Company News10 october 2014
In Saint Petersburg six business centers were delivered in Q3 2014
According to ASTERA an alliance member of BNP Paribas Real Estate, during the period from July to October six business centers with the leasable area of 69 700 sq.m were delivered in Saint Petersburg. Another six office premises are planned to be commissioned by the year end.
During Q3 the following premises were delivered in Saint Petersburg: two business centers of Class A (BC ‘Passage’ and BC ‘Trinity Place’), one center of Class B+ (BC ‘Stachek 59’), and three centers of Class B (BC ‘Megapark’, BC on Finsky per., 4, and BC ‘SetlCenter’).
Another six business centers with gross leasable area of 54 455 sq.m are planned to be commissioned in Q4 2014.
The opening of BC ‘Formida’ with gross leasable area of 7600 sq.m and BC ‘Silver Mirrors’ with the area of 2800 sq.m planned for Q3 and Q4 2014 accordingly was changed to 2015.
In the estimation of ASTERA experts, volume of commissioned office premises will amount to 124 155 sq.m in H2 2014. If all announced plans are fully delivered, supply on St. Petersburg office real estate market will increase by 8.8% and reach 2 228 thou. sq.m.
Petrogradsky and Moskovsky city districts will become absolute leaders in terms of delivering office premises in Q3 and Q4 where 39 855 and 33 800 sq.m of gross leasable space will be commissioned. ‘This is almost two-thirds of new supply planned to be delivered in the second half of 2014’, - notes Alexey Gulevskiy, head of Consulting Department at ASTERA an alliance member of BNP Paribas Real Estate.
Third quarter is traditionally a period of low demand on office real estate market due to summer vacations. However, in 2014 situation on the market was complicated by external political environment and introduced economic sanctions.
ASTERA experts mark that majority of business centers commissioned in 2014 does not implement plans announced earlier. In most new objects vacancy reaches 50% by the delivery date. This is due to uncertainty on the market, overstated rental rates, and to the fact that some foreign companies left St. Petersburg market in 2014.
‘We can state that demand for offices was changed and optimized. Companies either rent premises with area smaller than they have planned, or move to premises with lower rental rate, or stay in the current business center. At the same time they sublease part of premises or abandon them if this option is stated in lease agreement’, - suggests Alexey Gulevskiy.
According to ASTERA, the most requested premises in Q3 were offices with the area from 100 to 200 sq.m (37% of inquiries) and objects with the area from 200 to 500 sq.m (31% of inquiries) while in Q2 facilities with the area from 200 to 500 sq.m (78% of inquiries) were of the highest demand.
Other requested parameters have not been changed recently. Central, Admiralteysky, and Petrogradsky districts are still the most requested ones. ‘Our observation shows that despite the lack of parking places and high rental rates, potential tenants are interested in the city center first. Moskovsky district in St. Petersburg is the second one according to customers’ preferences’, - comments Alexey Gukevskiy.
As for office premises, location and rental rate remain to be key parameters for clients. ‘Class of business centers is less important than walking distance to the metro station. Also, the majority of clients prefer offices with full finish which allow them moving there within a short time and without additional costs’, - adds Alexey Gulevskiy.
According to our analysis of inquiries received by ASTERA during the reporting period, main demand on office premises in Q3 was created by service companies, equipment distributors, and construction and transport enterprises. Among service firms IT companies had the greatest percentage of inquiries in their overall volume.
ASTERA experts note that rental rents on office premises in Q3 remained stable. Owners continued declaring level of rates similar to Q2. Thus, average rental rate in Class A stayed at the level of 1300 RUR/per sq.m/month (without VAT), in Class B – 900 RUR.
‘However, owners are ready to make a concession in case if they are interested in a tenant. Large clients can expect individual lease terms where preferences can be expressed not in money equivalent. For example, owner can provide anchor tenant with grace period for the time of his moving to business center, by the end of repair works, or give reduced rental rate for parking places. There are a lot of different options. At the same time, lease terms will be standard for small companies’, - states Alexey Gulevskiy.
In Q4 ASTERA experts do not expect significant decrease of activity in office real estate segment. However, clients will continue optimization of their costs for rent of premises which will lead to modifying of rental rates under some of present and new lease agreements.
At the same time supply of office premises announced to be commissioned in 2015 will not have any changes. Moreover, realization of announced projects will depend on further development of political and economic situation in the country.