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News Release

Moscow

New Warehouse Completion in Q3 2012 Increased by 168%


Moscow, 15 October 2012 – According to Jones Lang LaSalle, new completion in Q3 in Moscow region reached almost 299,559 sq m, which is 2.5 times more when compared with the same period last year (111,910 sq m). During the first three quarters of 2012 new completions amounted to 468 000 sq m, a 70% increase YoY. Major new industrial buildings that entered the market (48%) were built-to suit schemes in the PNK-Vnukovo project. The other two significant projects completed this quarter were South Gate (51,000 sq m), Phase II and LP Dmitrov (61,000 sq m), Phase I.

Ilya Vydumkin, Head of Industrial Research, Jones Lang LaSalle, Russia and CIS, commented: ‘In the third quarter we observed a substantial increase in market activity, with total completions achieving pre-crisis levels. On the development side, many new plots were proposed for possible construction. Total area of announced for 2013-2014 projects exceeds 2.3m sq m. However we do not expect all of them to enter the market on time. Developers are quite conservative which means that even while announcing projects, they prefer to wait for their first clients before initiating construction.”

Supply and demand dynamics in Moscow Region warehouse market
Supply_and_demand_dynamics_in_Moscow_Region_warehouse_market.png

Source: Jones Lang LaSalle

Among key projects in the pipeline most interesting are two located on a very popular and deficit north direction: Logopark North which is expediting construction and will realize completion early in 2013; and Nikolskoe LP. The largest projects in the south will include South Gate IP, Phase III from Radius Group and PNK-Chekhov, Phase II.

Take-up of over 400,000 sq m was recorded in Q3 2012, which represents 27% YoY growth. At the same time, the volume of demand for the first nine months of 2012 amounted to 932,000 sq m – a 14% decrease on YoY basis.
This current decline is largely due to notable drop in market activity in H1 2012 when take-up fell by 31% YoY. Third quarter indicators however are more optimistic and by the end of the year we expect total demand to reach 1.2 to 1.3m sq m, similar to 2011 (1.263m sq m).

Ilya Vydumkin: “With almost no available space on the market, the vacancy rate in Q3 2012 only measured 1.28%. Prospective occupiers have little choice but to engage in built-to-suit schemes and wait for 8 to 12 months upon completion of the project.  Prime rents in existing premises are stable at the level of USD135/sq m/year, as opposed to projects under-construction, where for some clients a USD5-10 discount is achievable. We expect rental levels to remain flat till the end of the year.”

Dynamics in rents and vacancy rates in Moscow Region warehouses
Dynamics_in_rents_and_vacancy_rates_in_Moscow_Region_warehouses.png
Source: Jones Lang LaSalle


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 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 www.joneslanglasalle.ru