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Moscow

Q1 2012 New Office Completions in Moscow Decrease of 44% to Q1 2011

Jones Lang LaSalle reports the first quarter office market results


Moscow, 18 April 2012 –  In Q1 2012 only 111,300 sq m entered the market, which is a 44% decrease compared to the previous period one year ago, reported Jones Lang LaSalle’s experts. Around 80% of the new office market completions were Class B (Grand Setun Plaza – office area – 58,000 sq m; BC Vorobyovsky – office area – 14,400 sq m), whereas Class A was represented by only one building – Lighthouse (office area - 22,500 sq m).

The total modern office stock in Moscow reached over 13.34m sq m (graph below).

In the next two years we expect modern office stock to increase by approximately 2m sq m. We note that of this pipeline, nearly 30% will be Class A space and approximately 25% of pipeline will appear in the city’s core area, the Central Business District (CBD).

The leasing activity in Q1 reached 300,000 sq m with drivers of this demand being Banking & Finance (Sberbank, Tinkoff Credit, BDU) with a 32% share; Manufacturing companies (GMS Group, Novaem) with 16%.

The vacancy rate in Q1 2011 remained almost at the same level as the previous quarter and measured 13% for CBD. Whereas the overall vacancy rate remained stable at 16.5% (graph below).

In terms of costs, rents remained stable during the last four quarters with prime base rents of USD1,000-1,200 sq m/year (excluding operational expenses and VAT). 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: “High quality assets are in strong demand. Conversely, new completions in Q1 reflected lower levels of new Class A product coming to the market. In terms of Class A pipeline we expect around 200,000 sq m to be completed by the end of the year. We could note the following new premises to come to the market this year: Alcon, SkyLight, Aquamarine 3, Country Park Phase III. Although rents remained stable since Q2 2011 we can expect them to increase by 5-7% later by the end of this year.”


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