Business centers were concreted – Newspaper Kommersant No. 147 (7348) dated 08/15/2022

In the context of rising prices for materials and construction work, potential tenants of Moscow business centers began to look for premises with ready repairs more often. However, it has become unprofitable for developers to offer finished premises: over the past year, the cost of repairs has increased by 30%, much faster than the price of rent. The growing share of vacant space does not allow owners of business centers to raise rates. In this scenario, experts warn, investments in this real estate segment may not be profitable.

In the first half of the year, the average cost of interior finishing and engineering equipment for office space (fit out) increased by 30% year-on-year, Nikoliers calculated. Cost growth peaked in the spring: then, the cost of fit out jumped by 50% year-on-year, Pridex adds.

According to Nikoliers, standard trim has risen in price by 32%, to 70 thousand rubles. for 1 sq. m, work in business class facilities – by 31%, up to 105 thousand rubles, in premium office complexes – by 28%, up to 163 thousand rubles. The cost of interior finishing consists of general construction works, which account for up to 38% of the estimate, electrical, low-voltage and mechanical systems, project management costs and other costs. Nikoliers clarifies that the fit out price does not include free-standing furniture, which usually adds up to 40% to the repair budget.

The difficulty of acquiring materials, the suspension of imports and production, and the increase in the cost of logistics led to an increase in the cost of fit out, explains Igor Temnyshev, regional director of the Nikoliers construction project management department. Some items, such as wood, have added up to 80% in price, adds Ekaterina Newman, CEO of Q1 Group.

In addition, now the domestic labor market cannot cover all the needs of the construction industry, as a result of which the segment has become highly dependent on foreign labor, Mr. Temnyshev notes.

The main rise in price was for IT equipment, which increased in price several times, says Sergey Baranov, director of commercial real estate at AFI Development. Over the past four years, the share of costs for the integration of “smart office” in the structure of projects has grown from 4% to 20%, says Alexander Aleinikov, Commercial Director of Pridex. If the replacement of finishing materials is quite easy, then the replacement of technical equipment with analogues is significantly difficult, and there are no analogues at all for a number of IT infrastructure positions for business centers, adds Mr. Baranov.

But office developers cannot refuse to build facilities with ready-made finishes. Premises “in concrete” almost none of the tenants are considering, recalls Remain CEO Dmitry Klapsha. Office space without fit-out finishing has become less attractive to tenants due to the limited choice of raw materials and furniture, as well as rising prices, notes Igor Temnyshev.

According to Nikoliers, 30% of office space in the Moscow office market is presented in shell & core (rough finish) and about 70% – with a ready repair. Realizing that the period of exposition of finished objects will be shorter, developers specializing in their sale began to study the option of repair from the developer, says Anastasia Malkova, managing partner of Stone Hedge.

As a result, the cost of building and equipping business centers has increased significantly, but the rates for tenants of finished premises have not changed, Sergey Baranov notes. According to Knight Frank, in June 2022, rates in class A business centers in Moscow increased by only 11% compared to December 2020, to 34.5 thousand rubles. for 1 sq. m.

Mr. Baranov believes that the owners will try to raise rental rates for finished premises, but the market is unlikely to allow this. From the end of 2021 to June 2022, the vacancy increased from 9.5% to 11.5%, Knight Frank notes. IBC Real Estate expects that by the end of the year 18-20% of premium offices in the capital will be empty. As a result, Sergei Baranov does not rule out that office real estate will cease to be an investment tool altogether.

Daria Andrianova