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News Release

Moscow

New office completions in Moscow decreased by a third in 2011

Jones Lang LaSalle reports the annual office market results


Moscow, 8 February 2012 –  Approximately 166,000 sq m of new space was added to the office market in Moscow in Q4 2011, reported Jones Lang LaSalle’ experts. Altogether for 2011, new office market completions only amounted to little more than 600,000 sq m of space. This figure, when compared year-on-year, was significantly lower (34%) than in 2010.

Nearly 60% of all the newly completed offices that entered the market in Q4 were Class A, most notably: Imperia Tower (office area - 70,000 sq m); Legion II Phase II, in Zone 1* office area -19,400 sq m); Moscow Hotel (office component), in Zone 1 (9,000 sq m).

The modern office stock in Moscow reached to over 13.26m sq m (graph below).
 
Approximately 2.7m sq m are expected to be completed and delivered to the market in the next three years. Again, supporting the drive for higher quality office space, we note that of this 2.7m sq m, nearly half (41%) will be Class A space and 20% of this pipeline will appear in the city’s core area, the Central Business District (CBD).

A strong upswing in demand was measured toward the end of 2011, with Q4 take-up reaching 490,000 sq m, pushing the annual total for take up to 1.77m sq m  compared to 1.4m sq m in 2010 (21% increase YoY).

The overall vacancy rate on the Moscow office market in Q4 2011 slightly decreased in Q4 and measured 16.3%, with vacancy decreasing even further to 12.7% in the CBD.

On a quarterly basis, office rents remained stable in Q4 2011, with prime base rents remaining at a level of USD1,000-1,200 sq m/year (excluding operational expenses and VAT). Nevertheless, prime rents increased 33% YoY. Class A base rents amounted to USD600-850 sq m/year; Class B+ base rents amounted to USD400-600 sq m/year; and Class B- base rents were USD300-400 sq m/year.

Liliana Stoianova, Head of Office and Occupier Research, Jones Lang LaSalle, Russia and CIS, mentioned: “Despite global economic uncertainties, when looking forward, we continue to project 2012 as an active year for the office market. In terms of rental growth, we forecast a slower rate of growth (particularly compared to that of 2011) of around 5-7% per annum”.


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 2011 global revenue of $3.6 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 195 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 $47.7 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
 

*    Zone 1 -inside the Garden Ring;
      Zone 2 – between the Garden Ring and Third Transport Ring;
      Zone 3 – between the Third Transport Ring and MKAD