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News Release

Moscow

Vacancy rate on the regional warehouse markets in Russia halved in H2 2017

There is a shortage of quality warehouse facilities in the regions, says JLL


​Moscow, 07 February 2018 – According to JLL, at the end of 2017 the warehouse vacancy rate on the Russia regional markets, excluding Moscow and St. Petersburg, declined to 4% from 8% at the end of H1 2017. For comparison, the vacancy rate in the Moscow region reached 8.3% in Q4 2017, in St. Petersburg 4.8%.

The Moscow region now has 2.4 times more available warehouse space than the rest of Russia, including the second-largest warehouse market of St. Petersburg.

​Geographic distribution of vacant quality warehouse space in Russia, ‘000 sq m
​Geographic distribution of vacant quality warehouse space in Russia_07022017.png
Source: JLL

Low vacancy rates in the regional cities are the result of a significant reduction of available area in H2 2017 in the most popular regional logistic hubs, Novosibirsk, Kazan, and Rostov-on-Don.

In some regional markets, the total supply remains low. While the vacancy rate in some cities is quite high, in the range of 20-38% in Saratov, Bryansk, Kemerovo, Kursk, Irkutsk, in absolute terms the volume of vacant premises does not exceed 15,000 sq m in any of the above cities.

​Regional warehouse vacancy rate
​Regional warehouse vacancy rate_07022018.png

​Source: JLL

"The Russian regional quality warehouse market remains highly heterogeneous. The supply in the Moscow region is almost 17m sq m, in St. Petersburg 2.8m sq m, and in the regions 8.4m sq m. Such uneven distribution is determined by the demand in these cities.” – comments Oksana Kopylova, Head of Retail and Warehouse Research, JLL, Russia & CIS. – “Yekaterinburg and Novosibirsk are the largest hubs in terms of quality warehouse supply in the regions, with close to 1m sq m in each.”

New completions of regional warehouses (excluding Moscow and St. Petersburg) totalled 427,000 sq m in 2017, twice less than in 2016. For 2018, 559,000 sq m are announced and are under construction, with another 300,000 sq m that can be built on demand.

The new supply leaders in 2017 were Yekaterinburg (97,000 sq m), Vladivostok (50,000 sq m), and Kazan (39,000 sq m).

Notable 2017 projects included the X5 Retail Group distribution centre in Yekaterinburg (developer Romex, 35,600 sq m), the 6th phase of the Pridorozhniy logistics centre in Samara (SamaraTransAvto, 34,000 sq m), the Magnit distribution centres in Murmansk (33,000 sq m) and Kirov (30,000 sq m), and the X5 Retail Group distribution centre in Tyumen (30,000 sq m).

“The leaders in expected 2018 warehouse completions are the traditional millionniki cities, Yekaterinburg, Novosibirsk, Rostov-on-Don, Kazan, Samara, and Krasnodar. About 54% of next year’s pipeline (559,000 sq m) have already secured its occupiers. For comparison, in Moscow, 45% of 2018 completion is contracted,” – says Oksana Kopylova.

Among the largest projects this year are the 3rd phase of the Rolsy complex in Yekaterinburg (50,000 sq m), and new buildings within the Industrial Logistics Park of Novosibirsk Region, including Sibirskiy LP (66,000 sq m, a former Eurasia Logistics project) and the Russian Post distribution centre (48,000 sq m).

Quality warehouse stock in Russian cities, '000 sq m
Quality warehouse stock in Russian cities_07022018.png
Source: JLL

​“There is currently a shortage of quality warehouse facilities in the regions. Low speculative construction activity has led to a significant reduction of the vacant space,” – observes Viacheslav Kholopov, Regional Director, Head of Warehouse & Industrial Department, JLL, Russia & CIS. – “There is another interesting regional trend, with the geography of quality warehouse supply expanding in cities not previously considered as federal transport hubs (Murmansk, Tyumen, Kirov, and Tula). This is driven by demand from retail chains which expand their coverage into regions and choose these cities based on internal business development strategies.”

Warehouse take-up dynamics in top regional markets, ‘000 sq m*
Warehouse take-up dynamics in top regional markets_07022018.png

* Excluding direct deals. According to JLL, the volume of direct deals (between owners and operators of warehouse space) on regional markets in 2017 was about 30-35% of the total take-up.

Source: JLL

Overall, Yekaterinburg, Novosibirsk, and Chelyabinsk were the leaders in take-up in 2017. These three cities accounted for 73% of transactions that involved consultants (excluding direct deals between owners and warehouse operators).

The main occupiers of quality warehouses on regional markets are large retail chains, primarily in the grocery segment. In addition to the FMCG sector consolidation, there are two processes evident on the warehouse market. The first is the rise of warehouse occupancy in the core cities (such key logistics hubs as Yekaterinburg, Novosibirsk, and Rostov-on-Don). The second is the expansion of coverage by retail chains into secondary locations, including acquisitions of local operators. 

Among the largest regional transactions in H2 2017 is the 46,000 sq m lease deal in the Yuzhnouralskiy TLC (Chelyabinsk Region) by Detskiy Mir and the 30,000 sq m lease in the PNK-Kosulino industrial park (Yekaterinburg) by Auchan.

The weighted average asking rental rates in new transactions on the regional warehouse market remain in the range of RUB2,800-3,600 per the sq m per year (excluding VAT and operating expenses). In the locations with scarce supply such as Primorye and Vladivostok, rents average up to RUB4,000-4,500 per sq m per year, higher than in Moscow region.



​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.