow in the prestigious business district of Zamoskvorechie, overlooking Sadovnicheskaya embankment. Ernst & Young is not the only tenant of this business complex. Other tenants are Deutsche Bank, Novartis, GE Money Bank. Total rentable area of the complex is currently about 52,000 m². The complex has been constructed in phases: the first two phases were completed in 2002 and 2006 respectively. The third phase is under construction now and expected to be completed in 2014-2015.
After the completion of the construction Ernst & Young will occupy almost half of the office complex Avrora Business Park. This deal is one of the largest class-A lease deals on the Moscow office market completed in 2011. For Forum Properties this large-scale deal is the second after the deal when Hermitage Plaza business complex of almost 32,000 m² was leased to Vympelcom. CBRE also represented the tenant in that deal.
Anna Andreeva, Administrative director of Ernst & Young (CIS) B.V. in CIS, comments on the deal: "The signed deal is the result of hard analytical work of Ernst & Young and CBRE teams. It was critical for our company to find a solution that reflects the requirements of our growing business which can support the long-term company growth. The final decision for Avrora Business Park was made particularly due to landlord's precise understanding of our key interests. As a result there was an integrated solution that included modernization of the current office space, occupied by Ernst & Young, as well as well-balanced approach to our further growth."
Elena Efremova, Director, Head of Corporate Services, CBRE in Russia, comments: "This deal was extremely challenging in terms of structure and timing when it was signed. The negotiation of commercial terms took almost 8 months and during all this time the rental rates were constantly growing. Nevertheless the signed agreement proves that the negotiated terms were accurately forecasted by the moment when the Letter of Intent was signed, and both the tenant and the landlord were totally satisfied with the result."
Sergey Voronin, Chief Executive Officer, Forum Properties, said: "From the point of the landlord, the bigger the client is, his requirements are much more strict, his team is more experienced and it is much harder to reach the agreement that satisfies the both parties. So it should be mentioned that it is pleasant to understand that by the time when the basic terms of the 10-years lease agreement were negotiated, the working process on the agreements was held by the one joint team of the landlord, the tenant and the c