Research Office market report 27 Contents office markets 2-3 Market breakdown 4 Market data Executive summary The rapid development of the office market over the last decade has brought the total Grade A and B stock to.6 million sq m, having stood at just 2.9 million sq m at the end of 23. Vacancy rates in the city s best buildings remain very constrained, particularly in the more central locations. A substantial amount of Grade A accommodation is scheduled to be delivered to the market at the City site in the west of the city. In total, the development is anticipated to bring. million sq m of office space to the market before the end of 2. Investment activity in the office sector continues to grow, with yields maintaining a downward trajectory. Prime yields in the office sector are now circa %. Foreign investment into the Russian office market has been largely restricted to as the lack of investment grade product in secondary cities has limited outside investment. Competition for good quality stock in the city remains strong.
2 office market report 27 Knight Frank City ( International Business Center) 9 8 9 8 7 st Krasnogvardeysky proezd 6 2 3 4 8 7 6 2 9 4 3 Krasnopresnenskaya naberezhnaya 2 Complete Partially Complete 27 28 29 River 2+ city developments Site Development Total size, sq m Office Component Status Completion Tower 2 6,7, Complete 2 Expocenter 6, n/a Partially Complete 2,3 City Palace Tower 69, 8, Under Construction 29 4 Imperia Tower 3,, Under Construction 29 6,7,8 Central Core 4,,9 Under Construction 28 9 Capital City Complex 288,68 72,3 Under Construction 28 Naberezhnaya Tower 24,, Partially Complete 27 Transport Terminal 2,43 22, Under Construction 29 2 Eurasia Tower 27,42 82,87 Under Construction 29 3 Federation Tower Complex 423, 8,8 Under Construction 28 4 Mercury Office Tower 8, 86, Under Construction 28 Government Administrative Complex 397,83 n/a Under Construction 28 6 Multifunctional Office Administrative Complex 249, 7,342 Planning 2-2 7,8 Russia Tower 42, 2, Planning 2-2 9 Northern Tower 3, 78, Under Construction 27 2 Multifunctional Business-Expo Complex 2, 7,936 Planning 28 www.knightfrank.com
sh. 3 office market report 27 Knight Frank Fourth Transport Ring 4 Dmitrovskoe 2 Leningradsky prospekt Third Transport Ring 7 7. 8. Tverskaya ul. 8 4 8.2 Garden Ring prop. Mira ul. Rusakovskaya 9. 3 Kutuzovsky prospekt 7.2 7.4 7.3 Komosomolsky prosp. ul. Novy Arbat 3 6. Leninsky prospekt Mytnaya ul. 2 6 6.2 9.2 Entuziastov 9.3 shoose ul. Nizhegordskaya Volgogradsky prospekt 9. Central Business Districts 2. GR South 3. GR West 4. GR North. GR East Borders of business districts Borders of subdistricts 6. TTR South 6. Leninsky 6.2 Tulsky 7. TTR West 7. Presnensky 7.2 City 7.3 Kievsky 7.4 Khamovniki 8. TTR North 8. Tverskoy-Novoslobsodsky 8.2 Prospekt Mira 9. TTR East 9. Basmanny 9.2 Tagansky 9.3 Volgogradsky. FTR North. FTR South 2. FTR West 3. FTR East 4. MKAD GR = Garden Ring TTR = Third Transport Ring FTR = Fourth Transport Ring
Knight Frank office market report 27 4 sub-market data Transport Direction Sub Class A Average Transport Stock Vacancy Transport Ring district rental ranges rent ring average (sq m) rate ring vacancy ($ per sq m) ($ per sq m) rent ($ per sq m) rate Boulevard Ring Center CBD 72-, 864 864 33,299.9%.9% 2 Garden Ring South GRS 7-,3 732 286,886.% 3 West GRW 8-, 73 74,92.4%.8% 4 North GRN 62-9 79 2,77.% East GRE 6-,2 796 7,9 3.8% 6. Third Transport Ring South Len 7-72 7 4,84.8% 6.2 South Tul 6-6 62,882.% 7. West Pres 6-86 737 9,86.6% 7.2 West City 67-86 77 7,99.% 7.3 West Kiev 66-77 74 77 32,469.8%.9% 7.4 West Kham -8 633 2,946.% 8. North Tv-Nov 66-77 72 86,9.% 8.2 North PrM 7 7 7,6.% 9. East Basm 7 7 3,67.% 9.2 East Tag 6-78 78 6,488 2.8% 9.3 East Volg Fourth Transport Ring North FTRN 8-73 7 33,27.% South FTRS 63 63 68 6,6.% 7.6% 2 West FTRW 6-8 688 24,982 9.7% 3 East FTRE 4 MKAD MKAD MKADN 2-6 6 6 6,937.%.% TOTAL 2-, 73,2,93 2.4% Based on a selection of s Prime Grade A stock Key leasing transactions Address District Transport Sub Purchaser Size Rent ($ per Operating no. ring district (sq m) sq m), Est expenses Pushkinsky Dom/Strastnoy blvd, 9 BR CBD Gazexport 2,83 6 Hermitage Plaza/Krasnoproletarskaya st., 2/4, bld.6 8. GR GRN VympelCom 3,6 7 Sheremetievsky business center/polkovaya st, 3 8. TTR Tv-Nov Eldorado, 4 n/a Paveletskaya Tower/Paveletskaya sq, 2 bld. 2 GR GRS Nestle 7,4 7 7 Golutvinsky Dvor/Yakimanskaya emb, 4 2 GR GRS Equant 6,22 9 n/a Kvartal business center/dubininskaya st, 3 6.2 TTR Tul Eurochem,99 68 n/a Balchug Plaza/Balchug st, 7 BR CBD Salans 3,86,2 3 Vaviloff Tower/Vavilova st, 24 6. TTR Len AstraZeneca 3, 63 8 White Square/Lesnaya st, 8. TTR Tv-Nov Deloitte & Touche CIS 29, 6 n/a Naberezhnaya Tower/Krasnopresnenskaya emb, 8, block C 7.2 TTR City KPMG 2, 7 Avrora Business Park/Sadovnicheskaya st, 82, block C 2 GR GRS Deutsche Bank 7,7 77 9 Balchug Plaza/Balchug st, 7 BR CBD Gazprombank 8,76, 3 Krugozor business center/obrucheva st, 3/ FTR FTRS ABB,2 8 Naberezhnaya Tower/Krasnopresnenskaya emb, 8, block C 7.2 TTR City Regus 3,9 7 Stanislavskogo Factory/Stanislavskogo st, 2, bld. 3 9.2 TTR Tag Ancor Regions 3,9 66 8 Krugozor business center/obrucheva st, 3/ FTR FTRS IBM 3,427 8 IKEA business park in Khimki 4 MKAD MKAD Ford Motor Company 4, 4 7 Concord business center/shabolovka st, 6. TTR Len Nycomed 3,6 7 8
Knight Frank office market report 27 Key investment transactions Address District Transport Sub Purchaser Size Price no. ring district (sq m) ($, mln) Ducat Place II / Gasheka st, 7 4 GR GRN London & Regional Properties 9, 8 Capital Tower / Brestskaya st, 29/22 bld. 8. TTR Tv-Nov Yug-Nefteprodukt, 7-7 McDonald s Building I / Gazetny ln., 7/9 BR CBD Eastern Value Partners Ltd 7,8 6-7 DaimlerChrysler House / Bol. Ordynka st, 4/2 2 GR GRS Bank Saint-Petersburg 6,334 n/a Figure Average Grade A rents 8 Figure 2 Grade A rents by submarket Figure 3 Distribution of selected office stock *. US $ per sq m per annum 7 6 US $ per sq m 8 6 4 2 million sq m.8.6.4.2 998 999 2 2 22 23 24 2 26 BR GR - City TTR FTR MKAD. BR GR -City TTR FTR MKAD * Based on a selection of s Prime Grade A stock Figure 4 Vacancy rate * Figure Prime yields 8 2 7 6 2 % 4 3 % per annum 2 BR GR -City TTR FTR MKAD 2 2 22 23 24 2 26 Federation Tower, City * Based on a selection of s Prime Grade A stock
Research London Chris Bell Managing Director Europe +44 () 27 629 87 chris.bell@knightfrank.com Joe Simpson Associate International Research +44 () 27 629 87 joe.simpson@knightfrank.com Kyrill Starodoubtsev Director Office Head +7 (9) 98 kyrill.starodoubtsev @ru.knightfrank.com Maria Kotova Director Head of Research +7 (9) 98 maria.kotova@ru.knightfrank.com Knight Frank Commercial Research provides strategic advice, consultancy services and forecasting to a wide range of clients worldwide including developers, investors, funding organisations, corporate institutions and the public sector. All our clients recognise the need for expert independent advice customised to their specific needs. Knight Frank Research Reports are also available at www.knightfrank.com Americas USA Bermuda Brazil Caribbean Australasia Australia New Zealand Europe UK Belgium Czech Republic France Germany Hungary Italy Poland Portugal Russia Spain The Netherlands Africa Botswana Kenya Malawi Nigeria South Africa Tanzania Uganda Zambia Zimbabwe Asia China Hong Kong India Indonesia Malaysia Singapore Thailand Knight Frank LLP 27 This report is published for general information only. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no legal responsibility can be accepted by Knight Frank Commercial Research or Knight Frank LLP for any loss or damage resultant from the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank LLP in relation to particular properties or projects. Reproduction of this report in whole or in part is allowed with proper reference to Knight Frank Commercial Research. Knight Frank LLP is a limited liability partnership registered in England with registered number OC3934. Registered office: 2 Hanover Square, London WS HZ www.knightfrank.com