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Moscow

The lowest volume of warehouse delivery across the last seven years has been fixed in Moscow Region

Jones Lang LaSalle summarizes 2011 at warehouse real estate-market


Moscow, 26 January, 2012 – The volume of new warehouse completions in the Moscow Region in 2011 amounted to 486,200 sq m, almost half of which (208,600 sq m) was delivered during the last quarter. Despite this last quarter spike, the total volume of new space on the market was the lowest level since 2005, according to estimates by Jones Lang LaSalle analysts.

Elevated delivery at the end of the year is consequence of both seasonal factors and much-anticipated developer activity. Thus, in Q4 2011 several warehousing complexes were delivered to the market, the largest of which were the second phase of Klimovsk Logistics Terminal (55,000 sq m), developed by British investment fund Raven Russia; and the first building of PNK-Vnukovo complex (50,000 sq m), built for TsentrObuv. By the end of 2011 the total area of high quality industrial space in Moscow Region reached 8.2m sq m.

In 2011 the volume of new construction delivered to the warehouse segment dropped by 28.5% in comparison with the level in 2010. Notably, this is almost four times lower than in 2007, when the Moscow warehouse market grew by 1.7m sq m in a single year. Low delivery volume last year can be explained by a lack of project-starts during the crisis, said Jones Lang LaSalle experts.

Take-up volume in Q4 decreased compared to the previous quarter and amounted to 186,200 sq m. Consequently total take-up in 2011 reached 1.27m sq m and exceeded completion more than 2.5 times. However, the level of take-up in 2011 is 15% less than that of 2010.

Reduced demand activity in the end of the year is a result of several factors, key amongst them are: rental growth, lack of vacant space, and overall uncertainty of the macroeconomic situation. In 2011 rents have grown quite rapidly and increased by 17% YoY. Moreover, strong growth occurred in the first half of 2011, and in Q3-Q4 rental rates stabilized at $135/sq m per year. In 2012 we expect moderate annual growth of 3-5%.

Availability continued to decrease, settling at 1.29% in Q4 2011. In the first half of 2012 we expect a further reduction to 0.6-0.8%.

In the second half of 2011 several major projects were introduced. Their market delivery in 2012 should improve the supply situation on the market. However, most of them will be leased before completion, which will continue the market’s state of deficit in 2012. According to Jones Lang LaSalle‘s forecasts, vacancy rate will increase to 1.5-3% by the end of the year.
 
Ilya Vydumkin, Industrial Analyst, Jones Lang LaSalle, Russia and CIS, said: “The current sharp deficit of existing space on the Moscow warehouse market support the fact that large tenants are faced with really only one option for expansion - built-to-suit. During 2011 we saw a number of such deals, for example in Q4 of 2011 new warehouse for TsentrObuv (50,000 sq m) has been competed in PNK-Vnukovo complex.

Even more popular is the built-to-suit scheme for warehouses with specific technical standards, including: a large section dedicated to freezers or with a special type of ventilation. A distribution warehouse for Dixy (47,116 sq m) in PNK-Vnukovo complex is a as good example of this. A special type of ventilation is usually required for alcoholic beverage distributors and manufacturers. In 2011, for example, with Jones Lang LaSalle’s assistance, VEDK leased this kind of warehouse twice – 17,887 sq m in the beginning of the year in the PNK-Chekhov complex and 18,058 sq m at the end of the year in LP Dmitrov). In 2012 we expect further growth of popularity of the built-to-suit scheme: new projects, new clients, new developers.”


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