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News Release

​Moscow

Vacancy rates on Moscow warehouse market may recover in 2015


Moscow, 3 February, 2015 – According to JLL estimates, the total volume of new supply of warehouse space in 2014 in the Moscow region is about 1.6m sq m which is over the highest level in the last 7 years. As a result, the total stock of high quality warehouse space in Moscow region reached 11.2m sq m. In terms of geographic location, the biggest increase was seen in the southern and northern directions of the Moscow Region with a 40% and 27% share in the total amount of deliveries over 2014 respectively.

In Q4, about 663,000 sq m of new warehouse space was delivered in the Moscow Region, which was three times more the level seen in Q4 2013. Among the biggest deliveries in Q4 were new premises in industrial park PNK – Chekhov 2 (bldg. 5 and 8, with a total area of 77,000 sq m), new warehouse space in South Gate (100,000 sq m) as well as new premises in Logopark Synkovo (bldg. 3, 11, with a total area of 47,300 sq m) in the South of Moscow region; in the western direction there was Novaya Riga (Phase I, 67,000 sq m), in the North - Logopark Sever - 2 (Phase II, 40,000 sq m).

Dynamics of New Warehouse Supply in Moscow Region

Dynamics of New Warehouse Supply in Moscow Region_03022015.png 

Source: JLL

According to JLL analysts, the pipeline of high quality warehouse space for 2015 is estimated at 1m sq m, including 925,000 sq m of supply being on the later stage of construction with the high probability of completion at the beginning of 2015. At the same time, the level of new deliveries in the second half of the year is likely to be at a minimum since the current macroeconomic uncertainty forces developers to adjust their construction plans, to postpone or even freeze the construction process.

Nonetheless, record high volumes of new supply last year coincided with the weak dynamics of demand for warehouse space in Moscow Region. The volume of total transactions for warehouse space in Q4 2014 amounted to 357,000 sq m, which represents 30% decline YoY. Over the 2014, the total take-up volumes for warehouse space were 860,000 sq m implying roughly 35% YoY drop. Nevertheless, in case of decrease in FX and oil prices volatility, the amount of demand for warehouse space in Moscow region could reach 800-900 thousands sq m in 2015.

Petr Zaritskiy, Regional Director, Head of Warehouse and Industrial Department, JLL, Russia and CIS, commented: “We don’t expect a sharp fall in demand in 2015 compared to the 2014 results – the total amount of transacted warehouse space is likely to stay close to 850,000-900,000 sq m thanks to the expected absorption of new deliveries. Several considerable transactions that were negotiated last year are expected to take place this year.”

Demand and Supply of Warehouse Market in Moscow Region

Demand and Supply of Warehouse Market in Moscow Region_03022015.png

Source: JLL

The structure of demand on warehouse premises in Moscow region has not changed significantly over the last year with retailers being the most active players on the market occupying a 34% share in total volume of demand for warehouse space in Moscow region. Logistic companies had close to 22% share of all recorded transactions in 2014. The demand for warehouse space in 2014 was concentrated mostly in the South, South-East and the North of Moscow region. The average deal size decreased by 32% compared to the 2013 and reached 11,688 sq m.

By the end of 2014, the level of vacancy rates in existing warehouse premises grew up to 7.9% compared to 1.4% seen in the end of 2013. Such an increase in vacancy was due to high volumes of new deliveries of warehouse space seen in 2014 coupled with the negative influence of external factors on demand. “It is entirely possible that warehouse market could see some rebound in vacancy rates on the market by the end of 2015. The construction of new projects in 2015 will likely be suspended due to the high cost of borrowings for the majority of developers. In the absence of a significant amount of new supply in the second half of the year we may see a gradual decline in vacancy on the market, with the space being leased on lower and mostly rouble denominated rents.” - Peter Zaritskiy said. – “At the same time, the differentiation between vacancy rates in newly constructed and second-hand stock will be more visible in 2015. Overall, the average vacancy rate on the market could decrease to 5-6% by the end of the year with the vacancy rates in the new stock being even lower as tenants will tend to prefer new projects to the existing ones.”

Market Balance in Moscow Region

Market Balance in Moscow Region_03022015.png

Source: JLL

By the end of Q4 2014, average market rents on warehouse space stood at to the level of 115 USD/sq m/year compared to 135 USD/sq m/year in the end of 2013 with the tendency to decline further in 2015. In addition, the majority of deals on warehouse market are currently executing in roubles.


About JLL

JLL (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 fee revenue of $4.7 billion and gross revenue of $5.4 billion, JLL has more than 230 corporate offices, operates in 80 countries and has a global workforce of approximately 58,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3.4 billion square feet, or 316.0 million square meters, and completed $118 billion in sales, acquisitions and finance transactions in 2014. Its investment management business, LaSalle Investment Management, has $53.6 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated.

In Russia and CIS JLL has offices in Moscow, St. Petersburg and Kiev. JLL, Russia & CIS was voted Consultant of the Year in 2004, 2006, 2007, 2008, 2009, 2010, 2011, 2012 , 2013 and 2014 at the Commercial Real Estate Awards, Moscow; Consultant of the Year at the Commercial Real Estate Awards 2009, St. Petersburg and The Best Real Estate Consultancy in Ukraine at the Ukrainian Property Awards in 2013.

For further information, visit www.jll.ru