2016 WAreHouse MArket report - Knight Frank...WAreHouse MArket report. MosCoW 2 key indicators....

HigHligHts � 709 thousand sq m of quality warehouse space were built in 2016, which was comparable to the 2015 level.

� About 17% of the total stock of new facilities or 118 thousand sq m were built for own use; 40% or 288 thousand sq m – for speculative purposes (for the open market) and 303 thousand sq m (43%) were constructed directly for existing clients (built-to-suit). As a comparison: the share of built-to-suit premises did not exceed 18% in 2015, and 10% in 2014.

� the vacancy rate remained practically unchanged at 9.3% (more than 1.2 million sq m) at the end of the year.

� the volume of transactions reached 1.1 million sq m, 11% down from the previous year's figure and became the third result in the whole history of the market. However, the new take-up transactions amounted to 80% or 883.6 thousand sq m (excluding the move to other premises, changes of existing commercial terms and the renewal of current lease agreements).

� the main tenants of quality warehouses were retail operators and distributors as well as in the year-earlier period. in total, their share exceeded 60%.

� the asking rental rates for Class A premises were in the range of 3,000–4,300 rub./sq m/year.

WAreHouse MArket reportMoscow

2016

reseArCH

Warehouse Market report. MoscoW

2

key indicators. Dynamics*

"Several stable trends shall be mentioned summing up the outgoing year. Firstly, the volume of completed transactions is at a sufficiently high level, it is almost equal to the indicator of the previous year. On the other hand, the take-up of the existing vacant stock is very slow and the average marketing time is from 8 to 12 months. In general, we can state that the market has reached its historically bottom values of rental rates, and the demand/supply ratio is in equilibrium. The unstable economic situation, the low level of rental rates and the high vacancy rate were constraining factors for many developers to implement new speculative projects, so most of the new construction was built-to-suit.

As for demand, a large share of transactions has been evidenced, they were previously deferred by large players waiting for the "bottom of the market" and more attractive commercial terms. As a result, 42% of the total volume were transactions with an area of more than 25 thousand sq m.

We expect a reduction in demand in 2017, as key players of the online market, retail and distribution have already acquired or leased the required premises. The average transaction size also declined in addition to reducing demand. Warehouse premises are being taken up even if slowly despite long marketing terms. Therefore, the further fall of rental rates is hardly worth counting in 2017. On the other hand, the existing vacant stock does not demonstrate the existence of serious prerequisites for the growth of rates."

Maxim ZagoruikoDirector, Industrial, Warehouses and Land, Knight Frank, Russia and CIS

Class А Class B

total quality supply volume, thousand sq m 12,666

including, thousand sq m 10,715 1,951

New delivery in 2016, thousand sq m 709

lease and purchase transactions volume in 2016, thousand sq m

1,099

Vacancy rate, % 9.3

Asking rental rates**, rub./sq m/year 3,000–4,300 2,000–3,300

operational expenses, rub./sq m/year 1,000–1,200 700–900

* Compared to the end of Q4 2015** triple net – excluding VAt, operating expenses and utility bills

source: knight Frank research, 2017

Vacant space and asking rental rates for Class A warehouse premises in terms of location

* triple net – excluding VAt, operating expenses and utility billssource: knight Frank research, 2017

3,000–4,300 3,000–

3,700

2,900–3,500

3,000– 4,000

3,000–4,200

3,000–4,300

3,000–4,300

3,500–4,400

3,000–4,350

Asking rentalrates*,rub./sq m/year

Vacancy rate0–3%3–7%7–10%> 10%

NORTH

NORTH-WEST

NORTH-EAST

EAST

WEST

SOUTH-WEST SOUTH-EAST

SOUTH

MKAD

Moscow

3

ReseaRch2016

Distribution of new 2016 delivery by type

lease and purchase transactions volume by size

43%

40%

17%

Built-to-suit

Speculative

Owner-operated

42%

37%

21%

< 10,000 sq m10,000–25,000 sq m> 25,000 sq m


source: knight Frank research, 2017source: knight Frank research, 2017


New delivery volume, transactions volume and vacancy rate dynamics

Average asking rental rates dynamics for warehouse premises in Moscow region denominated in ruB

Average asking rental rates dynamics for warehouse premises in Moscow region denominated in usD


lease and purchase transactions in Moscow region in terms of company profile, 2016


12%

3%2%

40%

23%

16%

RetailDistributionTransport and logisticsManufacturingOnline-retailOther

0

2

4

6

8

10

12

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2010 2011 2012 2013 2014 2015 2016New delivery volumeTransactions volumeVacancy rate

%thousand sq m

2010 2011 2012 2013 2014 2015 2016

rub./sq m/year

3,550

3,900

4,4004,700

4,5004,300

4,000

3,0003,250

3,6003,900

3,6003,300

3,000

2,000

2,500

3,000

3,500

4,000

4,500

5,000

Class А Class B

120 125132 130

100

117

132140 140

100

70 65

100 105

129

124

80

97

110115 120

90

60 5540

60

80

100

120

140

160

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

$/sq m/year

Class А Class B


4

Leningradskoe hwy

Pyatnickoe hwy

Yaro

slavs

koe

hwy

M-8 "K

holm

ogor

y"

Schelkovskoe hwy

Dm

itrov

skoe

hw

y

А-107

А-107

А-107

MKAD

P-113

A-104

SOLNECHNOGORSK

ZELENOGRAD(MOSCOW)

MOSCOW

YACHROMA

DMITROV

IKSHA

LOBNYA

DOLGOPRUDNIYSHODNYA

KHIMKI

MYTISCHI

PUSHKINO

KRASNOARMEISK

IVANTEEVKA

SCHYOLKOVO

FRYAZINO

KRASNOHORSK

DEDOVSK

KOROLEV

₽

₽

М-11

key iNDiCAtors

tHe VoluMe oF QuAlity supply

tHe iNCreAse oF supply

tHe VoluMe oF VACANt spACe

tHe VoluMe oF trANsACtioNs

AskiNg reNtAl rAtes (triple net – excluding VAt, operating expenses and utilities)

3,223 thousand sq m

324.3 thousand sq m

more than 370 thousand sq m

224.7 thousand sq m

3,700 rub./sq m/year

North

the northern direction of the region has always been one of the most popular for warehouse development, since leningradskoye and Dmitrovskoye highways, located here, provide the connection of the Moscow region with the port of st. petersburg, receiving goods from a number of european and Asian countries.

the supply volume of quality warehouses here was 3,223 thousand sq m or 25% of the total stock of the Moscow region.

the total increase in the new supply reached 324.3 thousand sq m in 2016, which was 45% of the total amount. Notice also that, 45% of new warehouses were directly constructed for built-to-suit purposes.

the volume of transactions in the north of the Moscow region was about 224.7 thousand sq m over the past year. Almost half of them were executed by distribution companies.

rental rates at the north of the region were one of the highest among all directions: the average rental rate was 3,700 rub./sq m/year (triple net).

key transactions

Company Segment Object Class Area, sq m

О'key retail logopark sever-2 A 59,645

Armtek Distribution Nikolskoe А 28,560

pek transport and logistics evropark А 16,000

Megapolis Distribution logopark pushkino А 13,762



lease and purchase transactions in Moscow region in terms of company profile

WAREHOUSE COMPLEXESSpeculative

Owner-operated

Object class

Existing

Under construction

8%

44%

27%

21%Distribution

Retail

Transport and logistics

Manufacturing

8%

44%

27%

21%Distribution

Retail


Manufacturing

tHe sHAre oF Built-to-suit WAreHouse CoMplexes

45%

5

ReseaRch2016

₽

₽

₽

SCHERBINKA

PODOLSK

CHEKHOV

KLIMOVSK

ODINTSOVO

LYTKARINO

ZHUKOVSKY

LYUBERTSY

DOMODEDOVO

TROITSK

DZERZHINSKY

MOSCOW

Kaluz

hsko

e hig

hwayKievskoe hwy

MKAD

MKAD

Novoryazanskoye hwy

Kashirskoe hwy

War

saw

skoe

hw

ySi

mfe

ropo

lskoe

hw

y

Yegoryevskoye hwy

M-2

"Cr

imea

"

M-4 "D

on"

А-107

А-107


7%4%

3%

62%16%

8%

Retail


Distribution

Online-retail

Manufacturing

Other

7%4%

3%

62%16%

8%

Retail


Distribution

Online-retail

Manufacturing

Other

key iNDiCAtors

South

the southern direction has always been popular, as it enjoys good transport accessibility. in addition, one of the country's largest airports is located here, as well as a large selection of land plots for the construction of warehouses. simferopolskoye and kashirskoye highways, located in this direction, are of strategic importance, ensuring the connection of the majority of russian regions with the market of the capital.

the supply volume of quality warehouses here was 4,428 thousand sq m or 35% of the total stock of the Moscow region.

241.5 thousand sq m were delivered in the south of the Moscow region over the past year, 55% of them were built-to-suit.

the volume of transactions in the southern direction became the highest against other directions of the region and was equal to 438.9 thousand sq m.

the business dimension of residents is a noticeable difference from the northern direction: the main factor in the selection of facilities by retail operators is good transport accessibility, and the southern direction is one of the best by this criterion, unlike distributors, which prefer locations on the route from ports of st. petersburg to Moscow.

key transactions


slg transport and logistics Adidas Chekhov А 59,789

HoFF retail Northern Domodedovo А 47,000

Castorama retail pNk Chekhov-3 A 42,452

terem retail pNk park-Valishchevo А 23,400







4,428 thousand sq m

241.5 thousand sq m


438.9 thousand sq m



55%



Owner-operated

Object class

Existing

Under construction


6

₽

₽

27 km

DEDOVSK

ISTRA

KRASNOHORSK

ODINTSOVO

MOSCOW

APRELEVKA

NAROFOMINSK

TROITSK

SCHERBINKA

VNUKOVO

KHIMKI

Minskoe hwy M-1 "Belarus"

M-3

"Ukra

ine"

M-2

"Cr

imea

"

Novorizhskoe hwy

Volokolamskoe hwy

MKA

D

MKAD

Kievskoe hwy

Kaluz

hsko

e hwy

Mozhaiskoye hwy

М-9 "Baltija"

key iNDiCAtors

WeSt

the quality warehouse stock of the western direction of the Moscow region is represented by the smallest number of facilities: their total area is 2,032 thousand sq m. one of the reasons for this is the popularity of this direction among developers of suburban housing and, as a consequence, the high cost of land plots. kievskoye highway is most in demand among all highways of this direction for the construction of warehouse facilities.

the new supply increase of 2016 was minimal among the directions of the region and was only 12.6 thousand sq m or 2% of the total delivery.

Nevertheless, the western direction enjoys steady demand despite low supply. so, 149.7 thousand sq m of warehouse space or 14% of the total demand were located here during 2016.

the portrait of residents of the western direction is historically distinguished by the presence of a relatively large proportion of manufacturing companies. so, the share of such transactions ran at 35% of the total stock. Distribution companies stood first on the list as in the case with the northern direction.

it should be noted that the vacancy rate in the western direction was the lowest among all directions of the Moscow region and equalled to 7.4% given the limited supply and relatively high demand.

7%2%

43%

35%

13%

Distribution

Manufacturing


Retail

Other

7%2%

43%

35%

13%

Distribution

Manufacturing


Retail

Other

key transactions


BMW Manufacturing pNk park-Bekasovo А 34,344

luDiNg Distribution logopark krekshkino A 30,414

Greenfields Distribution Akvion Vnukovo А 12,698

Alutech Manufacturing kievskoe 22 А 12,262

panalpina transport and logistics logopark krekshkino А 10,570







2,032 thousand sq m

12.6 thousand sq m


149.7 thousand sq m



0%




Owner-operated

Object class

Existing

Under construction

7

ReseaRch2016

₽

₽

MKAT

А-10

7А-

107

MKAD

Novoryazanskoye hwy

Yegoryevskoye hwy

Nosovihinskoe hwy

Gorkovskoye hwy

Schelkovskoe hwy

M-5 "Ural"

M-7 "Volga"

MOSCOW

BALASHIHA

KOROLEVSCHYOLKOVO

NOGINSK

ELEKTROSTAL

ZHELEZNODOROZHNIY

LYUBERTSY

ZHUKOVSKIY

BRONNITSY

RAMENSKOE


10%

43%

30%

17%

Retail


Manufacturing

Distribution

10%

43%

30%

17%

Retail


Manufacturing

Distribution

key iNDiCAtors

eaSt


Delovye linii transport and logistics infrastroy Bykovo А 33,743

x5 retail group retail logopark Sofino А 22,868

ontex Manufacturing Viarona Noginsk А 20,000

Belligen Distribution springs park A 19,556

llC "geba" retail trilogy park tomilino А 14,000


the stock of quality warehouse properties in the eastern direction of the Moscow region was 2,982 thousand sq m. Here, the cost of land is relatively low unlike other directions, and the main constraining factor for the development of warehouse real estate is poor transport accessibility.

As a result, the landlords of the properties in the eastern direction significantly reduced rental rates in order to attract residents. they were 3,300–3,500 rub./sq m/year on average.

And, such a strategy was effective as 2016 showed: the total volume of transactions here was 238.1 thousand sq m or 22% of the total volume in the region. And the main residents were the companies engaged in retail industry as well as logistics operators.






2,982 thousand sq m

130.4 thousand sq m


238.1 thousand sq m



17%


key transactions


Owner-operated

Object class

Existing

Under construction


8

ReseaRch2016

ReSeARChOlga YaskoDirector, russia & Cis [email protected]

InduStRIAlMaxim ZagoruikoDirector, russia & [email protected]

+7 (495) 981 0000

© Knight Frank llP 2017 – this overview is published for general information only. Although high standards have been used in the preparation of the information, analysis, view and projections presented in this report, no legal responsibility can be accepted by knight Frank research or knight Frank for any loss or damage resultant from the contents of this document. As a general report, this material does not necessarily represent the view of knight Frank in relation to particular properties or projects.

reproduction of this report in whole or in part is allowed with proper reference to knight Frank.

Warehouse complex Borisovka, Moscow region, simferopol'skoe hwy, 10 km from MkAD

2016 WAreHouse MArket report - Knight Frank...WAreHouse MArket report. MosCoW 2 key indicators....

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