According to JLL, warehouse completions in Moscow region amounted to 297,000 sqm in Q4 2017. In 2017, a total of 532,000 sqm 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 sqm), Klin Logistics LP (56,500 sqm), a new phase in Vnukovo II logistics complex (50,000 sqm), block C of Dmitrov logistics complex (45,000 sqm), Green Store multi-temperature complex (42,700 sqm), and the second phase of Technopark Uspenskiy warehouse complex (42,000 sqm).
About 53 percent of the new supply in 2017 has been constructed by five companies: Orientir (83,000 sqm), Amtel Properties (56,500 sqm), Logistics Partners (50,000 sqm), Ghelamco (45,000 sqm), and PNK Group (45,000 sqm).
Some 969,000 sqm of warehouse premises are announced for delivery in 2018, 45 percent 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 sqm) of warehouse complex for Wildberries.ru; 90,000 sqm in Solnechnogorsk District for a large international retailer; 68,000 sqm for Utkonos in the new Orientir Sever 3, 52,000 sqm warehouse for Ulmart.
Among other large projects for 2018 are the new Orientir Zapad park (400,000 sqm) of Orientir company and PNK Park Valischevo industrial park of PNK Group. In the latter project, about 130,000 sqm are announced for delivery in 2018, 52,500 sqm 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 sqm) and PNK Park New Riga (300,000 sqm).
The volume of vacant space on the Moscow region warehouse market in 2017 totaled 1.39 million sqm (of 16.9 million sqm). The vacancy rate was down 1.3 ppts, or 163,000 sqm for 2017, to 8.3 percent 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 percent 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 sqm,” says Oksana Kopylova, Head of Retail and Warehouse Research, JLL, Russia & CIS.
The total take-up volume in the Moscow region in 2017 amounted to 1.2 million sqm, 18 percent less than in the previous year. About 336,000 sqm were leased and acquired in Q4 2017.
In the past year, the main warehouse demand drivers traditionally were retailers and distributors, with 39 percent and 19 percent of the transaction volume respectively. Within the retail segment, e-commerce showed high activity in 2017, with 22 percent of the total transaction volume.
Leasing deals dominated in the total demand volume in 2017 (61 percent). At the same time, the share of sales of built-to-suit projects increased by 6 ppts compared to 2016, to 21 percent, 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.
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 sqm 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.
