Warehouse overview for Russian market (RU)

According to the latest report from Colliers International, despite the evident difficulties in fund raising for project implementation, the supply in the warehouse property market increased in 2009 by 640,000 m² of quality warehouse space.

The most active market players included Raven Russia, Espro Development, PNK Group, and Giffels. Thus, as of the end of 2009, the total stock of Class A speculative warehouse space amounted to 3,235,000 m². Previously, the amount of actually commissioned properties used to be less than expected at the beginning of the year.

In early 2009, against the background of the crisis, expectations underwent considerable changes, which made it possible to forecast commissioning of new properties with minimum error. It is also noteworthy that the forecast for 2010 exceeds the data forecasted for 2008. This is due to a number of new projects launched in 2009, which is undoubtedly a positive factor. However, it is evident that the share of these projects in the market is small. About 400,000 m² of warehouse space is expected to be developed in 2010, including approximately 100,000 m² carried over from 2009.

The demand structure in the warehouse property market has changed. H1 2009 could be characterized as the waiting period, when companies tended to study the market and analyze various offers waiting for rental rates to reach the minimum, while the second half of the year saw a definite increase in activity. A good example of it can be provided by the analysis of the Q4's transactions share in the total amount of deals in 2009: Q1 – 9%, Q2 – 20%, Q3 – 35%, and Q4 – 36%.

The total amount of deals concluded in 2009 is approximately 600,000 m² of warehouse premises. The largest of them include lease agreements signed by Eldorado for 67,000 m² in warehouse complex PNK-Chekhov, John Deere company lease agreement for 45,000 m² in warehouse complex South Gate, lease agreement for 23,500 m² in Severnoye Domodedovo complex signed by Novy Impuls company Utkonos operator), as well as lease agreement for 23,000 m² of warehouse space in PNK-Chekhov signed by Х5 Retail Group.

2009 saw a change in the breakdown of the demand for warehouse premises by the tenant profile. While in 2008 about half of the leased space (47.2%) was occupied by logistics operators, in 2009 their share fell to 9.6%, and the largest tenant groups were FMCG operators (about 12.2% in 2009, 1.6% in 2008), retail operators (48.1% in 2009, 26.3% in 2008), and industrial companies (15.6% in 2009, 6.5% in 2008).

Rental Rates
The changes in the supply and demand ratio resulted in changes in lease terms: the agreement duration decreased from 7-10 to 3-5 years, the security deposit changed from equivalent of lease payment for 3-6 to 1-3 months, the approach to the agreement currency has become more flexible. Rents fell down to $100/m²/year for Class A (in early 2009 Class A rents reached $125 sqm/year) and $90/m²/year for Class B (in early 2009 Class B rents reached $115/m²/year)

Vacancy Rates
Changes in the situation on the warehouse property market led to a rapid vacancy rate growth. Before 2009, this indicator did not exceed 2%, whereas by the end of Q2 2009 it reached approximately 19%.
By the end of 2009, the vacancy rate in the Moscow Region was 10%. Vacant premises include both the new projects that have not yet been occupied by tenants, and the vacated space. The larger share of the latter is formed by premises that used to be occupied by logistics operators (in 2009, logistics operators vacated approximately 220,000 m² – for comparison, other operators vacated about 47,500 m² – and we expect them to vacate another 125,000 m² in H1 2010).

We expect the situation on the warehouse property market to stabilize in 2010 thanks to such factors as further active renewal of demand (mainly in the Moscow Region) and lower vacancy rates (due to active demand and a decline in new supply). The supply will include newly constructed properties (we expect the supply to i

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