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28 Декабря 2010, 9:30
Warehouses: Another Supply and Demand Dilemma
Supply in the warehousing market once again seems to be inadequate to meet burgeoning demand. During the crisis developers were forced to give up on many of their projects and so the delivery of new warehousing areas in 2010 is among the lowest in years. Meanwhile experts see a resurgence of consumer demand, which means retailers are in need of warehouses. Should the supply have to catch up with demand once more? What are the odds?
Supply
According to Knight Frank, about 180,000 sqm of warehousing premises was inauguratd Q1-Q3 2010.
The total supply of quality storage space in the Moscow region thereby reached 5.91 million sqm. In expert estimations the lion’s share of the new supply to be delivered to the market in 2010 will be commissioned in Q4 – it is estimated that construction on 220,000 to 240,000 sqm of warehousing areas will be completed during the final quarter of the year. This will bring the total accrual of new storage space supply in 2010 to more than 400,000 sqm. According to Dmitry Volkov, Director of Consulting and Appraisal Department, Praedium Oncor International, about 450,000 sqm of warehousing areas will be put into operation by the end of 2010, which is comparable to the level of 2008 but half of 2009 results. “This figure represents 50-70% of the announced amount and while in 2009 the accrual of new supply reached 15-18% this year it has dropped to 10%,” states the expert. By year end the total supply of Class A and B storage facilities will exceed 6 million sqm, according to Knight Frank. Despite the impressive amount of storage space on the market, warehousing real estate in Moscow and in the Moscow region still lags behind the developed European markets, as this volume is unable to meet the existing demand. One of the lowest in recent years delivery of warehouses to the market is attributed by experts of Jones Lang LaSalle to problems with project financing: developers were forced to curtail their construction plans and put some of their projects on hold. At the present time the vacancy rate in the Moscow region keeps falling and has reached 8.1% – down 0.8% from the last quarter. A dearth of ready-to-use warehousing areas is now apparent on the market.
In response to the burgeoning demand many developers are ready to restart construction on frozen projects or launch new development projects:
• Hines has commenced construction on the third phase of Logopark Belaya Dacha on Novoryazanskoe Highway. The completion should not be expected sooner than Q2-Q3 2011.
• Israel-based Mirland Development Corporation announced construction of a 150,000-sqm Class A warehouse complex in the Saratov region. The project will be delivered in phases, but the times of construction completion have not been announced.
• The German investor and developer SIF&B declared its intention to invest more than 1 billion euro in the construction of an industrial logistics park in the Kaluga region.
• The Arabian seaport operator Gulftainer Company Ltd is willing to invest $500 million in ports and logistics centers in Russia – an agreement on this was concluded with the state-run corporation Rostekhnologii during the investment forum in Sochi.
A return of faith in the Russian market is also corroborated by the plans of some manufacturers to expand their production potential in Russia.
• One of the world’s leading manufacturers of ceramic tile Marazzi Group declared its intention to invest 75 million euro in the expansion of its Russian production capacities.
• Oriflame will invest from 125 to 175 million euro in the construction of its manufacturing facility in Noginsk district of the Moscow region, whose commissioning is scheduled for 2013. Knight Frank’s experts point out that unlike the pre-crisis period, warehouse developers are now much more cautious in making decisions about launching a new construction project. A number of players continue correcting their plans and trying to lower the level of investments in earlier planned projects in anticipation of a more stable demand:
• Raven Russia radically cut its planned amount of investment in the construction of a Class A warehouse complex at the entry to Nizhny Novgorod. The level of investment was reduced from $150 million planned in 2007 to $50100 million, while the project area has been cut in half – from 220,000 sqm to 110,000 sqm.
• GC Espro gave up on construction of the second phase of the officewarehousing project Kulon Yugros – the developer will confine himself to the commissioning of 27,700 sqm in 2011 in place of the earlier planned 55,500 sqm, while the rest of areas will be developed following on a build-to-suit basis.
Demand The first nine months of 2010 saw a remarkable resurgence of demand on the industrial real estate market. In third quarter alone the amount of leased and purchased areas reached 464,100 sqm, according to Jones Lang LaSalle. Overall 996,400 sqm were leased and purchased during the first three quarters of this year, which is more than during the entire year 2009 (938,970 sqm), as reported by this company.
Among the biggest transactions is the lease of 46,200 sqm by X5 in the logistics park PNK-Chekhov, the lease of 32,400 sqm by Arkonda in the warehouse complex Agroterminal, and others.
Retailers (39% according to Cushman & Wakefield) and distributors (22%) are the key contributors to the burgeoning demand. The manufacturers who arrange for their output distribution on their own are also keen on leasing quality storage facilities. According to Vladislav Ryabov, Director of Industrial and Warehousing Real Estate Department, Colliers International, 77% of the users lease warehouse premises while 23% of the users own their warehouses.
The average requested area is 10,000 sqm in the Moscow region and 5,000 sqm in other regions of Russia (Cushman & Wakefield).
Commercial terms • Throughout 2010 the vacancy rate kept decreasing on the market and by Q4 it varied between 10% (Knight Frank) to 7.4% (Jones Lang LaSalle). There are even more radical estimations. “Last year 12% of warehouse was vacant while in H1 2010 this rate dropped to 7% and our forecast for the whole year is 5-6%,” says Ruslan Suvorov, Vice President of Giffels Management Russia, citing the company’s statistics.
• By Q4 cap rates grew by 4-5% to $110-115/sqm/year in Class A (exclusive of utility charges and operating expenses).
• Lease agreements are presently signed for 3-5 years.
Trends • While in past times the market participants were intent on building up the number and scale of their projects, nowadays decisions about the construction of warehouses are based on a thorough analysis of the market prospects and a forecast of the solvent demand on the part of tenants.
• The market already has precedents of resuming the practice of signing prelease agreements or developing build-to-suit storage facilities.
• Manufacturing groups are preparing to raise their output. The burgeoning consumer demand roused the interest of overseas and domestic companies in the development of manufacturing capabilities in Russia. They are greatly interested in the Moscow, St. Petersburg and Kaluga regions as well as Russia’s South.
Forecasts Given a reduction in the amount of premises delivered to the market and revitalization of demand, further dwindling of vacant areas is expected by Jones Lang LaSalle in the year 2010. This will push up rates. “In view of the slow pace of newly built storage space delivery to the market, we forecast that the share of vacant areas in the Moscow region will keep on going down in 2011,” agree experts of Knight Frank.
According to Knight Frank, about 180,000 sqm of warehousing premises was inauguratd Q1-Q3 2010.
The total supply of quality storage space in the Moscow region thereby reached 5.91 million sqm. In expert estimations the lion’s share of the new supply to be delivered to the market in 2010 will be commissioned in Q4 – it is estimated that construction on 220,000 to 240,000 sqm of warehousing areas will be completed during the final quarter of the year. This will bring the total accrual of new storage space supply in 2010 to more than 400,000 sqm. According to Dmitry Volkov, Director of Consulting and Appraisal Department, Praedium Oncor International, about 450,000 sqm of warehousing areas will be put into operation by the end of 2010, which is comparable to the level of 2008 but half of 2009 results. “This figure represents 50-70% of the announced amount and while in 2009 the accrual of new supply reached 15-18% this year it has dropped to 10%,” states the expert. By year end the total supply of Class A and B storage facilities will exceed 6 million sqm, according to Knight Frank. Despite the impressive amount of storage space on the market, warehousing real estate in Moscow and in the Moscow region still lags behind the developed European markets, as this volume is unable to meet the existing demand. One of the lowest in recent years delivery of warehouses to the market is attributed by experts of Jones Lang LaSalle to problems with project financing: developers were forced to curtail their construction plans and put some of their projects on hold. At the present time the vacancy rate in the Moscow region keeps falling and has reached 8.1% – down 0.8% from the last quarter. A dearth of ready-to-use warehousing areas is now apparent on the market.
In response to the burgeoning demand many developers are ready to restart construction on frozen projects or launch new development projects:
• Hines has commenced construction on the third phase of Logopark Belaya Dacha on Novoryazanskoe Highway. The completion should not be expected sooner than Q2-Q3 2011.
• Israel-based Mirland Development Corporation announced construction of a 150,000-sqm Class A warehouse complex in the Saratov region. The project will be delivered in phases, but the times of construction completion have not been announced.
• The German investor and developer SIF&B declared its intention to invest more than 1 billion euro in the construction of an industrial logistics park in the Kaluga region.
• The Arabian seaport operator Gulftainer Company Ltd is willing to invest $500 million in ports and logistics centers in Russia – an agreement on this was concluded with the state-run corporation Rostekhnologii during the investment forum in Sochi.
A return of faith in the Russian market is also corroborated by the plans of some manufacturers to expand their production potential in Russia.
• One of the world’s leading manufacturers of ceramic tile Marazzi Group declared its intention to invest 75 million euro in the expansion of its Russian production capacities.
• Oriflame will invest from 125 to 175 million euro in the construction of its manufacturing facility in Noginsk district of the Moscow region, whose commissioning is scheduled for 2013. Knight Frank’s experts point out that unlike the pre-crisis period, warehouse developers are now much more cautious in making decisions about launching a new construction project. A number of players continue correcting their plans and trying to lower the level of investments in earlier planned projects in anticipation of a more stable demand:
• Raven Russia radically cut its planned amount of investment in the construction of a Class A warehouse complex at the entry to Nizhny Novgorod. The level of investment was reduced from $150 million planned in 2007 to $50100 million, while the project area has been cut in half – from 220,000 sqm to 110,000 sqm.
• GC Espro gave up on construction of the second phase of the officewarehousing project Kulon Yugros – the developer will confine himself to the commissioning of 27,700 sqm in 2011 in place of the earlier planned 55,500 sqm, while the rest of areas will be developed following on a build-to-suit basis.
Demand The first nine months of 2010 saw a remarkable resurgence of demand on the industrial real estate market. In third quarter alone the amount of leased and purchased areas reached 464,100 sqm, according to Jones Lang LaSalle. Overall 996,400 sqm were leased and purchased during the first three quarters of this year, which is more than during the entire year 2009 (938,970 sqm), as reported by this company.
Among the biggest transactions is the lease of 46,200 sqm by X5 in the logistics park PNK-Chekhov, the lease of 32,400 sqm by Arkonda in the warehouse complex Agroterminal, and others.
Retailers (39% according to Cushman & Wakefield) and distributors (22%) are the key contributors to the burgeoning demand. The manufacturers who arrange for their output distribution on their own are also keen on leasing quality storage facilities. According to Vladislav Ryabov, Director of Industrial and Warehousing Real Estate Department, Colliers International, 77% of the users lease warehouse premises while 23% of the users own their warehouses.
The average requested area is 10,000 sqm in the Moscow region and 5,000 sqm in other regions of Russia (Cushman & Wakefield).
Commercial terms • Throughout 2010 the vacancy rate kept decreasing on the market and by Q4 it varied between 10% (Knight Frank) to 7.4% (Jones Lang LaSalle). There are even more radical estimations. “Last year 12% of warehouse was vacant while in H1 2010 this rate dropped to 7% and our forecast for the whole year is 5-6%,” says Ruslan Suvorov, Vice President of Giffels Management Russia, citing the company’s statistics.
• By Q4 cap rates grew by 4-5% to $110-115/sqm/year in Class A (exclusive of utility charges and operating expenses).
• Lease agreements are presently signed for 3-5 years.
Trends • While in past times the market participants were intent on building up the number and scale of their projects, nowadays decisions about the construction of warehouses are based on a thorough analysis of the market prospects and a forecast of the solvent demand on the part of tenants.
• The market already has precedents of resuming the practice of signing prelease agreements or developing build-to-suit storage facilities.
• Manufacturing groups are preparing to raise their output. The burgeoning consumer demand roused the interest of overseas and domestic companies in the development of manufacturing capabilities in Russia. They are greatly interested in the Moscow, St. Petersburg and Kaluga regions as well as Russia’s South.
Forecasts Given a reduction in the amount of premises delivered to the market and revitalization of demand, further dwindling of vacant areas is expected by Jones Lang LaSalle in the year 2010. This will push up rates. “In view of the slow pace of newly built storage space delivery to the market, we forecast that the share of vacant areas in the Moscow region will keep on going down in 2011,” agree experts of Knight Frank.
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