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News Release

Moscow

Only 27% of the annual Moscow office pipeline was completed in H1 2012


Moscow, 17 July 2012 –  New completions in Q2 reached 106,100 sq m. As a result, in H1 2012 around 220,000 sq m were added to the market, which represents only 27% of the expected new completions for 2012, reported Jones Lang LaSalle’s experts.

Seven new buildings were competed in Q2, from which only one was Class A (SkyLight – office area – 61,300 sq m). The remaining 42% was formed by five Class B office buildings (for. ex: Mosfilmovskiy BC – office area – 17,500 sq m, Dezhnyov Plaza BC  – office area – 11,000 sq m, River City BC– office area – 9,700 sq m). The total Moscow modern office stock in Q2 reached over 14.3m sq m* (see graph).

Roughly another 580,000 sq m is expected to be completed by the end of this year, of which 27% is considered to be Class A space. Main Class A new completions expected to enter the market are: ALCON, Aquamarine 3, Country Park (Phase III).

The leasing activity in Q2 reached 323,500 sq m, which is an 8% increase QoQ. With 623,500 sq m take-up in H1, we expect to see more growth in the second half of the year and we forecast the annual take-up to reach 1.7m sq m.

Location-wise almost 60% of the executed deals in Q2 were completed between Third Transport Ring (TTR) and MKAD; 22% in Central Business District (CBD); 4% in Moscow City; 13% between Garden Ring and TTR.
 
The overall vacancy rate in Q2 2012 decreased by 0.7% QoQ and reached 14.7% (graph below). This indicator decreased further in CBD where it currently measures 11%. One of the highest vacancy rate was noticed in the southern area between TTR to MKAD (24%).
 
In terms of costs, rents remained stable during the last five quarters with: prime rents  - USD1,200/sq m/year, Class A - USD850/sq m/year, Class B+ - USD600/sq m/year, all excluding operational expenses and VAT (see graph).
 
Liliana Stoianova, Head of Office and Occupier Research, Jones Lang LaSalle, Russia and CIS, mentioned: “Preferences for high quality space are on the agenda for most occupiers - 90% of the executed deals in Q2 were completed in Class A (30%) and B+ (60%) buildings. The drivers of Q2 demand were Banking & Finance companies with a 40% share; Manufacturing companies with 26%. The biggest deals this quarter included the sale of Nagatino i-Land to Raiffeisenbank (25,000 sq m) and Alfa-Bank (23,000 sq m); the lease of Novartis (16,000 sq m) in ALCON; Merlion (16,500 sq m) in Myakininskaya Poyma. These four deals represented almost half of the executed deals** of this quarter.”
 
* In Q2 2012 the historical dynamic of indicators were revised according to stock recounting.

 

** Deals exchanged at the Moscow Research Forum



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 $47.2 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, 2011 and 2012 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