The internal structure of new demand has been re-distributed towards Grade B+ properties due to the postponement until next year of the commissioning of several large Grade A business centres. The share of Grade B+ properties was 74% and Grade A was at 21% (45% in 2015). The Grade B share still has not exceeded 10% of newly commissioned property.
Decentralisation continues – in 2016, 58% of the annual amount of newly commissioned property was built in the area between the Third Ring Road to the Moscow Ring Road and 15% on the outer boundary of the Moscow Ring Road. Only 27% of new offices are concentrated in the Central Business District.
Vacancy dropped from 13.9% to 12.4% in the office sector in 2016. This is due to the fact that two large facilities (President Plaza and Eurasia Tower) were withdrawn from the market, and vacancy decreased by almost 210,000 m2. At the moment, the supply shortage is manifested only in the selection of ready-to-move-in floor space of more than 10,000 m2 in high-quality, well-located business centres and more than 5,000 m2 within the Central Business District.
Grade A vacancy decreased most significantly – by 6.9 percentage points from 25.3% to 18.4%. The currently amount of vacant Grade A space is 716,000 m2. The share of vacant space in the Grade B+/- category is 10.6%, or 1.4 million m2.
Most of the proposed facilities (37%) are concentrated in the Central Business District, the Kutuzovsky sub-market and west. Despite minimum occupancy in the business centres located in the Kutuzovsky sub-market and the southwest, vacant space there also decreased in 2016. In particular, vacancy decreased in the Kutuzovsky sub-market from 48% to 30%, and from 30% to 28% in the southwest.
The vacancy rate at the Moscow International Business Centre fell 13 percentage points, as a result of which the amount of vacant space did not exceed 18%, or 162,500 m2, by the end of 2016. The drop in vacancy contributed to strong demand among Russian companies, which are more apt to consider this business district as a location for their business.
Vera Zimenkova, regional director, Corporate Solutions & Office Agency, Colliers International Russia: “In 2017, developers announced the commissioning of about 410,000 m2 of office space, more than 90% of which was declared as Grade A. However, the choice of high-quality space area of over 10,000 m2 and ready-to-move-in buildings will remain limited, since the pace of new commissioning in 2017-2018 will remain low compared to the pre-crisis period. Given the limited launch of new projects and gradually recovering demand for office space, according to our forecasts, the vacancy rate in 2017 will amount to 12%-12.5%. However, due to the pending vacancy of previously occupied offices (VTB, Sberbank, MegaFon), the amount of vacant space could grow.”