According to JLL, warehouse take-up in Moscow region amounted to 362,000 m² in Q3 2017, 54% above the level in the same period of last year. The year-to-date take-up totalled 864,000 m², 26% higher than in 9M 2016.
More than half of Q3 2017 take-up was formed by the two record transactions with e-commerce retailers. Utkonos bought 70,000 m² in Logopark Sever - 2 and Wildberries signed a built-to-suit distribution centre contract with A Plus Development for over 145,000 m². In addition, an e-tailer Gala-Centre leased 23,000 m² in Tomilino.
“Large deals of online retailers on the warehouse market is the sign of a new stage in the development of this sub-segment,” says Oksana Kopylova, Head of Retail and Warehouse Research, JLL, Russia & CIS. “The size of these transactions reflects the importance of scale in e-commerce. Minimizing logistics costs per order is essential, and the best way to achieve this is to maximize the size of the distribution centre. The deals mark a new level of competition in Russian e-commerce; until recently, a typical online retailer deal was 5,000-10,000 m².”
Another active business sector in 9M 2017 has been manufacturing companies (24%), which also prefer long-term solutions and value an opportunity for the construction of customised buildings, both logistic and industrial.
“We are seeing a trend for business consolidation. Although this process is most noticeable in retail, the optimization of logistics and the tendency to increase the size of warehouses can be traced in all segments. In turn, this generates large warehouse deals, over 50,000 m²,” observes Viacheslav Kholopov, Regional Director. Head of Warehouse & Industrial Department, JLL. “We expect that 400,000-500,000 m² space will be absorbed until the end of the year. As a result, the annual take-up will reach 1.3-1.4 m m².”
The amount of commissioning for warehouse space in the Moscow region in Q3 2017 approximated to 35,400 m². Only two properties entered the market, one in Logopark Dmitrov (25,600 m²) and the other in the Logopark Sever – 2 (9,800 m²). Thus, 9M 2017 warehouse completions amounted to 235,000 m², which is 74% less than in January-September 2016.
"Despite this decline, the developers' activity in the warehouse market can be characterized as stable. About 458,000 m² are scheduled for delivery in Q4, which will bring the annual figure to 700,000 m². Although this will be 35% lower than in 2016, the number is high if compared to the large volume of available vacant premises,” comments Viacheslav Kholopov. “In addition, two large developers announced new projects that will maintain active construction in the near future. PNK Group has declared two new industrial parks, PNK Park Zhukovsky (500,000 m²) and PNK Park Novaya Riga (300,000 m²), while Logopark Development plans to launch the construction of Logopark Zapad (400,000 m²).”
The vacancy rate on the warehouse market reached 9% at the end of Q3, 1.5m m² against the total stock of 16.6m m². The vacancy rate has declined by 0.1 ppts in Q3. Despite large new projects delivery in Q4, JLL analysts expect high demand, both primary and secondary, to reduce the vacancy rate further, to 8.6%.
“The availability of 1.5m m² of vacant space will continue to affect rental rates and sale prices. This results in a wide variety of suitable premises for prospective tenants and buyers,” added Viacheslav Kholopov. Average asking rental rates in the warehouse market of the Moscow region in the new deals are at the lowest level and remain in the range of RUB3,000-3,600 m² per year (triple net).
Actual rents depend on a specific location and proximity to MKAD. Moreover, older warehouse buildings (more than seven years old) that have not undergone renovation or reconstruction can be offered at lower prices. This would also affect the average.