Offices have caved in rates – Kommersant

Despite the continued high level of vacant space in co-working spaces and flexible offices in Moscow, the volume of their offers has grown by about one and a half times over the year. This has already led to lower asking rental rates, forcing landlords to be more flexible in the negotiation process. Such a conjuncture may reduce interest in the format of investors who have taken a wait-and-see attitude. They fear that the market is not ready for a large volume of supply.

The supply of flexible offices in Moscow at the beginning of April, according to NF Group estimates, amounted to 381.8 sq. m. m, or 55.6 thousand jobs. This is one and a half times more year on year. Analysts attribute such dynamics to the completion of projects started last year. In the first quarter of 2023, five new coworking spaces with an area of ​​23.9 thousand square meters entered the market at once. m. According to CMWP, the total supply of flexible offices in Moscow is now 396 thousand square meters. m, which is 29% more year on year.

The sharp increase in supply is taking place against the backdrop of a high share of vacant space, which at the beginning of April, according to NF Group, was 24%. IPG Russia Managing Partner Ivan Pochinshchikov estimates the occupancy of flexible offices in Moscow and St. Petersburg at 65%. He suggests not comparing the vacancy rate in the segment of classic offices and co-working spaces, since we are talking about different types of business – rental and operating. According to the expert, jobs in co-working spaces, as a rule, were occupied by those who decided to leave the country after February 24, 2022.

Vacancy in the classic office segment is indeed somewhat lower. For class A premises, the average figure for the first quarter was 13.3%, for class B — 8.1%. It’s all about the scale, says Natalia Nikitina, head of the office real estate department at CMWP: “A 1 p.p. m, and in flexible office spaces – only 3.5 thousand sq. m. m.

NF Group partner Maria Zimina also draws attention to the rapid rotation of flexible office tenants due to a shorter lease term than in the case of classic offices. Yevgeny Tomilov, Senior Analyst at CORE.XP Market Research, points out that the volume of realized demand for flexible offices in the first quarter exceeded the figure for the same period last year by 13%.

Elizaveta Golysheva, Strategy and Sales Director of the Multispace network, says that flexible offices are currently rented mainly by IT companies, government agencies, players in the manufacturing and FMCG sectors. Flexible offices and corporate co-working spaces feel much better during the crisis than classic offices, says Gurgen Shekoyan, founder of the Code network. He attributes this to the fact that the format is more adapted to the rapid change in the amount of space occupied.

Another trend in the market is the decline in coworking rental rates due to high vacancy rates and ongoing uncertainty in the economy. This, according to Mr. Tomilov, encourages operators of such facilities to be flexible in negotiations with potential tenants. According to NF Group estimates, the average asking price for renting flexible spaces in Moscow is now RUB 35,600. per job per month, down 9.2% from the fourth quarter. Ivan Pochinshchikov believes that a 10% decrease in the cost of renting flexible offices occurred just at the end of last year and since then the rate has remained stable.

Ms. Nikitina does not consider the current dynamics of rate cuts dramatic: “The gap between the requested and real closing rate is rather growing.” However, investors investing in office real estate are now choosing a more cautious strategy. “After the unfreezing of office projects, which were suspended at the height of the crisis, a very large volume of supply may appear on the market,” Mr. Shekoyan predicts.

Alexandra Mertsalova