The volume of vacant warehouse space on the Moscow region market declined to 932,000m², or 5.3% of the total modern warehouse stock in Q3 2018, according to JLL. The decline in Q3 was 0.7ppt, or 105,000m².
“This is the lowest level in the last four years. The vacancy rate on the Moscow region warehouse market has been increasing from early 2014 until 2017. Lately, we have seen a steady decline in this indicator. According to our estimates, the vacancy rate will increase to 5.8% at the end of 2018 due to sizeable speculative completions. We expect it to stay at 5-6% in 2019,” commented Oksana Kopylova, Head of Retail and Warehouse Research, JLL.
Vacant space on the Moscow region warehouse market
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Some 355,000m² of warehouse space were completed in Q3 2018, bringing total warehouse completions in 9M 2018 to 570,000m², 2.5 times higher than in the same period of last year.
Two large projects entered the market in Q3 2018: a distribution centre for the e-commerce retailer Utkonos in the Orientir Sever 3 warehouse complex (68,000m²) and the new building for the logistic company Operator Kommercheskoy Nedvizhmosti in PNK Valischevo Industrial Park (52,000m²).
Additional 656,000m² of new warehouse premises are scheduled for delivery until the year-end. Among significant projects expected in Q4 2018 are large distributional centres for federal retailers: Auchan DC in South Gate Industrial Park, IKEA DC in Solnechnogorsk District, the second phase of Wildberries DC in the Koledino industrial park and a distribution centre for Detsky Mir in PNK Park Bekasovo.
If the announced projects delivered on time, the 2018 completions will amount to 1.3m m² vs 0.5m m² in 2017. Notably, 61% of 2018 warehouses deliveries will be built-to-suit schemes vs only 33% last year.
“Such a high share of contracted space is explained by the fact that large retailers are the main warehouse occupiers. Offline and online operators have accounted for 52% of the take-up this year. Each of them has specific requirements of the warehouse size and quality, and the built-to-suit format satisfies their needs most efficiently,” said Evgeniy Bumagin, Head of Industrial & Warehouse Department, JLL, Russia & CIS. “This trend is confirmed by our deal of the largest (140,000m²) automated distribution centre construction for the DIY-retailer Leroy Merlin. The new multifunctional logistic complex Beliy Rast will be built by PNK Group in the north of Moscow region.”
Moscow region warehouse demand distribution by business sector
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The warehouse take-up in Moscow region amounted to 1.2mm² in 9M 2018, 48% above the level of Q1-Q3 2017. The take-up volume in Q3 2018 totalled 587,000m², growing twice YoY double the volume in the previous quarter and 62% higher YoY. The annual take-up may exceed 1.5m m², 31% above the 2017 level.
“The rental rates for new deals on the Moscow region warehouse market are stable, in the range of €44.9 - €47.5 (RUB3,400–3,600) per m² per year (excluding VAT and operating expenses). Nevertheless, the growth trend is resurfacing: weighted average asking rental rates for some projects increased to €50.2 (RUB3,800) per m² per year. However, we do not expect a sharp growth of rental rates in the near future, as about 1m m² of vacant premises, a result of new speculative construction, will continue to pressure rental rates,” added Evgeniy Bumagin.
