q1 2012 office real estate market report · after q2 2011 (92,000 sq m) since 2003. the...
TRANSCRIPT
OVERVIEW
Q1 2012OFFICE REAL ESTATE MARKET REPORTMoscow
Knight Frank
HIGHLIGHTS• Totalstockofthequalityofficespaceshasreachedthelevelof12mlnsqmbyApril2012,20%is
ClassApremises.
• Supplygrowthtotaled111,000sqmofClassAandBpremisesinQ1andthatisthesecondlowestafterQ22011(92,000sqm)since2003.Thecommissioningdatesofthenumberofprojects,plannedforQ12012,havebeendelayedforseveralmonthsminimum.
• Wehighlightahighdemandlevelinthefirstthreemonthsof2012.Take-uptotaled200,000sqminQ12012,thatis10%higherthanpreviousyearindicator.Hightenants’activityinQ1willinfluencetheofficemarketinQ2andQ3.Weexpectthattenants’demanddynamicwillremainpositive,aswellastake-upvolumeincreaseincaseofthelackofmacroeconomicfluctuations.
• Vacancyrateremainedsteadydecrease,representingClassAvacancyrateof12.1%,and16.8%forClassB.
• Averagerentalratesremainat$830persqmforClassAand$480persqmforClassBoffices.Theaveragerentsareontheleveloftheendof2008nowanddidn’treachthemaximumpre-crisislevelsthatwerefixedinthemiddleof2008.
Q1 2012OFFICE REAL ESTATEMARKET REPORTMoscow
2
Supply
BytheendofQ1ClassAtotalstockamounted2.36mlnsqmandClassB–9.66mlnsqm.Quarterlysupplygrowthtotaled111,000sqmthatisthesecondlowestafterQ22011(92,000sqm)since2003.TheonlyClassAbusinesscentredeliveredtothemarketwasLightHouse(officearea22,000sqm)locatedinPaveletskiybusinessdistrict.
Actualsupplygrowthwas2–2.5timeslowerthanexpectedasmostprojects’deliveringdateshavebeendelayedforatleastseveralmonths.
Lookingforward,weexpectthedeliverywillbeincreasingduringtheyear.ItisworthmentioningthatsomepremisesinClassAbusinesscentresplannedforthedeliveryin2012arepre-leased.
SuchkeyClassAbusinesscentresasAlcon,AquamarineIIIandOlympicHallareduetocompletionaswellasRossoRiva,MercuryCityandRaiffeisenEvolutionbytheyearend.
OFFICE REAL ESTATE
MARKET REPORTKey indicators Class А Class В+ Class B-
Totalstock,thousandsqm 12,021
including,thousandsqm
2,362 6,503 3,156
+1%* +1.4%*
DeliveredinQ12012,thousandsqm 111.2
including,thousandsqm 22.5 87.4 1.3
Vacancyrates,%12.1 16.8
-0.4p.p.* -0.4p.p.*
Averagerentalrates,$/sqm/p.a.Changecomparingtotheendof2011
830 480
Rangeofrentalrates**650-1,200
(1,000-1,300***)350-650 260-400
OperationalExpenses,$/sqm/p.a. 110-210 80-120 50-95
*Comparingtotheendof2011
**ExcludingOperationalExpensesandVAT(18%)
***Rangeofrequestedrentsforpremiumspace
Source:KnightFrankResearch,2012
Nikola ObajdinHeadofOfficeDepartment
«We observed a high level of tenants’ activity in the first three months that is not typical for the beginning of the year. Stable demand increase has continuedd in Q1 2012 and we expect a number of transactions to be closed in Q2 as the result of active market.
In January and February a number of new projects have been announced by developers, we consider this fact as positive signal as the same period in 2010 and 2011 developers’ performance was not so promising. Taking into account construction cycle we expect previously announced projects to come into the market in 2015-2016.
Moreover , the beginning of the year was remarkable because of high buyers’ demand. Office market has experienced several key transactions, i.e. for investment purposes and companies’ relocating as well.
Rental rates remain stable at the level of the end of 2011».
Vorob'evskiyBusinessCentre12,UniversitetskiyAve
www.knightfrank.ru
3
Demand
Afterthefirstthreemonthsof2012weobservedtenants’highactivity,take-upreachedthelevelof200,000sqmthatis10%highercomparedtoprecedingyearindicator.Severallarge-unittransactionsarecurrentlyatthestageofnegotiation.WeexpectthedemandvolumetoremainatthesamelevelinQ2.
Withthelackofmacroeconomicfluctuationsthedemandcouldpossiblyrecordapproximately1mlnsqmin2012risingabovepreviousyearindicatorby5–8%.
Class А Class В
*Forecast according to announced construction volumeSource: Knight Frank Research, 2012
250
200
150
100
50
0
Q1 demonstrated low delivery, however,the increase of the delivery volumesis expected by the end of the yearthousand sq m
III II III IV III II III IV III II* III* IV*
2010 2011 2012
16,8%
12,1%
Offices’ supply structure
Class A vacancy rateClass B vacancy rate
Source: Knight Frank Research, 2012
Cla
ss B
Class A
Office properties delivered* in Q1 2012 and due to complete during the remainder of 2012
*Officeprojects,thatpassedStateCommissioninQ12012.ClassesaccordingtoMoscowResearchForumSource:KnightFrankResearch,2012
Q1 2012OFFICE REAL ESTATEMARKET REPORTMoscow
4
VacancyratedemonstratinggraduatedecreaseinQ1hasreachedthelevelof12.1%forClassAand16.8%forClassBoffices.
Financialsectorwasparticularlyactivedemonstratingthehighesttake-upperformanceinQ1withtotal25%shareofClassAandBtake-up.ITandTelecomremainstabledemand,however,inthemeantimeB2Bsectordemandfelldownifcompareto2011.Distinctly,Q1wasnotedforseveralmajorreal-estateconsultingcompaniestoleasenewofficepremises.
1,400
1,200
1,000
800
600
400
200
0
25
20
15
10
5
0
Tenants’ activity gives optimistic tendency of increasing take�up volume by 5�8% comparing to 2011thousand sq m
Class A ClassB
*New office classificationSource: Knight Frank Research, 2012
Delivery Take�up Vacancy rate
%
2003 2004 2005 2006 2007* 2008 2009 2010 2011 2012F
1,600
1,400
1,200
1,000
800
600
400
200
0
25
20
15
10
5
0
%thousand sq m
2003 2004 2005 2006 2007* 2008 2009 2010 2011 2012F
25%
17%
10%10%
6%
4%
3%
5%2%2%
2%
14%
Q1 demonstrated high demand from financial sector and FMCG
Source: Knight Frank Research, 2012
Banking / Finance / Investment
FMCG / Retail
IT / Telecommunicatios
Audit
Real Estate
Medicine / Pharmaceutical / Healthcare
Advertising / PR
Machinery / Equipment
Mining
Manufacturing
Construction / Architecture / Engineering
Other
Key transactions in Q1 2012
Tenant Area, sq m Address Property Name
BDOUnikonBusinessSolutions 6,320 8,PreobrazhenskayaSq PREO8
TinkoffCreditSystems* 3,125 39,LeningradskoeHwy OlympiaPark
Wikimart* 1,935 15,LeningradskiyAve Bolshevik
AutoTracker* 1,695 3,bld1,SkladochnayaSt Gorizont
KnightFrank 1,690 26,ValovayaSt LightHouse
DixySouth 1,670 23,KirovogradskayaSt Solutions
CBRE 1,555 5bldB,LesnayaSt WhiteSquare
ALDAutomotive 1,500 25,VarshavskoeHwy ChaikaPlazaX
Nadeco 1,370 11-13,NikolskayaSt
Starlett 1,325 3bld5,Stolyarniylane Apelsin
Energoprom 1,310 12bld.1,DvintsevSt Dvintsev
*KnightFrankactedasaconsultantofthetransaction
Source:KnightFrankResearch,2012
www.knightfrank.ru
5
Commercial Terms
Averagerentalratesdemonstratingsteadyincreaseby10%and6%forClassAandBduring2011,hadstabilizedat$830and$480persqmperannumrespectively(triplenet).Thetendencyoflowconstructionvolumealongwithtenants’highdemandallowstopredictrentalratesslightincrease,aswellastraditionalgrowthofprimerents.
Moreover,rentalratesdifferentiationbylocationisstillsignificant.ClassArentsvaryfrom$700to$1,300andClassB–from$350to$700.Mainly,premiumlocationbusinessdistrictssuchasBoulevardRingandKremlinZoneareexpectedtoexperiencegraduaterentsincrease.
Ascurrentmarketsituationisdefinedasstablewithvacancyrateabovecriticalpoint,wedonotexpectmarketrentstoreachthehistoricalmaximumof2008infuture2–3years.Todayofficemarketisinbalanceandnotdominatedbytenantorlandlord.
Class A and B rental rates remain stable$ / sq m/ year
Source: Knight Frank Research, 2012
Class A Class B
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
1,600
1,400
1,200
1,000
800
600
400
200
0III II III IV III II
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