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News Release

Moscow

No more new warehouse space to become available in 2013

Jones Lang LaSalle announces the Q2 2013 results


Moscow, 19 July 2013 – Demand for industrial real estate in Moscow region is growing but is limited by supply. Take-up amounted to 366,000 sq m in Q2 2013 (16% YoY growth). As a result there is almost no vacant space either in existing projects (vacancy rate of 0.57%), or in H2 2013 pipeline. According to Jones Lang LaSalle experts there are only 90,000 of 650,000 sq m of H2 2013 projects still available to lease.

212,000 sq m was delivered to the market in H1 2013 (25% YoY growth). Despite the large volume of completions overall vacancy rate continued to drop. All Q2 2013 projects (new buildings in PNK-Vnukovo of 88 000 sq m. and third phase of Souh Gate IP of 20 000 sq m) were pre-let or sold before completion. As of H1 2013 total warehouse supply reached 9m sq m.

 

New warehouse supply dynamics_19072013.png

 

Source: Jones Lang LaSalle
 
Petr Zaritskiy, National Director, Head of Warehouse and Industrial Department, Jones Lang LaSalle, Russia and CIS, commented: Series of large transactions (more than 50,000 sq m) started last year with Adidas and Enter deals and continued with record-breaking IKEA, lead to a serious deficit in the market. There is neither available spaces in existing projects nor in projects expected in the next 4-6 months. As of Q2 2013 large blocks of more than 20,000 sq m remained available only in Infrastroy Bykovo LP and in Vostochniy LP. Supply focus shifted to build-to-suit projects of 8-12 months perspective.
 
According to Jones Lang LaSalle forecast annual completion volume will increase almost by 50% YoY and reach 870,000 sq m. Another 1m sq m is announced for 2014.
 
Among major upcoming projects are PNK-Chekhov next phases (312,000 sq m) and South Gate (63,000 sq m) in the south and Logopark Sever (110,000 sq m), Nikolskoe LP (106,000 sq m), Dmitrov LP II (63,000 sq m), Radumlya LP and PNK-North (150,000 sq m) in the north.
 
Demand activity take-up and net absorption_19072013.png
 
Source: Jones Lang LaSalle
 
Total demand is expected to reach 1.5m sq m by the year end (15% YoY growth). Retail sector remains to be the main driver of the demand activity with 40% market share in H1 2013 (35% in 2012). More than 30% of transactions were executed by logistic companies (20% in 2012).
 
Prime rents remains stable at the level of USD140/sq m/year. Due to large number of pre-leases average rent is lower – USD130-135/sq m/year. A large volume of projects are announced for 2014-2015, but developers prefer to wait to occupiers in order to start construction, so supply is growing only in response of demand and we expect commercial terms to remain approximately the same by year end – added Petr Zaritskiy.

 

 

Market Balance_19072013.png
 
Source: Jones Lang LaSalle

 

 
About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual revenue of $3.9 billion, Jones Lang LaSalle operates in 70 countries from more than 1,000 locations worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services to a property portfolio of 242 million square meters and completed $63 billion in sales, acquisitions and finance transactions in 2012. Its investment management business, LaSalle Investment Management, has $47.7 billion of real estate assets under management.
In Russia and CIS Jones Lang LaSalle have offices in Moscow, St. Petersburg, Kiev and Aktau. Jones Lang LaSalle, Russia was voted Consultant of the Year in 2004, 2006, 2007, 2008, 2009, 2010, 2011, 2012 and 2013 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.jll.ru