July 22, 2016

Demand for Class A offices for the last 12 months is two times higher than pre-crisis levels

Demand for Class A offices for the last 12 months is two times higher than pre-crisis levels

CBRE has summarized H1 2016 results for the Moscow Office market. According to the report, take-up volume in H1 2016 increased by 69 percent y-o-y and amounted to 557,100 sqm. At the same time, the share of Class A offices in take-up increased by more than 3 times y-o-y in H1 2016.

In H1 2016 Class A vacancy decreased to 19,3 percent from 26 percent at the end of 2015. To a greater extent this decrease in vacancy rate is related to withdrawal from the market of Eurasia Tower (93,900 sqm) and President Plaza (114,700 sqm), which will be potentially occupied by structures of VTB and Sberbank, respectively. These two towers accounted for 2.4 percent and 3 percent of the vacancy rate in Class A, respectively.

Elena Denisova, Senior Director, Head of Office Agency of CBRE in Russia said: "Two large buildings being taken off the market has had a positive impact on Class A vacancy rates. But one must understand that these are non-market transactions: in reality, if excluding these buildings from calculations, Class A vacancy fell by only 1.3 percent. These type of transactions are a continuation of the trend that began last year, when large corporations, with state participation and government authorities, became active in the office market. On one hand it has had positive effects on market indicators, on the other - it makes market forecasting even more difficult."

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