Fashion for Light Industrial: demand for industrial and warehouse premises has increased in Russia

Based on the results of the first quarter of this year, entrepreneurs have grown interested in the Light Industrial format, which allows light production, a warehouse for storing products, an office and a showroom to be located simultaneously in one block of the industrial park. MK looked into why the popularity of industrial coworking spaces is growing, what their advantages and prospects are.

Three incentives

According to analysts interviewed by MK, demand for Light industrial premises was ensured by three main factors. Firstly, during the pandemic, online trading began to boom. And this format allowed online stores within the city to quickly deploy a network of distribution centers and order pick-up points.

Secondly, small and medium-sized businesses have fallen in love with industrial coworking. Especially, “tired” of registration in former Soviet industrial zones. Unlike a classic warehouse, the blocks in Light industrial are small and start from 500 sq. m. They are equipped according to the latest warehouse fashion, allowing you to arbitrarily change the purpose of the premises at your discretion. Which is very convenient for young small companies and individual entrepreneurs. At the same time, each block has its own entrance and parking for vehicles.

Thirdly, thanks to government support, not only large developers, but also banks and investment companies entered the segment. Only through the Ministry of Industry and Trade of the Russian Federation for 2023–2025, 47.5 billion rubles are allocated in the federal budget to support the creation and development of industrial parks and technology parks. Thus, in Moscow and the Moscow region, as part of the policy of import substitution, about 100 industrial parks with a total area of ​​more than 12.7 thousand hectares have already been built. Today, according to experts, Light industrial properties account for about 1% of the industrial and warehouse real estate market. But this share will grow, analysts are sure.

Stash for a rainy day

This year, experts have recorded a new trend – many tenants of industrial parks wanted to buy Light Industrial premises. As Vitaly Kolyada, general director of Realitek, explained to MK, this is due to an increase in rental costs, while the purchase price has not increased so significantly. Rent, in his words, is more relevant for beginning entrepreneurs. Therefore, even small enterprises that have already firmly occupied their niche are trying to acquire their own real estate. In terms of business development, this is always more profitable. Indeed, in the event of a negative scenario, property will help reduce costs and allow you to survive difficult times.

The demand for land plots and ready-made commercial premises remains consistently high, despite the increase in the key rate of the Central Bank. “Last year, the shortage of available rental space in warehouse and industrial real estate was surprising,” admitted Kolyada. In his opinion, this trend will continue in two years. The old stock of industrial and warehouse premises is reaching its end; its place will be taken by new modern complexes. “Industrial zones continue to be built up with residential complexes, and production facilities located there will be forced to look for premises nearby in order to maintain the workforce and usual logistics. And complexes of the Light Industrial format, which allow flexible switching to another type of activity, are doomed to continue to develop,” Vitaly Kolyada is sure. According to him, today the most in demand are blocks ranging from 300 to 1,700 square meters. m.

New wave

The volume of commissioning of new Light Industrial facilities in the first months of 2024 exceeded the value of 2023 by almost half – by 45%, said Evgeny Bumagin, head of the department for work with warehouse and industrial premises at IBC Real Estate. There are 374 thousand square meters at the construction stage. m, which are announced for commissioning in 2024-2025. The total area of ​​projects planned for implementation, the construction of which has not yet begun, is more than 2 million square meters. m.

At the end of 2023, the average annual rental rate in industrial coworking spaces in the Moscow region (excluding VAT and NUTS) was 7.5 thousand rubles/sq. m. And at the end of March 2024, against the backdrop of a shortage of quality supply, rental rates for class A properties increased to 12 thousand rubles. per sq. m. per year, while 1 “square” was sold for an average of 101 thousand rubles. Further price dynamics will depend on the macroeconomic situation in the country, incl. from the key rate of the Central Bank of the Russian Federation.

20% per annum

“Interest in Light Industrial facilities is growing both from end users for the purpose of locating their own production facilities or organizing work with marketplaces, and from private investors for the purpose of subsequent leasing. At the same time, the contracted volume of private investment in the overall structure of demand does not yet exceed 1%,” Bumagin noted.

“From an investment point of view, Light Industrial remains an undervalued segment. A high barrier to entry into projects and a lack of professional experience hinder the investment potential of this format. But the constant increase in rental rates and the presence of long-term unbreakable lease agreements make the segment attractive both for speculative investors and for organizing a rental business. Currently, the return on investment in the Light Industrial segment can be up to 20% per annum, depending on the stage of construction readiness and the location of the facility,” said Parametr managing partner Alexander Manunin.

As MK has learned, several large banks and investment funds are now considering the possibility of creating a closed-end mutual fund Light Industrial. “Such funds will allow investors not only to participate in development activities with a minimum entry threshold, receiving significant potential profitability, but also to participate in the development of the industrial sector,” said Vladimir Stolnikov, head of the alternative investment management directorate at Alfa Capital Management Company.

True, it will not be easy to implement the plans to create a closed-end mutual fund today. The fact is that most of the quality properties have already been sold to end users, which limits the possibilities for creating rental funds.

However, as soon as deposit rates begin to decline en masse, investors, as practice shows, will again turn to the stock market. And then, there is no doubt that investment companies will quickly find solutions on how to wisely place citizens’ investments in mutual funds. Including in Light Industrial format warehouses.