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News Release

Moscow

​High vacancy rate underlines a record low warehouse delivery in Moscow region

In 2017, 532,000 sq m were built, the lowest level in 12 years


​Moscow, January 25, 2018 – According to JLL, warehouse completions in Moscow region amounted to 297,000 sq m in Q4 2017. In 2017, a total of 532,000 sq m were delivered, half the 2016 volume and the lowest since 2006.

Among the largest projects completed in 2017 are new buildings in Orientir Sever 2 warehouse complex (83,000 sq m), Klin Logistics LP (56,500 sq m), a new phase in Vnukovo II logistics complex (50,000 sq m), block C of Dmitrov logistics complex (45,000 sq m), Green Store multi-temperature complex (42,700 sq m), and the second phase of Technopark Uspenskiy warehouse complex (42,000 sq m).

About 53% of the new supply in 2017 has been constructed by five companies: Orientir (83,000 sq m), Amtel Properties (56,500 sq m), Logistics Partners (50,000 sq m), Ghelamco (45,000 sq m), and PNK Group (45,000 sq m).

​Warehouse completions in Moscow region
Warehouse completions in Moscow region_25012018.png

Source: JLL

Some 969,000 sq m of warehouse premises are announced for delivery in 2018, 45% of which have already found their occupiers. The main 2018 warehouses projects are the built-to-suit schemes for large retailers, namely: the 1st and 2nd phases (100,000 sq m) of warehouse complex for Wildberries.ru; 90,000 sq m in Solnechnogorsk District for a large international retailer; 68,000 sq m for Utkonos in the new Orientir Sever 3, 52,000 sq m warehouse for Ulmart.

Among other large projects for 2018 are the new Orientir Zapad park (400,000 sq m) of Orientir company and PNK Park Valischevo industrial park of PNK Group. In the latter project, about 130,000 sq m are announced for delivery in 2018, 52,500 sq m of which are already under construction for Operator Kommercheskoy Nedvizhmosti. In addition, two new industrial parks were announced by PNK Group for 2018, PNK Park Zhukovsky (500,000 sq m) and PNK Park New Riga (300,000 sq m).

The volume of vacant space on the Moscow region warehouse market in 2017 totaled 1.39m sq m (of 16.9m sq m). The vacancy rate was down 1.3 ppts, or 163,000 sq m for 2017, to 8.3% in December. Its fluctuations in the last three years were typical for the market, by 0.1-1.5 ppts per quarter, while in absolute terms vacant premises remains at a constantly high level.

“Sharp decline of completions in 2017, 33% of which had already been contracted at the stage of construction, served as a balancing factor for the Moscow region warehouse market. The net absorption, that is the difference between occupied stock at the beginning and end of the year, remained at the level of 2016 and amounted to 700,000 sq m,” – says Oksana Kopylova, Head of Retail and Warehouse Research, JLL, Russia & CIS. 

​Available warehouse premises dynamics in Moscow region​
Available warehouse premises dynamics in Moscow region_25012018.png

​Source: JLL

The total take-up volume in the Moscow region in 2017 amounted to 1.2m sq m, 18% less than in the previous year. About 336,000 sq m were leased and acquired in Q4 2017.

In the past year, the main warehouse demand drivers traditionally were retailers and distributors, with 39% and 19% of the transaction volume respectively. Within the retail segment, e-commerce showed high activity in 2017, with 22% of the total transaction volume. 

​Demand distribution by business sector in Moscow region
Demand distribution by business sector in Moscow region_25012018.png

Source: JLL

Leasing deals dominated in the total demand volume in 2017 (61%). At the same time, the share of sales of built-to-suit projects increased by 6 ppts compared to 2016, to 21%, the level seen in 2014 and 2012.

“We expect a new development cycle to gather pace in 2018. At the same time, the market still has high volume of vacant premises, almost 1.4m sq m, but this availability is heterogeneous both in terms of quality and size. The mismatch of demand requests and supply options stimulates warehouse development, despite the large volume of vacant premises. So, for example, if a tenant or a buyer needs a warehouse block of 30,000 sq m, in most cases the best option will be a built-to-suit scheme. Moreover, in this case, the future occupier will get the building of required quality and with customized specifications,” – comments Viacheslav Kholopov, Regional Director, Head of Warehouse & Industrial Department, JLL, Russia & CIS.

​Moscow region warehouse take-up and completions
Moscow region warehouse take-up and completions_25012018.png

​Source: JLL

Weighted average asking rental rates in new transactions on the Moscow region warehouse market are at a minimum and remain in the range of RUB3,000-3,600 per the sq m per year (excluding VAT and operating expenses). According to JLL analysts, the rental growth will start in 2018: new and reconstructed buildings will be offered on the market at a higher price, which will lead to a change in the average rental rate.


About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2016, JLL had revenue of $6.8 billion and fee revenue of $5.8 billion and on behalf of its clients managed 4.4 billion square feet, or 409 million square meters, and completed sales acquisitions and finance transactions of approximately $145 billion. At the end of the third quarter of 2017, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of over 80,000. As of September 30, 2017, LaSalle Investment Management had $59.0 billion of real estate under asset 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, 2006-2017 at the Commercial Real Estate Awards, Moscow; Consultant of the Year at the Commercial Real Estate Awards 2009, 2016, St. Petersburg; Consultant of the Year at the RCSC Awards in 2015.