Moscow offices are forecast to see a 30% drop in demand after a record year in 2023.

After a record year in 2023, the Moscow office market is set to cool down. Consultants predict that the drop in demand for such space next year will be up to 30%. This is explained both by a general decline in business activity and by the completion of the active relocation of Russian tenants to the offices of foreign companies that have left Russia. Limited demand may lead to a slight increase in vacancy, and against this background, experts do not see prospects for an increase in rental rates.

The volume of office real estate transactions in Moscow in 2024 may reach 1.8 million sq. m. m, having decreased by 5.3% compared to the current year; in 2025 the decrease will be another 2.8%, to 1.75 million sq. m. m, says the CMWP review. Head of the department for office space at IBC Real Estate, Ekaterina Belova, predicts a decrease in the volume of transactions by 10%, to 1.7 million sq. m. m. CORE.XP forecasts moderate demand: 1.4–1.6 million sq. m. m, which is 20–30% lower than this year. Denis Bobkov, head of marketing and analytics at Asterus, predicts a decrease in demand by 15–20%, to 1.3–1.5 million sq. m. m.

The cooling predicted by consultants will begin after a successful 2023 for the office market, when the volume of transactions reached a record 1.9 million sq. m. m, notes IBC Real Estate. The high performance is partly explained by pent-up demand and the availability of free funds in the business, Nikoliers says. But the most pronounced increase in activity, according to Tatyana Divina, head of the CMWP Research and Analytics Department, was observed with class A business centers, many of which were vacated after the departure of foreign companies. Now, according to the expert, this factor has ceased to influence the segment.

But the most significant reason for the decline in activity in the office market in 2024, according to Tatyana Divina, will be the increase in the key rate of the Central Bank this year, which will lead to an increase in the cost of debt financing and, as a result, a general decrease in business activity. According to Nikoliers analysts, the market will also be held back by limited construction rates. According to estimates from NF Group partner Maria Zimina, 307 thousand square meters will be brought to the market this year. m, in the next – 690 thousand sq. m. m.

CMWP says there will be a 15% decrease in new supply coming to market this year, while the increase in developer activity next year will largely be dictated by the delivery of several already occupied large properties. “Speculative new construction will not show noticeable growth – large objects announced for commissioning are either already completely occupied or are at the stage of advanced negotiations,” says Ms. Divina.

In 2025, activity will also be restrained – the withdrawal of 370 thousand sq. m. is expected. m, which includes the headquarters of Roscosmos (200 thousand sq. m). Nikoliers does not rule out that developers may now be more willing to start new projects, but their completion should only be expected in three to five years. Although Denis Bobkov notes that the construction activity of developers is also significantly influenced by the size of the Central Bank’s key rate, restraining their activity.

At the same time, the share of vacant space, according to CMWP forecasts, in 2024 may increase from 12.5% ​​to 13% for class A offices and from 6.5% to 7% for class B offices. This dynamics, according to Ms. Divina, will be associated with potential decline in activity and business contraction. According to Denis Bobkov, a more active growth in the share of empty space will be restrained by a limited volume of speculative input.

But the consultants do not see any prerequisites for a noticeable increase in rental rates in such conditions. CMWP predicts that the average cost of offices in Moscow in 2024 will increase by only 4.4%, to 22.2 thousand rubles. for 1 sq. m per year. For class B premises, the average figure will even decrease by 1.8%, to 16.2 thousand rubles. for 1 sq. m. Analysts do not expect an increase in the cost of offices in 2025.

Alexandra Mertsalova