According to CBRE's latest office market report, the Moscow market was stable in 2012: the volume of new construction was 556,264 m², just 8% less than in 2011, with the volume of leasing deals at 1 million m² (14% less than 2011). In 2013, CBRE expects the total volume of new supply in Moscow will total 860,000 m² exceeding 2012 supply by 50%.
Total take-up for 2012 was 1 million m² a reduction of 14% on 2011 (1.18 million m²), with take-up in 2013 expected to be comparable to 2011-2012 in the region of 1.1-1.2 million m².
In 2012, the biggest volume of office leasing deals, as in 2011, were signed on space in the area between the TTR and the MKAD (2102: 40%). This was followed by the CBD (29%), the area between the Garden Ring and the TTR (22%), and a minimal number of deals beyond the MKAD (9%).
Despite vacant space in the CBD (9%), tenants are considering offices beyond the TTR to optimize rent expenses. The trend is confirmed by the volume of deals in the Class A segment in 2012. At 330,000 m², this figure is 160,000 m² less than in 2011 and 140,000 m² less than in 2010. Nevertheless, a number of significant Class A agreements were signed during the year including the first pre-lets since the crisis (Alcona and White Gardens).
In 2012, the most active occupiers were Russian companies, representing 67% of the total volume of deals. In 2011 this figure was 65%.
Overall vacancy rates dropped slightly during the year, from 13% in 2011 to 11%. Within this, Class B building vacancy rates decreased by 1% to around 10% and Class A building rates fell from 17% to 15%.
Rental rates remained stable throughout 2012: $1,100-1,200 for Prime Class A, $650-750 for Class A, and $400-450 for Class B. According to CBRE forecasts, rents will remain stable throughout 2013, assuming a steady economic environment in the Eurozone.
In 2012, the volume of office space delivered was 556,264 m², bringing Moscow's total office stock to 13.2 million m², of which Class A premises comprise 19.5% and Class B premises 80.5%. Based on the pipeline of announced projects, the total volume of new supply in 2013 in Moscow will total 860,000 m² (including deliveries of ca. 80,000 m² designated for owner occupiers), bringing the total office stock to 14 million m².
According to CBRE forecasts, in 2013 the Moscow office market will remain stable with many of the trends seen in 2012 expected to continue meaning limited change in the Class A office segment and an expected drop in the vacancy rate for Class B space of 1-2%.
Due to uncertainty in European markets, international companies are expected to extend their existing lease agreements, with a true revival in demand not anticipated until H2 2013 at the earliest.
Claudia Chistova, Head of Office Research, CBRE in Russia commented:
"In 2012, the Moscow office market was stable. The volume of new delivery dropped marginally and reached 556,000 m². In 2013, the volume of new supply to be delivered is expected to exceed 2012 volumes by 50%. As we forecasted, the total take-up for 2012 was 1 million m² and we expect a similar total this year with rents not expected to be affected by the increase in supply."