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News Release

Moscow

New Office Completions in 2012 at record lowest level in Moscow

Jones Lang LaSalle announces the Q4 2012 results


 

Moscow, 24 January 2013 – Approximately 162,500 sq m of new supply was launched on the market in Q4 (a 9% decline on QoQ basis) with the annual cumulative figure amounting to 557,000 sq m (down 33% on a YoY basis). New completions recorded its lowest level in 2012 during the last ten years and was four times lower than the 2.1m sq m peak in 2008 reported Jones Lang LaSalle experts.
 
Completions Dynamics in Moscow
Completions Dynamics in Moscow.png
Source: Jones Lang LaSalle
 
 
 
Approximately 40% of the annual 2012 new supply (219,000 sq m) was represented by 5 Class A office buildings, which is about 40% of the total new supply (5% YoY growths) Location-wise, CBD submarket received only 18% of this new supply reaffirming once again the decentralization on the Moscow office market.

 


2012 New Completions by Locations and Class.png
Take-up in Q4 amounted to 605,000 sq m (23% growth compared with Q4 2011), with the year to date figure aggregating to 1.5m sq m. Major leasing transactions in Q4 included renewals of Mercedes-Benz (10,700 sq m) on Leningradskiy Avenue, 39A and Ericcson (8,900 sq m) at 8 Marta Street, 12, both located inside “Leningradskiy Office Corridor” – a popular office submarket in North-West Moscow.

More than a half (53%) of transactions were driven by Russian companies. As before, interest came from such business sectors as: Banking and Finance (36%); Manufacturing (31%), Construction, Mining and Exploration (13%).
 
In terms of Classes – the trend of quality continues with 90% of the executed deals being in Class A and B+. More than 60% of take-up remained concentrated in the decentralized submarket where occupiers found more opportunities in terms of both value-for-money and high-quality office schemes.
 
Record low new supply alongside stable high demand pushed vacancy rate downward in Moscow – overall vacancy rate became 13.5% (1.7% decrease YoY). Meanwhile, Class A vacancy rate is registered at 18.9% and 12.5% for Class B+.
 
Vacancy Rate Dynamics
Vacancy Rate Dynamics.png
 
Source: Jones Lang LaSalle
 
 
 
In Q4 prime rents were recorded at USD1,150/sq m per year, ranking Moscow as the second most expensive office market in Europe (after London). Class A and Class B+ rents ranged between USD625–-850  and USD400–600 respectively.
 
Liliana Stoianova, Head of Office and Occupier Research, Jones Lang LaSalle, Russia and CIS, mentioned: “2013 promises to be a more active year in terms of office buildings entering the market with 1.1m sq m in the pipeline. Significant high quality developments will include: White Gardens Office Center and Wall Street in CBD; CityPoint and Mercury City Tower in Moscow City financial district and new phases of Country Park and Riga Land business parks to be delivered. The supply shortage of Class A in the CBD could suggest a slight rise in rents of no more than 3%.”
 
 
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