Warehouse meter: commissioning of commercial real estate in Russia breaks records
The projected volume of commissioning of commercial real estate in Russia by the end of 2024 is 6.4 million square meters, which will be a record for the last ten years, reported the consulting company Nikoliers. More than 80% of the total volume of commissioning falls on the warehouse segment. The trend will continue in 2025, in which a new maximum of 8 million square meters is expected, where the largest share of commissioning will again fall on the segment of warehouse real estate. What are the reasons for such high figures and whether they affect the number of residential projects under construction - in the material of "Izvestia".
Growth of deficit
High volumes of commissioning of commercial real estate are caused, first of all, by high demand for warehouse premises, explained Dmitry Puchkarev, the expert on the stock market of "BKS World of Investments".
- There is a deficit on the market, rental rates are growing. At the same time it is important to realize that the construction cycle takes several years. The real estate, which was built and financed in the period of low interest rates, is put into operation. A tough CDA will put pressure on the volumes of commercial real estate commissioning in a couple of years," the expert told Izvestia.
According to him, the volumes of commissioning of residential premises will decrease in 2024-2025 against the background of winding down the program of preferential mortgages, as well as the growth of interest rates. In conditions of weak demand builders may hold back the commissioning of new objects until the situation improves. At the same time, the situation on the commercial real estate market is different: there is a more stable demand in this segment.
The growth of warehouse capacities is primarily due to the development of Internet trade, said Valery Tumin, Director of Russia and CIS markets at fam Properties. According to Data Insight, by the end of 2024, online trade will grow by another 36%, with double-digit growth every year since 2020. And the potential is far from being exhausted. Supply is flowing online in all areas, even luxury boutiques are turning into delivery points for these brands.
- In part, the increase in the delivery of commercial properties is due to the cooling in the housing market. "Fat", accumulated over the years of favorable mortgages, is gradually spent, and developers have to be more careful in choosing the next project. Cooling demand - a consequence of the decline in the availability of apartments (high key rate, the abolition of favorable mortgages, bank fees, tougher requirements for borrowers), - said "Izvestia" expert.
In addition, developers face another non-trivial task - to sell existing apartments, especially in the Far Eastern and Volga Federal Districts, added Valery Tumin. Thus, according to the data of the Unified Information System of Housing, the volume of unsold housing is 76.888 million square meters (this is a growing trend: in July the figure was 76.786 square meters). Thus, most likely, developers will focus on the realization of unsold housing, and there will be fewer new projects, at least for now.
The trend of the last decade in trade is the active development of the online segment, agreed Dmitry Sergienko, Senior Director for Corporate Ratings of Expert RA Agency. This can be observed both in food retail and non-food retail. It can also be clearly seen in the rapid growth of marketplaces turnover. Accordingly, this trend determines the growing demand for commercial real estate, in particular - for warehouse complexes.
- Residential and commercial real estate are fundamentally different segments of the industry. They have different growth drivers, different production cycles, different financial and economic performance indicators, different payback periods and even different investment criteria when deciding to start a project. Therefore, the decline in demand for residential real estate has a very indirect effect on this segment, and we should not expect developers to reorient themselves to commercial real estate," he said in a conversation with Izvestia.
Uncertain future
This year's volumes of commissioning are mainly objects that were planned for the end of 2021 - 2022, noted Ksenia Balandina, an expert of the Presidential Academy.
- However, the situation has changed. The increase in the key rate will now play on the reduction of commissioning of commercial real estate, especially the office segment. After the events of 2022, it was in high demand among private investors: people and companies invested money and bought offices under construction to keep their savings. Those properties that are already mortgaged will of course be realized, but for the new ones, the cost of borrowing is now a roadblock. Warehouses were showing outstripping growth even before the pandemic. The Moscow region receives most of its goods via the M4 "Don" highway. That is why huge warehouses were built there," she told Izvestia.
Now, according to her data, the number of vacant warehouses is minimal. But again, the high cost of money will not allow developers to realize a large number of projects. And for the next year we can expect growth only in the already laid build-to-suite projects, i.e. those that are built for a specific customer, a specific product.
- I think it is difficult to talk about new projects. At the same time, a significant number of projects are realized in such type of real estate as "light industrial". In such objects no more than 25% of the area should be allocated for a classic warehouse, 75% is given to industry, albeit light. The point is that this segment is supported by the state. There are a huge number of programs that allow you to get both subsidized financing and land lease relief, - says the expert.
According to her, there is practically no connection between commercial real estate and residential markets. If we are talking about commercial real estate on the first floors of residential projects, it has completely different buyers than the classic commercial real estate, class "A" business centers or large warehouse complexes. Here the demand is for small premises and small "neighborhood" shopping centers, as the leisure activities of families with children often take place outside the apartment.
Shifting priorities
The high key rate has forced construction companies to reconsider their business processes, says Natalia Kazantseva, Associate Professor of the Department of Economic Policy and Economic Measurements at the State University of Management. The time of preferential mortgages for residential new buildings is over, and developers for the first time after the pandemic time turned their attention to other segments of the real estate market.
Moreover, the growth of business activity in some sectors of the economy corresponded to this, and the record increase in the volume of commissioning of commercial real estate is quite natural. The development of e-commerce and retail in general required an increase in warehouse space, and the need for not only small warehouses, but also large logistics centers has grown.
- Their construction is also facilitated by the fact that they are usually remote from major cities, and the cost of purchasing land plots in these locations is not so high. The supply of class A and A+ warehouses does not match the demand, and there are opportunities for growth," comments Kazantseva.
A new type of warehouses is also emerging - city warehouses for storing people's belongings.
A similar picture is observed in the segment of office space. There is a shortage of premises for small and medium-sized businesses, which are small in area, but united with industrial and commercial premises, which is typical for technopolises, explained Natalia Kazantseva to Izvestia.
In her opinion, the demand for high-class offices is also not fully satisfied. But the problem here is that they have accommodation requirements, so this segment will require redevelopment rather than development.
Co-working spaces as a special type of commercial real estate are still needed for employees to work remotely or on a combined basis, which are practiced by many companies.
- The shift of developers' interests from residential real estate to commercial real estate will continue until there is a significant increase in demand for it, which will probably be no earlier than 2026-2027," the expert concluded.
Today the warehouse real estate market is the most liquid one, Vladimir Komlev, managing partner of the warehouse construction company "Buildservice", is sure. Stable growth dynamics can be safely predicted for the next five years. With an average lending rate of 23%, business is ready to invest funds for the construction of warehouses, sign long-term lease agreements with federal chains with annual indexation. Moreover, this applies not only to Moscow and the Moscow region, but also to the regions. The reason for this is the active development of Internet trade, for which there will be no substitute in the near future, and vacant space is already in short supply. In addition, other market participants are also interested in the development of this sphere: owners of agricultural holdings, factories, plants and other companies whose activities are directly related to the need for storage space.
- Especially this trend is typical for those who already had land with the target VRI (type of permitted use), they build lites of 1500 sq. m. and either sell them at the rate of 108-112 thousand rubles per 1 square meter. m without VAT, or they lease it at an approximate price of Br14-17 thousand per square meter without VAT with annual indexation of 10-15%. At an approximate construction price of Br63 thousand per square meter without VAT," Vladimir Komlev told "Izvestia.
As for residential real estate, he said, there is no direct connection between these processes.
- Firstly, the construction of residential and commercial real estate are engaged in different companies, whose activities do not overlap. Secondly, the volume of construction of residential real estate depends on a number of other factors, in particular - on the cost of project and mortgage loans, the availability of preferential government lending programs for the population, etc. If there is a drop in volumes, it will be due to the Central Bank's credit policy, including the growth of the key rate and, as a consequence, the rise in the cost of mortgages," the expert concluded.
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