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News Release

Moscow

Moscow warehouse market saw a record surge in demand for warehouse space

​While the supply of new warehouse space is set to decrease further


Moscow, 26 October, 2015 – According to JLL estimates, only 91,000 sq m of new warehouse space was delivered in Q3 in the Moscow Region which was 65% less than the same period in 2014. At the same time, the total amount of new supply of warehouse space for the first nine months was close to 0.7m sq m which was 20% lower than the total amount delivered over the same period 2014. 

The total amount of expected completions of warehouse space for the rest of the year is estimated at 0.3m sq m which is half of what was commissioned a year ago bringing the total amount of new deliveries for the full 2015 to 1m sq m representing a 34% YoY drop. By the end of Q3, the total warehouse stock of Moscow region reached the level of 11.9m sq m.

Among the largest delivered project there were new warehouse premises in Logopark Sever – 2 (24,650 sq m – total area) and in Leninskie Gorky LP (20,000 sq m). Among the largest upcoming warehouse projects there are new complexes in PNK – Severnoye Sheremetyevo II (52,700 sq m), Dmitrov LP (20,000 sq m) and Synkovo LP (28,000 sq m). 

Petr Zaritskiy, Regional Director, Head of Warehouse and Industrial Department, JLL, Russia and CIS, commented: “We will likely see a further significant decline in the amount of deliveries in warehouse space going forward, as the majority of developers are switching to built-to-suit schemes due to the fall in rents coupled with the rising costs of construction. There are currently only about 0.4m sq m of warehouse space under construction which can enter the market in coming year.”

Dynamics of New Warehouse Supply and Demand in Moscow Region
Dynamics of New Warehouse Supply and Demand in Moscow Region_26102015.png

Source: JLL

At the same time, the market saw record volumes of demand for warehouse space over Q3. The volume of take-up in Q3 was 712,300 sq m which is almost 3x times higher compared to the levels seen over the same period last year. The volumes of take-up over the first nine months 2015 was around 1m sq m beating JLL forecast for the entire 2015 year (0.85m sq m). The average size of deals in Q3 2015 amounted to 24,500 sq m significantly exceeding that of Q2 (11,400 sq m).

“The level of activity remained high over Q3 translating into several large transactions for new warehouse space such as the purchase of 120,000 sq m by adidas Group in PNK – Chekhov 2, the lease of 66,000 sq m by X5 Retail Group in Sofyino LP and the lease of 45,000 sq m by retail chain Globus in Industrial Park Kholmogory. Retailers took almost a 75% share of all deals over Q3 (or 55% for the nine months) followed by distributors and logistic companies.” - Petr Zaritskiy said. – “Despite the actual deferred demand which could be met by the end of the year, such high levels of activity are unlikely extend far into 2016, as the Russian warehouse market is still heavily influenced by external factors such as rouble volatility and the ongoing recession in the economy. We wouldn’t be surprised to see the amount of take-up in warehouse space at 1.2-1.3m sq m for the entire year.”

Warehouse Market Balance in Moscow Region
Warehouse Market Balance in Moscow Region_26102015.png

Source: JLL

On the back of this surge in demand the vacancy rate decreased from 11.2% seen in Q2 to the levels seen at the beginning of the year and stood at 9.9%. JLL experts expected it to remain at the levels close to 10% for the remainder of the year. The high vacancy rate on the back of decreasing supply could be attributed to the ongoing increase in availability in existing stock.

Over the course of Q3, the average level of rents for new deals in Class A decreased slightly to RUB4,000 sq m per year (triple net) from RUB4,300 sq m seen in Q2, while the level of prime rents was around RUB4,500 sq m per year (triple net) compared to RUB5,000 sq m in Q2. At the same time, the average rental costs (including level of rents for renewals and renegotiations) saw also slight decrease QoQ and stood at USD100 per sq m per year in Q3. The actual level of rents varies quite significantly depending on the particular object and its location.


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. A Fortune 500 company 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 $56 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, 2014  and 2015 at the Commercial Real Estate Awards, Moscow; Consultant of the Year at the Commercial Real Estate Awards 2009, St. Petersburg; Consultant of the Year at the RCSC Awards in 2015, and The Best Real Estate Consultancy in Ukraine at the Ukrainian Property Awards in 2013.