Demand for rent and purchase of offices in Moscow fell by more than 20% over the year

The volume of transactions for the lease and purchase of offices in Moscow decreased by 20% over the year. But even this result turned out to be higher than the pessimistic scenario. Demand in the coming years will support the transactions of structures with state participation,

At the end of 2022, the total area of ​​offices in Moscow, leased and purchased for own needs, amounted to 1.2 million square meters. m, follows from the report of the consulting company CORE.XP (former CBRE), which was reviewed by RBC. This is 20.6% less than in 2021, when the demand for offices in the capital amounted to 1.5 million square meters. m. But this figure does not include the extension of lease agreements and sublease of premises.

Other consulting companies provide similar data on renting and buying offices in Moscow. According to Nikoliers, the volume of transactions in Moscow amounted to 1.17 million square meters. m (24% lower than the result of 2021). According to IBC Real Estate estimates, 1 million sq. m (minus 29% year on year).

But even this result turned out to be better than analysts' expectations: their forecasts varied in the range from 800 thousand square meters. m to 1 million sq. m per year, recalls the HEAD of the department of office real estate CORE.XP Irina Khoroshilova. Moreover, the actual result of the year is 2.5% (or 34 thousand sq. m.) more than in 2020, when the covid-19 pandemic began .

The total volume did not live up to the most pessimistic forecasts, which means that the market does not stand still and is gradually adapting to new realities, confirms Elena Medushevsky, deputy DIRECTOR of the office real estate department at Nikoliers. Forecasts of a larger market decline were due to the fact that many international companies announced plans to leave the Russian market and close their offices in response to the outbreak of hostilities in Ukraine on February 24, 2022 and the imposition of sanctions against RUSSIA. Western companies did not enter into new large lease agreements, and some Russian companies have optimized the cost of offices. Despite all the difficulties that the market faced in 2022, the activity of tenants and buyers did not decrease to the results of the crisis years of 2014-2015, when the total area of ​​transactions was at around 750-850 thousand square meters.

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When were the most deals made?

According to CORE.XP, the fourth quarter was the most active in transactions, accounting for 30% of all leased and sold meters in 2022. The largest deal last year was the purchase by the Moscow government of one of the buildings of the Vereiskaya Plaza business center with an area of ​​26.6 thousand square meters. m in the western district of Moscow, next to the Aminevsky highway, indicates Khoroshilova.

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Among the major transactions are also 22 thousand square meters. m in Ostankino Business Park, which was bought by the NTK holding, and the Nevis business center with an area of ​​15 thousand square meters. m, which became the property of ZPIF "GlobalStroyProekt" under the management of "Aurum Investment". The owners of the fund's shares are not disclosed, market participants associate them with the shareholders of LUKOIL. The press service of the company does not comment on this information.

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The share of free space in business centers in Moscow, taking into account sublease and assignment of lease rights, increased by 2.7 p.p. compared to the end of 2021 and amounted to 10.3%, according to CORE.XP. According to the NF Group, there is more free space in more expensive offices, which are classified as class A - by the end of last year, 13.4% of the space was empty in them. In class B, where rental rates are lower, 7.4% of the space was vacant.

There has been a noticeable increase in vacant office space, but it is very far from the peak values ​​of 2014-2016, when this figure exceeded 17%, says Khoroshilova. The total area of ​​free offices in Moscow business centers as of the end of 2022 amounted to 1.8 million square meters. m. According to the results of 2023, CORE.XP expects an increase in vacant space up to 12%.

What awaits the office market in 2023

CORE.XP expects that the demand for the purchase and rental of offices in Moscow by the end of 2023 will be at least 1 million square meters. According to the results of the first quarter, the company expects transactions for at least 150-200 thousand square meters. m, which is 40-50% less than in the same period last year. Ekaterina Nogai, head of research and analytics at IBC Real Estate, believes that demand in 2023 will be 1.1 million square meters. m. In the future, one to three years, the main drivers of demand in the office real estate market in Moscow will be companies with state participation, she predicts.

Due to lower demand last year, rental rates have already decreased. At the end of 2022, the weighted average rental rate was RUB 21.3 thousand. for 1 sq. m per year, decreasing by 4.3% compared to the first half of 2022, says Elena Medushushskaya, deputy director of the office real estate department at Nikoliers

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However, according to IBC Real Estate, rental rates have technically increased over the year: by 13% in class A and by 12% in class B. Nogai explains this by the specifics of the current crisis: after the departure of international tenants, offices in premium business centers in expensive locations are vacated , because of this they are included in the calculation of the average rental rate, which leads to a nominal increase in indicators. In 2023, IBC Real Estate expects a 1-2% reduction in rental rates.

Last year, landlords were pointwise ready to give discounts of up to 20-30% during the negotiation process, says Dmitry Klapsha, CEO of Remain. But when offering discounts, landlords tend to be willing to enter into short-term leases — 11 months or two to three years — and that trend will continue, he says. The expert explains that office owners want to be able to replace the tenant if the market turns around and starts to grow. Tenants are also generally not ready to sign contracts for more than three years, and in longer-term contracts they prescribe the possibility of early termination without penalty. “This is going to be a story all over the place because due to uncertainty, tenants want flexibility. Landlords are also asking for the possibility of termination in the contract, because they hope for an improvement in the situation or that

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