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H1 results for Moscow’s warehouse segement: 700,000 sqm of new space enters market

According to the international real estate consultancy Colliers International, during the first six months of 2014 the Moscow warehouse market expanded by 700,000 sqm, which is an absolute record for this period over the past five years and is 80% more than the H1 new build total in 2013. This large volume of new space has increased the total volume of prime warehouse space in the Moscow region to 9.8 million sqm.
According to the calculations of Colliers International, more than one-third of the new warehouse terminals were opened in the South- East of the Moscow region, one-third in the North and 17% in the South. More than 72% of the total volume of new supply appeared within 30 km of the MKAD. The largest properties to be completed during the first half of the year were PNK-Chekhov 2 (GLA – 81,900), first phase of SST-Britovo  (80,000 sqm), second phase of the Dmitrov Logistics Park (75,400 sqm) and others.

The distribution of demand was such that 70% of the deals were for warehouse space situated in the South-East and North of the Moscow region, where the largest volumes of available space are situated. The total volume of space absorbed by the market was about 60% of the volume absorbed in the first half of 2013 (320,000 sqm). The share of warehouse space purchased by end-users remained unchanged from this period in 2013 – 13.5%.

Despite the substantial volume of new build, the Moscow warehouse market continues to experience a deficit of quality space, with the average vacancy rate not exceeding 3.1%. 

According to the estimates of Colliers International, due to the large volume of new supply lease rates have become increasingly dependent on the geographic location of a property. In the North-West and South-West the average rates for warehouses within 15 km of the MKAD were $135-140/sqm/year. In these same directions but further than 15 km from the MKAD the average rates were $125-130/sqm/year. The lowest rates were found in projects situated 15-30 from the MKAD to the east of Moscow ($115/sqm/year).

Another 1.3 million sqm of warehouse space has been announced for completion by the end of 2014. However, considering the actual rate of construction in the region, analysts of Colliers International anticipate that no more than 750,000 sqm of new space will enter the market by the end of the year. 

Vladislav Ryabov, Partner, Regional Director of Warehouse, Industrial and Land, Colliers International Russia: “More than half of the projects planned for opening by the end of the year are situated in the North of the Moscow region, another 15% is being built in the South while the rest is in the east, South- East and North- West. Considering the current take-up level, the volumes of new space entering the market will maintain the balance of supply and demand in these areas. At the same time, 70% of the new space is being created near the ring highway A107. However, over time all of this space will be absorbed by the market and the vacancy levels will remain low, made possible in part by the construction of the Central Ring Road, which should improve the transport situation on the main roads and reduce pressure on the MKAD.”