Skip Ribbon Commands
Skip to main content

News Release

St. Petersburg

In 2011 office the number of projects delivery increased by 30%

Jones Lang LaSalle’s specialists summed up the results of St. Petersburg office property market development  in 2011


St. Petersburg, 18 January 2012 By the end of 2011 the volume of high quality office premises exceeded 2 mln sq m with the total volume of completions at  31, 680 sq m in Q4.

Four new office projects were delivered to the market in October-December 2011, including the 1st phase of mixed-use complex Aeroportcity St. Petersburg. In total about 170, 080 sq m of high quality office stock was completed in 2011.

Compared to previous year the number of completions increased almost by 30%. The volume of completions announced for 2012 is around 200, 000 sq m not considering delays.

Sector wise, the most active companies in the market were those from wholesale & retail industry with 24 share, construction and mining industries with 16% and 13% respectively. Recent activity of construction sector confirms its gradual recovery after the crisis. After the same time banking & finance sector remains subdued operating mainly in the B2C segment and leasing street-retail premises. IT companies were also active on the market in 2011.

In 1H 2011 tenants displayed considerable activity, but the situation changed before year-end. Net absorption in October-December 2011 reached only 20, 430 sq m of office space (vs 59, 790 sq m in Q4 2010). Low figures in Q4 might be demonstrating market uncertainty regarding future economic perspectives. Potential tenants have taken a “wait-and-see” position, at least until spring 2012. However, the total net absorption level in 2011 was rather high coming to 236, 800 sq m. For comparison the total net absorption level in 2008 amounted to 238 940 sq m.

The vacancy rate in Q4 slightly increased from 13.1% up to 13,5% due to high levels of completions by comparison to net absorption. The 2d phase of St. Peterburg Plaza added 37, 600 sq m of available class A space to the market in the middle of the year. Office projects delivered in Q4 2011 were not pre-let thus adding available space on the market. The current volume of available space in absolute figures remains high, at 124, 700 sq m in class A and 148, 200 in class B office segment.

Companies looking for office premises remain price-sensitive, which limits their growth potential. Rouble-denominated rents remained at the same level in Q4 2011. However, USD-denominated rental rates fell due to currency rate fluctuations to US$ 320-390 per sq m/ year for class A and US$ 240-310 per sq m/ year for class B office buildings. Prime office rents did not change remaining at the level of US$ 450-550 per sq m/ year (excluding VAT and operation expenses).

Andrey Rozov, Head of Jones Lang LaSalle in St. Petersburg, noted: «We can assert that St. Petersburg office property market remains to be “tenant’s market” despite that office space net absorption level exceeded the volume of completions in 2011 and from January to December we observed vacancy rate decreasing from 19.7 % to 13.5 %. Most of European markets are also characterized by the dominating role of tenants. This trend is likely to remain in 2012 as well”.

Veronika Lezhneva, Head of Research, Jones Lang LaSalle in St. Petersburg, added: «In 2012 the vacancy rate will decrease rather slowly since the significant volume of new supply volume will require much tome for absorption”. At the same time the current elevated level of available space will limit potential rental growth. We expect real rental increase to be at 5-7% with the most popular office properties demonstrating even greater increases”.


About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2010 global revenue of $2.9 billion, Jones Lang LaSalle serves clients in 70 countries from 1,000 locations worldwide, including 200 corporate offices. The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 167 million square meters worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with $47.9 billion of assets under management.
In Russia and CIS Jones Lang LaSalle have offices in Moscow, St. Petersburg, Kiev and Almaty. Jones Lang LaSalle, Russia was voted Consultant of the Year in 2004, 2006, 2007, 2008, 2009, 2010 and 2011 at the Commercial Real Estate Awards, Moscow and Consultant of the Year at the Commercial Real Estate Awards 2009, St. Petersburg. For further information, please visit our website www.joneslanglasalle.ru