According to JLL estimates, the new supply volume in the Moscow Region in Q1 2017 has declined by 40 percent YoY to 60,000 sqm. Overall in 2017, around 650,000 sqm of new space will be delivered in the Moscow Region, 15 percent less than last year.
A distinctive feature of 2017 is the domination of speculative warehouses in the completion structure. According to JLL estimations, such projects account for almost 80 percent of the forecast volume of new supply in comparison with 33 percent in the previous year. The share of built-to-suit (BTS) projects will decline from 40 percent to 10 percent. “Low volume of BTS projects under construction is one of the main reasons for lower new completions in 2017. The contraction of BTS projects delivery will happen as a result of longer realization of some difficult quality projects, which completions were postponed until 2018,” Viacheslav Kholopov, Regional Director, Head of Warehouse and Industrial Department, JLL, Russia & CIS, said.
In Q1 2017, only four warehouse complexes were commissioned: Diart (16,200 sqm), a new block in Logopark Dmitrov (20,000 sqm), part of Phase I in distribution center Radumlya (13,000 sqm), warehouse complex Khimki (8,000 sqm). It is worth highlighting that all newly constructed logistics premises are located in the north of the Moscow Region.
Here are the largest warehouse complexes under construction, planned for delivery by the end of the year: the warehouse complex Borisovka (63,000 sqm), new blocks in the PNK-Bekasovo and PNK-Northern Sheremetievo industrial parks (60,000 sqm), Logopark Klin Logistics (57,000 sqm), Vnukovo Logistic 2 (50,000 sqm), next phases in Logopark Sever – 2 (43,000 sqm), phase II in Tekhnopark Uspenskiy (42,000 sqm). 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.
The total take-up volume in Q1 2017 was 130,000 sqm, twice lower the Q1 2016 volume. The average deal size declined by 38 percent compared to the first three months last year. In Q1 2017, distributors and retailers prevailed in the demand structure (42 percent and 27 percent respectively).
The vacancy rate in existing warehouse complexes in the Moscow Region increased to 12.8 percent from 12.2 percent at the end of 2016 and 10.2 percent in Q1 2016. In absolute terms the vacancy on the Moscow warehouse market reached 1.65 million sqm, showing 6 percent QoQ growth and 33 percent YoY growth.
“If the quarterly demand stays in the range of 150,000-200,000 sqm, we expect the vacancy to stay at the same level, 12-13 percent throughout the year,” Viacheslav Kholopov forecasts. “In the long-term, the available space will be gradually absorbed, although we do not expect the reduction of the vacancy rate below 5-7 percent. The existence of significant amount of available space of different quality has become the new reality of the Moscow market: large vacancy with stay with us forever.”
Over the course of Q1, the average level of asking rents for new deals declined from RUB 3,500 to RUB 3,300 per sqm per year, triple net (-6 percent QoQ). The level of prime rents declined as well – from RUB 4,000 per sqm per year to RUB 3,800 (triple net). Besides, the readiness of the owners to provide discounts in the negotiation process has declined.
