According to the STONE analytical center, the sales volume of office space in class A business centers under construction in Moscow increased almost 2.5 times over 12 months and reached 75 thousand square meters by the end of the first half of 2024. Taking into account the overall exposure, it is predicted that by the time of commissioning, the projects under construction today will already be 80% completed.
The trend for purchasing offices under construction has intensified due to the low vacancy rate in the segment and the general shortage of quality properties. Thus, according to CMWP, the vacancy rate in Class A offices fell to 7.9% by July 2024, having lost 5.3 percentage points over the year. STONE analysts note that the highest quality supply in popular business locations is being washed out of the market faster and in some areas the vacancy rate is approaching 5%. In the Leningradsky Business Corridor and the Belorussky Business District, the vacancy rate in high-class offices is 4.3% and 4.6%, respectively.
«The statistics of the shift in demand towards offices under construction are also confirmed by the company's internal statistics on projects: today, STONE's portfolio includes ten Class A properties at the implementation stage, which makes up almost 50% of the total exposure on the market. Thus, in STONE's properties for sale in blocks, which are being prepared for commissioning in 2025, about 85% of the space has already been sold. In particular, in the STONE Leninsky business center and the last stage of the STONE Towers quarter (Tower D), the last ten lots remain for sale. This indicator suggests that by the time the properties are finally ready, there will be practically no unsold blocks left in them,» noted Kristina Nedrya, Director of Commercial Management at STONE.
The highest sales growth was noted in properties between the Third Transport Ring and the Moscow Ring Road, which indicates the ongoing decentralization of the office market. Compared to the results of the first half of 2023, by mid-2024, the sales volume in office centers between the Third Transport Ring and the Moscow Ring Road increased sevenfold. Today, the share of office block sales in this location has reached 76%. Experts attribute this trend to the location of the largest number of attractive and in-demand high-quality office centers under construction in areas beyond the Third Transport Ring. It is also worth noting that the sale of properties under a future purchase and sale agreement (FPA) remains a priority form on the market: today, transactions are concluded under it in 90% of cases in projects under construction.
Another trend that STONE analysts are talking about is the shift in demand from premises with finished renovations to shell & core properties. “This trend is a direct consequence of the concentration of buyers' interest in business centers under construction. Finished premises are in short supply, but often outdated, requiring investment in renovations. Therefore, companies prefer projects under construction “in concrete,” which can be easily adapted to the resident's business needs in the future,” explained Kristina Nedrya.
While demand for Class A offices in Moscow remains high, there will also be a shortage of corresponding supply. The volume of commissioning in the first half of 2024 exceeded the same figure for the whole of 2023 and amounted to 269 thousand square meters. However, 98% of the commissioned Class A space was accounted for by the large-scale Moscow Towers project, which is in the process of being negotiated and will not enter the open market. «In total, 648 thousand square meters of Class A office space is projected to be completed in 2024, but most of them have already been sold or are in deals with large Russian companies. Excess demand over commissioning will restrain the growth of vacancies, which will reach a historical minimum in the next three years,» the STONE analytical center concludes.
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