Participants in the discussion Warehouses as a Driver of Commerce were unanimous in their view that the potential for growth in Russia’s warehouse market is enormous, but developers want confirmation of bankable demand from retailers and manufacturers prior to beginning construction.
Discussion participants included: Artur Abrakhmanov, PPF Real Estate; Pavel Breev, M.Video; Christopher Van Riet, Radius Group; Armen Shakhnazarov, А2; Denis Shulga, X5 Retail Group N.V.; and Rustam Yuldashev, STS Logistics (Asia). Introductory remarks were delivered by Nikolay Kazanskiy, Managing Partner, Colliers International Russia, and Robert Dobrzycki, Managing Partner for Central and Eastern Europe, Panattoni Europe.
As Nikolay Kazanskiy noted, the Russian warehouse market has colossal potential. Today the market includes approximately 13 million m2 of prime warehouse space, and more than 1.5 million m2 have been inaugurated and absorbed over the past year. However, even if the volume of warehouse premises doubles, the Russian market will continue to lag behind Poland in terms of market saturation. Looking at the global leaders, one can see that warehouse growth is being driven by growth in retailers’ online sales, which creates a need for greater logistics capacities. Although at present online sales account for only 2% of total retail turnover in Russia, this format is on the verge of rapid growth, which will stimulate demand for high-quality warehouse premises in Moscow and Russia’s regions.
The enormous potential of the Russian warehouse market was also highlighted by Robert Dobrzycki of Panattoni Europe: speaking about the development phases of warehouse facilities in Poland, he noted that the Russian and Polish markets have much in common.
What sort of guidelines does a developer follow when selecting a region for warehouse investments, and what does a retailer look for when choosing a warehouse? These questions were the focus of the subsequent discussion. One important problem which all of the speakers acknowledged was the low level of development of warehouses in the regions.
Denis Shulga, Logistics Director at X5 Retail Group, noted that in the regions warehouse real estate is poorly developed: if in cities with a population of a million or more it is possible to find facilities which are more or less acceptable, then in the smaller cities there are no suitable offers, forcing retailers to find their own solutions, such as rebuilding outdated facilities. However, building one’s own warehouse is not always justified in terms of a company’s economic model and effective use of resources, particularly for retailers with aggressive expansion strategies for the regions, the expert said.
Executive Director of PNK Group Oleg Mamaev pointed out that in the Moscow region up to 1 million m2 Class A warehouse premises are brought to the market every year yet the vacancy rate remains quite low. Nonetheless, the growing level of competition among warehouse developers will be a force driving the assimilation of new technologies on the market.
Speaking at the roundtable, Dmitry Pumirzin, General Director of AT Real Estate, spoke about how his company is developing the Class A Sofino Logistics Park of approximately 840,000 m2 in the Ramensky district of the Moscow region. The project team, together with consultants from Colliers International and the British architecture bureau RPS Group, studied the best warehouse complexes in the UK and Poland and it will apply a range of the latest European technologies in the construction of the corpuses at Sofino (superflat seamless floors, LED lighting, etc). “At the present stage we are actively working to make the project as comfortable and convenient as possible for tenants both in terms of its technical features and in the operational process. This is why the decision was made to use BREEAM standards, which will make it possible to boost the energy efficiency of the premises and also provide an opportunity to decrease utility payments,” Dmitry Pumirzin added.