Why developers have become less likely to rent out commercial real estate

Why developers have become less likely to rent out commercial real estate


Renting an office in Moscow has become more difficult and expensive. Developers plan to rent out only 10% of the space in 2024, the rest will be sold, according to a report by the consulting company Nikoliers. The trend for selling commercial real estate in small lots has led to a shortage of large premises. Tenants, as Kommersant FM found out, are now standing in line and raising their rates themselves in order to move into the vacant meters. How to find an office? And how much does it cost? Aelita Kurmukova found out.

Developers are no longer renting out, but selling offices. And such a strategy is quite understandable, say brokers interviewed by Kommersant FM. Demand for renting premises without renovation fell to 4%, while the volume of transactions for the purchase of premises in concrete increased to 70%. And by the end of the year, developers will only release about 100 thousand square meters. m of offices for rent. This is a critical point for the market, says Nikoliers executive director Alexander Bogdanov:

“When we say that the entire office market is 20 million sq. m, and the current vacancy in the first quarter is already slightly less than 10% – this is becoming a landlord-owner market. The point where we see rate hikes of around 10% or higher is quite likely by the end of the year. We will see a shortage of quality rental premises and the trend will return as companies start looking at bare-metal premises.”

The business is not ready to invest in repairs – it’s too expensive. The cost of finishing commercial real estate has increased by a third. The average cost in Moscow is from 60 thousand rubles. per square meter. So many are trying to find ready-made offices, which is not easy. After all, developers have been actively selling properties in small lots for the last couple of years – from 50 sq. m. m. And they bought so many of them that they could rent large areas of 2 thousand sq. m. m up to 10 thousand sq. m. m is extremely difficult, notes Elena Akatova, director of work with landlords of the office real estate department of NF Group:

“You can’t find ready-made premises right away. Often you have to wait for the current tenant to vacate the space, which can take from two to seven months. At some sites there was even a queue of potential large companies. For example, in the South-Western District, in the Leningrad business district, in the center. There were even transactions where we had to outbid the rental rate, that is, increase it by 1-1.5 thousand rubles. from sq. meters so that the owner chooses them.”

In 2023, investors, as Core.XP analysts noted, invested 850 billion rubles in commercial real estate, which became an absolute market record. Offices promised a yield of 8% per annum, and the rental of Moscow apartments gave no more than 3%. But now many sites are hanging like dead weight. Although there are examples when management companies from the developer combine small lots and rent them out. And it’s almost impossible to hand over it yourself, and even without repairs, says Dmitry Zhidkov, partner of the consulting company Ricci:

“Private investors bought small lots from 150 sq. m. up to 300 sq. m. And in this segment, areas are sold only with finishing. They have two options: either try to sell and find a buyer who will be interested in this area and also do the finishing on their own premises, or carry out the repairs themselves, but then the economy will be extremely low. Exit and implementation through sale will be economically reasonable. Anyone who bought two years ago will most likely be able to sell with some margin, whether it suits her or not.”

But how to sell to private owners when there is such competition? After all, the developers themselves promise to put almost 600 thousand square meters on sale by the end of the year. m of Moscow offices. So investors who bought small lots may be disappointed, brokers do not rule out. After all, such an instrument allowed, rather, to preserve capital rather than earn money.

Everything is clear with us – Telegram channel “Kommersant FM”.


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