Average rental rates in existing warehouses in the Moscow region will increase by 43.4% in 2023

Pent-up demand, the desire of businesses to increase inventories and low activity of developers have led to a reduction in the share of empty warehouses to a minimum, stimulating an increase in rates. Over the course of a year, rent in the Moscow region may rise in price by 43.4%, which is 2.5 times higher than summer forecasts. But already in 2024, the warehouse market may experience a cooling: due to expensive loans and the high cost of premises, tenants may postpone development.

Average rental rates in existing warehouses in the Moscow region in 2023 will increase by 43.4%, to 8.1 thousand rubles. for 1 sq. m per year, calculated by Gazprombank. This is almost 2.5 times higher than the August forecast, which assumed growth of 17.7% and contrasts with other segments. Thus, in the office market, Gazprombank expects the average rate to decrease by 1.1% per year, to 26.5 thousand rubles. for 1 sq. m. The NF Group predicts that rent for warehouses will rise in price over the year by 45%, to 8 thousand rubles. for 1 sq. m per year. CORE.XP says that there are several properties available for rent for more than 10 thousand rubles. for 1 sq. m per year. IBC Real Estate expects annual rate growth of 40–50%.

The trend is noticeable not only in Moscow. According to Avito Real Estate, the average cost of renting warehouses in Russia increased by 26% over the year. An increase in rates was recorded in 26 of 33 regions, the most pronounced – almost doubling – in Kaliningrad. Demand for warehouse rental in Russia increased by 39% over the year, supply decreased by 16%, according to Avito Real Estate.

According to Ricci, at the end of September, 0.4% of warehouses in the Moscow region were empty compared to 2.3% last year. Gazprombank believes that by the end of the year the figure will decrease to 0.3%. Nikoliers allows a reduction of up to 0.1%. Anton Alyabyev, head of the warehouse and industrial real estate department at CORE.XP, gives a similar figure, calling the vacancy rate the minimum in 15 years. There is almost no free space on the market, and competition for it has increased, says Vladislav Fadeev, director of the Gazprombank Center for Economic Forecasting. NF Group partner Konstantin Fomichenko associates the deficit with a reduction in construction activity in 2022 due to uncertainty: developers have reformatted speculative projects into built-to-suit (BTS, custom-built), and many clients have taken a break.

Now the volume of transactions is record high. According to Ricci, in three months in the Moscow region the figure reached 2.2 million square meters. m, increasing by 2.5 times year on year.

Mr. Alyabyev expects annual absorption to exceed 3 million sq. m. m and will be the highest in the history of the market. Director of the Nikoliers warehouse and industrial real estate department Viktor Afanasenko says that 48% of demand is generated by e-commerce, 14% by logisticians, 13% by retailers. Due to supply instability, additional capacity was required to build inventory, he says. Evgeniy Bumagin, head of warehouse and industrial premises at IBC Real Estate, notes that this is the only way to manage price and assortment.

Vladislav Fadeev explains that previously a similar situation could have been balanced by BTS agreements, but now developers are including high rates in projects in the context of rising construction costs. And the emergence of new developers is held back by a lack of personnel, he points out. Skladman USG partner Evgeniy Numerov says that the previously concluded BTS contracts contained inflation risks, but “no one anticipated such a rise in rental rates.” Under the current agreements, he said, prices can hardly be increased by more than 15%.

For 2024–2025, Gazprombank plans to increase rates in the Moscow region by 5.4% and 1.4%, respectively. Mr. Fadeev explains this by a decrease in the rate of absorption, including due to the refusal to develop some tenants in the context of the expected cooling of the economy due to an increase in the key rate. The introduction of speculative projects is also expected, the expert adds. Commonwealth Partnership international partner Egor Dorofeev also believes that tenants will be limited in resources. Although Viktor Afanasenko expects that the market will reach a balance between supply and demand only in two to three years.

Alexandra Mertsalova