JLL: New warehouse completion in Moscow increased by 168% in Q3 2012 (RU)

According to Jones Lang LaSalle, new completion in Q3 in Moscow region reached almost 299,559 m², which is 2.5 times more when compared with the same period last year (111,910 m²).


Nikolskoe LP is one of the warehouse projects in the pipeline.

During the first three quarters of 2012 new completions amounted to 468,000 m², a 70% increase y-o-y. Major new industrial buildings that entered the market (48%) were built-to suit schemes in the PNK-Vnukovo project. The other two significant projects completed this quarter were South Gate (51,000 m²), Phase II and LP Dmitrov (61,000 m²), phase I.

Ilya Vydumkin, Head of Industrial Research, Jones Lang LaSalle, Russia and CIS, commented: "In the third quarter we observed a substantial increase in market activity, with total completions achieving pre-crisis levels. On the development side, many new plots were proposed for possible construction.

"The total area of announced for 2013-2014 projects exceeds 2.3 mln m². However we do not expect all of them to enter the market on time. Developers are quite conservative which means that even while announcing projects, they prefer to wait for their first clients before initiating construction."

Among key projects in the pipeline most interesting are two located on a very popular and deficit north direction: Logopark North which is expediting construction and will realize completion early in 2013; and Nikolskoe LP. The largest projects in the south will include South Gate IP, Phase III from Radius Group and PNK-Chekhov, Phase II.

Take-up of over 400,000 m² was recorded in Q3 2012, which represents 27% y-o-y growth. At the same time, the volume of demand for the first nine months of 2012 amounted to 932,000 m² – a 14% decrease on Y-o-y basis.

This current decline is largely due to notable drop in market activity in H1 2012 when take-up fell by 31% y-o-y. Third quarter indicators however are more optimistic and by the end of the year we expect total demand to reach 1.2 to 1.3 mln m², similar to 2011 (1,263 mln m²).

Ilya Vydumkin: "With almost no available space on the market, the vacancy rate in Q3 2012 only measured 1.28%. Prospective occupiers have little choice but to engage in built-to-suit schemes and wait for eight to 12 months upon completion of the project.

"Prime rents in existing premises are stable at the level of USD135/sq m/year, as opposed to projects under-construction, where for some clients a USD5-10 discount is achievable. We expect rental levels to remain flat till the end of the year."

Source: Jones Lang LaSalle

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