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Moscow

One Third of 2014 Warehouse Pipeline in Moscow Region is Already Pre-leased or Sold

Jones Lang LaSalle announces the Q3 2013 results


Moscow, 17 October 2013 – New completion volume continues to increase reaching pre-crisis levels. About 433,000 sq m of warehouse space entered the market in Q3 2013 which is 44% higher than in Q3 2012, Jones Lang LaSalle analysts reported.

Among Q3 2013 completions are new buildings in PNK-Chekhov (168,000 sq m, developer – PNK Group), Logopark Sever (110,000 sq m, developer – Logopark Development), 3 phase of Klimovsk LP (48,000 sq m, developer – Raven Russia) and 2 phase of Noginsk LP (37,000 sq m, developer – Raven Russia). According to Jones Lang LaSalle forecasted annual completion will increase by 59% YoY and reach its maximum over the last 4 years at 950,000 sq m.

Petr Zaritskiy, National Director, Head of Warehouse and Industrial Department, Jones Lang LaSalle, Russia and CIS, commented: “Despite high completion volumes, there is almost no vacant space on the market (overall vacancy rate does not exceed 1%) as the majority of Q3 2013 projects (82%) were pre-let or sold before completion. The deficit will remain in the next 6 months as almost all warehouse space expected in Q4 2013 and 30% of 2014 pipeline is already contracted.”

Dynamics of New Warehouse Supply in Moscow RegionDynamics of New Warehouse Supply in Moscow Region_17102013.png
Source: Jones Lang LaSalle

Among major upcoming projects in Q3 2013 – 2014 are new developments in PNK-Chekhov (139,000 sq m) and South Gate IP (162,000 sq m) in the South and PNK-North (174,000 sq m), Radumlya LP (155,000 sq m), Dmitrov LP II (108,000 sq m) and Nikolskoe LP (106,000 sq m) in the North. The total volume of announced projects for 2014 is more than 1.4m sq m.
 
Petr Zaritskiy commented: “A large number of projects announced for 2013-2014 in the North of Moscow Region will lead to increased competition among projects located in this region. Thus, the traditional lack of supply in the North should become more balanced. Occupiers with pre-lease contracts could get USD5-7/sq m discount on prime rent of USD140-145/sq m/year.”
 
Amid high completions volume in Q3 2013 take-up activity slowed down, amounting to 267,000 sq m in Q3 2013. That is 34% lower than in Q3 2012. According to Jones Lang LaSalle forecasted total demand will reach 1.2m sq m by the year end, remaining at the 2012 level.
 
In Q3 2013 more than 50% of transactions were executed by manufacturing companies and 37% by retailers. As of Q1-Q3 2013 retail sector remains to be the main driver of the demand activity with 40% market share, following by manufacturing companies (28%).
 
The share of BTS deals in total demand continues to increase; almost 40% of Q3 2013 demand is accounted for by BTS deals. Among these BTS deals are the largest transactions of the quarter - BTS lease in PNK-Sever of 43,374 sq m by Verny hypermarket, and BTS-sale in South Gate IP of 40,300 sq m, where General Motors is a tenant.
 
Warehouse Take-up and New Supply in Moscow Region
Warehouse Take-up and New Supply in Moscow Region_17102013.png
Source: Jones Lang LaSalle
 
Prime rent remains stable at the level of USD140/sq m/year. Due to the large number of pre-leases average rent is lower, at USD130-135/sq m/year.
 
“A large volume of projects are announced for 2014-2015, but some developers prefer not to start construction before securing a BTS contract”, Petr Zaritskiy commented. “As a result new supply is appearing on the market only in response to demand, that’s why we do not expect commercial terms to change in the next 6 months. Changes are possible only in 2014 when supply will reach demand and new warehouse space in upcoming pre-let projects will be offered for sub-lease”.
 
Warehouse Market Balance in Moscow Region
Warehouse Market Balance in Moscow Region_13102013.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 and Kiev. 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