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News Release

​Moscow

High demand for warehouse space does not lead to vacancy improvements in Moscow region


​Moscow, 27 April, 2016 – According to JLL estimates, only 3 high quality warehouses with the total area of 92,000 sq m were commissioned over the first three months of 2016 in Moscow region. The result of Q1 was almost four times less compared to completions over the same period last year. For the full year, the total volume of new supply of warehouse space in Moscow is expected to be close to 0.65m sq m which will be 23% lower than in 2015.

Among the largest deliveries in Q1 there were new premises in PNK – Severnoye Sheremetyevo (54,000 sq m of warehouse space) industrial park and Synkovo logistic park (28,000 sq m). The biggest upcoming projects in 2016 are new premises in South Gate industrial park (100,000 sq m) and Radumlya logistic park (70,000 sq m).    

In the longer term, further decline in the amount of new deliveries is expected. The bulk of future supply in 2017-2018 is represented by built-to-suit schemes, implying that the construction begins only in case of actual demand for warehouse space. 

Demand and Supply of Warehouse Market in Moscow Region
Demand and Supply of Warehouse Market in Moscow Region_27042016.png
Source: JLL

Several large transactions originally expected to be completed in late 2015 and postponed to Q1 2016 contributed positively to the total take-up volume in Q1, which were 280,000 sq m compared to 146,000 sq m in Q1 2015. The average size of a warehouse deal was 14,000 sq m, which was slightly less than the average size in 2015 (16,400 sq m). The main drivers of demand for new warehouse space in Q1 were retailers and logistics companies, accounting for 46% and 34% of all transactions respectively. 

In terms of geographical location, the demand for warehouse space was predominantly in the southern and northern directions, where active recent construction in recent years resulted in large volumes of new supply of warehouse space.

Despite considerable demand in Q1 2016 coupled with the decreasing supply, the vacancy rate in existing warehouse premises saw almost no change both in QoQ and YoY terms and stood at 10.2% versus 10.5% at the end of 2015 and 10.4% in Q1 2015.    

"The occupier activity was seen mainly on the secondary market, as tenants were moving out of expensive stock to more affordable new warehouse premises. This process, however, did not affect net absorption and led to a significant increase in vacant space on the secondary market.” – Petr Zaritskiy, Regional Director, Head of Warehouse and Industrial Department, JLL, Russia & CIS, commented – “At the same time, due to demand for warehouse space, particularly from food retailers, the amount of take-up this year is unlikely to fall below 850,000-900,000 sq m, which will likely lead to a gradual decline in the overall vacancy rate to 9-9.5% by the end of 2016."

Warehouse Market Balance in Moscow Region
Warehouse Market Balance in Moscow Region_27042016.png

Source: JLL

Over the course of Q1, the average level of asking rents for new deals in Class A decreased by 7.5% QoQ to RUB3,700 sq m per year (triple net). The level of prime rents stood unchanged QoQ at RUB4,200 sq m per year (triple net). The actual level of rents varies quite significantly depending on particular object and its location, with relatively expensive supply located on the most demanded locations (e.g. close to Moscow Small Ring highway).

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 $5.2 billion and gross revenue of $6.0 billion, JLL has more than 230 corporate offices, operates in more than 80 countries and has a global workforce of more than 60,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 4.0 billion square feet, or 372 million square meters, and completed $138 billion in sales, acquisitions and finance transactions in 2015. Its investment management business, LaSalle Investment Management, has $56.4 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, 2015 and 2016 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.