The share of speculative projects in the total commissioning of warehouse real estate in the Moscow region this year may grow to 60%

Feeling the prerequisites for the market revival, warehouse real estate developers have relied on speculative projects. The share of objects under construction not for specific tenants this year can reach 60-70%, becoming a record since 2018. The format is considered more risky, but due to a sharp increase in demand and a shortage of supply, it provides developers with the best rental rates.

The share of speculative projects (not built for a specific tenant) in the total commissioning of warehouse real estate in the Moscow region this year may grow to 60% against 23% a year earlier. Such calculations are provided by the Commonwealth Partnership (CMWP). “For the first time since 2018, we have observed a structure in which speculative construction exceeds the share of custom-made facilities (built-to-suite, BTS),” says CMWP international partner Egor Dorofeev.

According to NF Group partner Konstantin Fomichenko, speculative projects this year will form two thirds of commissioning. Director of Ricci | Warehouses” Dmitry Gerastovsky estimates their share at 65-70%. Viktor Afanasenko, regional director of the Nikoliers warehouse and industrial real estate department, says that 66% of the space in the announced volume of commissioning is speculative and, if all of them are commissioned, the figure will be a record for ten years.

The share of speculative projects is growing in the face of declining activity of developers.

According to CMWP estimates, a total of 1.4 million sq. m of warehouse space — 22% less than in 2022. Head of Warehouse and Industrial Real Estate Department CORE.XP Anton Alyabyev expects a reduction in commissioning by 26%, to 1.3 million sq. m. m. Mr. Afanasenko connects the increase in the share of speculative projects with the decrease in the number of BTS transactions last year. “There has been a redistribution of capacity from BTS to speculative,” agrees Alexei Smerdov, investment director at Parus Asset Management. According to Nikoliers estimates, in 2022, the volume of purchased and leased space in the Moscow region decreased by 46%, to 1.3 million square meters. m.

And the first half of this year was busy. CMWP estimates the volume of purchased and leased warehouse space at 1.45 million square meters. m, which is three times more than a year earlier. At the end of the year, the figure may reach 2.3 million square meters. Dmitry Gerastovsky says that the volume of demand will approach the level of the record year 2021 due to the implementation of pending transactions and the development of e-commerce.

Mr. Smerdov notes that the current situation gives developers confidence that speculative areas will be sold.

Speculative projects are more risky, but in conditions of low vacancy, their economy becomes attractive: renting ready-made premises allows you to achieve the best rental rates, explains Andrey Postnikov, General Director of Orientir. Skladman USG CEO Alexander Khomich also believes that the attractiveness of speculative construction has grown due to the low risk of downtime. Evgeny Bumagin, Head of Warehouse and Industrial Premises at IBC Real Estate, estimates the share of vacant space in the warehouse market of the Moscow region at less than 1% against 2.6% a year earlier.

The growth of speculative warehouse construction is also supported by the development of the light industrial format – industrial and warehouse premises sold in small blocks and usually built near residential areas. According to CMWP estimates, such properties form 25% of speculative construction. Evgeny Bumagin connects the development of the format with the need of local companies for such areas and with the program to create work places in the Moscow region. So far, light industrial in the region accounts for only 318 thousand square meters. m is 1.4% of the total supply of warehouse space, Mr. Afanasenko calculated.

According to Yegor Dorofeev, the current demand for warehouses may have a positive impact on construction activity and in 2024 the volume of commissioning may approach the record level of 2022. But the situation may change in the future. “The market is always cyclical: a low vacancy is followed by an increase in rates, an increase in input volume, saturation and an increase in vacancies,” Mr. Postnikov notes.

Alexandra Mertsalova