Q1 2014 OFFICE REAL ESTATE MARKET - Microsoft · OFFICE REAL ESTATE MARKET Saint Petersburg. 2...
Transcript of Q1 2014 OFFICE REAL ESTATE MARKET - Microsoft · OFFICE REAL ESTATE MARKET Saint Petersburg. 2...
HIGHLIGHTS• Nogrowthofhigh-qualityofficespacehastakenplaceinQ12014.
• ComparedwithQ12013,thetake-upofhigh-qualityofficespaceinQ12014hasgrownby26%,amountingto23.8thousandsqmbytheendofthequarter.
• ComparedwithQ42013,thevacancyrateinClassAofficecentershaschangedonlyslightly,withtheindexhavinggrownby0.2percentagepoints.However,comparedtothesameperiodofthepreviousyear,thisfiguregrewby16.1percentagepointsduetothesignificantinflowofnewsupplyinthelasttwoquartersof2013.
• Comparedwiththeendof2013,aslightdropinvacancyratesby1.1percentagepointshasbeennotedwithClassBofficecenters.Inall,thevacancyratehasgrownby0.3percentagepointscomparedwithQ12013.
• AdropinaverageleaseratesindollartermsisrecordedforAandBClassesduetothevolatilityoftheexchangerate.Comparedwiththepreviousquarter,thedeclineamountedto11%forbothclasses.Inrubleterms,however,theleaseratesremainstable.
RESEARCH
Q1 2014OFFICE REAL ESTATE MARKETSaintPetersburg
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Q1 2014OFFICE REAL ESTATE MARKET Saint Petersburg
Marina Puzanova, Headofofficedepartment,KnightFrankSt.Petersburg
“The office real estate market has not been very active in Q1. Leasing campaigns in the newly delivered business centers and projects close to delivery continued. The weakening of the ruble has affected tenants’ preferences: they now started favoring the projects with rates denominated in rubles. Business centers with foreign currency rates had to lower them and / or implement a “corridor”. The new major projects offer tenants high-quality facilities, most of which will be finished according to the requirements of the tenant. This new trend allows tenants to change their office space into a more comfortable one without significant one-time investment”.
Key events
• The official opening of two buildingsin the business-administrative districtNevskayaRatushawiththetotalleasableareaof40.5thousandsqmtookplaceinMarch.BothbuildingsareClassAofficefacilities.
• TheBalticMonolithCompaniesGrouphasstartedconstructionofamultifunctionalcomplex Docklands. This object willincludeClassBofficecenters,whichareplannedfordeliverybytheendof2016.
OFFICE REAL ESTATE MARKET
Key indicators. Dynamics
Indicators Class А Class В
Totalhigh-qualitystock,thousandsqm 2,052.8
including,thousandsqm 711.7 1,341.1
Changessince2013,% 0 0
DeliveredinQ12014,thousandsqm 0
VacancyratesbytheendofQ12014,% 22.3 6.3
Changessince2013,p.p. +0.25 -1.16
Askingleaseratesinoperatingbusinesscenters*,$/sqm/year 267–870 185–780
Leaserateschangesintheoperatingbusinesscenterssince2013,% -116 -116
Askingleaseratesinbusinesscentersunderconstruction*,$/sqm/year 394–675 197–380
*excludingVAT(18%),includingoperationalexpenses,1USD=36.12RUBSource:KnightFrankSt.PetersburgResearch,2014
www.knightfrank.ru
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Supply
No high-quality office centers weredeliveredinQ12014.Thetotalleasedspaceinhigh-qualityofficecentersamountedto2052.8thousandsqmbytheendofQ12014.
ThemainshareofsupplystockisrepresentedbyClassBbusinesscenters:theyaccountfor65%ofallsupplyinSt.Petersburg
Demand
Thetotalvacancyratehasdecreasedby5%inthepastquarter.AttheendofQ1,over240thousandsqmofhigh-qualityofficespace inoperatingfacilitiesarevacantonthismarket. The highest vacancy rate of30% is noted in the business districtCentral-2.Suchahighvacancyrateresultsfromthefactthatmajorpropertiesthatweredeliveredlastyearhavenotyetbeenfilledwithtenants.
Overall, havinggrownby0.2percentagepoints, the vacancy rate inClassAofficecenters market segment has remainedvirtually unchanged compared with thepreviousquarter.By theendofQ12014,thefigurewas22.3%.Over12months, itsvaluehasgrownby16.1percentagepoints.Suchasignificantgrowthresultedfromthesituation where high-end price segmentpropertiesweredelivered, and thosearefilledwithtenantsataslowerpace.
Havingstartedlastyear,themarkettrendofliquidClassBofficecentersupply“washout”continues. For the quarter, vacancy ratehas shrunk by 1.1 percentage points.ComparedwithQ12013,therateremainedalmost unchanged, having adjusted by0.3percentagepointsupward.
Q3 Q4 Q10
500,000
1,000,000
1,500,000
2,000,000
2,500,000sq m
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q22009 2010 2011 2012 2013 2014
Class А Class B
High-quality office space stock dynamics, Q3 2009 – Q1 2014
Source:KnightFrankSt.PetersburgResearch,2014
Class A and B office centers shares in the total supply stock of Q1 2014
Source:KnightFrankSt.PetersburgResearch,2014
35%
65%
Class А Class B
Major business centers expected for delivery by the end of 2014
Name Address ClassLeasable
office space, thousand sq m
TrinityPlace 22AdmiralaLazarevaEmb. A 27.0
Flandria TashkentskayaSt.,Plot1 A 24.4
Congress-exhibitcenterExpoForum
Shushary,PeterburgskoeHwy A 20.0
Electro 156MoskovskiyAve A 15.7
Eightedges 45AMalookhtinskiyAve A 13.2
Senator 60/129A,BMoskovskiyAve A 9.5
Passage/Italyanskaya,17 17AItalyanskayaSt. A 7.0
Senator 1KropotkinaSt. A 6.7
Senator 22ABolshayaPushkarskayaSt. A 5.4
ECOStatus 140LigovskiyAve A 3.4
VictoriaPlaza 2APobedySq. B 15.0
PulkovoStar 2APulkovskoeHwy B 12.4
Formida UtkinAve,Plot1 B 7.9
H2O 28KhimikovSt. B 6.8
N/A 94AMoskovskiyAve B 5.6
Source:KnightFrankSt.PetersburgResearch,2014
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Q1 2014OFFICE REAL ESTATE MARKET Saint Petersburg
Themarkettake-upinQ12014hasamountedtomorethan23.8thousandsqmofofficespace.Mostof thisspacewastakenup inthe peripheral business districtWestern,accountingformorethan60%ofthetotalleasedspace.
Market participants have noted a newtrend: inordertoexpeditethetake-upoftheir properties, the proprietors of newofficecentersarefrequentlyofferingtheirprospectivetenantstocarryoutofficeroomsfinishforthem.
Commercial terms
TheaverageaskingleaserateinoperatingClass A business centers at the end ofQ1 2014 amounted to 446 $/sq m/year
30%
22%
14%
8%5% 4% 4% 3% 2% 2% 2%1% 1% 1% 1%
0
Centra
l-2
Moskovsk
y Ave
Emban
kmen
ts with
view
s
Petro
gradsk
y
North W
ester
n
Sourt
h Eas
tern
Centra
l-1
Easte
rn
Admiralte
ysky
Obvodny
Vasile
ostrovsk
y-1
North Ea
stern
Vasile
ostrovsk
y-2
Outside
Sourt
h Wes
tern
5
10
15
20
25
30
35%
Vacancy rate shares distribution in operating business centers according to the business districts of Saint Petersburg, Q1 2014
Source:KnightFrankSt.PetersburgResearch,2014
Source:KnightFrankSt.PetersburgResearch,2014
Business districts of Saint Petersburg
www.knightfrank.ru
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Class А Class B201420132012201120102009
100
200
300
400
500
600
$/sq m/year*
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Lease rates dynamics for Class A and B office facilities, Q3 2009 – Q1 2014
*excludingVAT(18%),includingoperationalexpensesSource:KnightFrankSt.PetersburgResearch,2014
0
Vacancy rate volume, Class AVacancy rate volume, Class B
Vacancy rate, Class AVacancy rate, Class B
0
5
10
15
20
25
30
40,000
80,000
120,000
160,000
200,000sq m %
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
20112010 2012 2013 2014
Vacancy rates and vacancy shares dynamics in Class A and B business centers, Q3 2010 – Q1 2014
Source:KnightFrankSt.PetersburgResearch,2014
(includingoperating expenses, excludingVAT), and in Class B – 307 $/sq m/year(includingoperating expenses, excludingVAT).
Duetothegrowthofthecurrencyexchangevalue,theconversionofaverageleaserateslistedindollartermshasresultedinadropofweightedaverageleaseratesby11%inbothClassAandClassBofficecenterssegments.
Forecast
Morethan214thousandsqmofhigh-qualityofficespaceisexpectedfordeliverybytheendof2014.ItisworthnotingthatClassAofficecenterswillconstitutethemajorpartofthenewsupplystockof66%.
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RetailSergey GipshPartner,Director,Russia&[email protected]
ResidentialEkaterina [email protected]
Strategic ConsultingIgor [email protected]
ValuationOlga KochetovaDirector,Russia&[email protected]
Marketing, PRGalina CherkashinaMarketingDirectorgalina.cherkashina@ru.knightfrank.com
Market ResearchTamara [email protected]
Investment and SalesNikolai [email protected]
International InvestmentsHeiko [email protected]
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Project Management Andrew [email protected]
OfficesMarina [email protected]
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RESEARCH
© Knight Frank 2014
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