Moscow, 9 November, 2012, - According to the latest CBRE Industrial research report, key features of Q3 2012 warehouse market were: growing volumes on new supply, over 30% share of build–to-suit deals, very low levels of vacancy (around 1 %) and the same range of rental rates. 

The volume of new delivery in Q3 2012 amounted to 198,000 sq m. This figure is about 100,000 sq m up on the results for the second quarter of 2012, and is the same as for the third quarter of 2011. The third quarter growth of the new supply was based primarily on the projects PNK-Vnukovo, South Gate Industrial Park (Radius Group), and the DDT Logistic warehouse complex. The new projects were mainly located in the south, south-west, and south-east of the Moscow region, in districts that have traditionally hosted modern warehouse complexes. 
Significant Big Box Projects announced as due for delivery in Q4 2012
Project                 Location                                                                 Developer
PNK-Vnukovo 19 km from MKAD on Borovskoe highway PNK Group
Infrastroy Bykovo 19 km from MKAD on Novoryazanskoe highway Infrastroy 
Atlant Park         26 km from MKAD on Gorkovskoe highway Atlant-Metalloplast
Istra Logistic         14 km from MKAD on Novorizhskoe highway Istra Logistic
The structure of demand has seen some changes in the make-up of tenants. In comparison with the previous quarter, the share of retail companies grew by about 16%. The continued growth of the whole retail sector was a factor here, as well as the expanding activity of online retailers. 
The structure of deals in Q3 2012 has changed. Whereas in Q1 the most of deals were for existing vacant premises, in Q3 the situation changed and about 69% of deals for lease/sale of warehouses relate to properties expected to come on stream in the next 9-10 months. This situation is the result of the continuing trend for BTS development. The share of BTS deals continues to account for more than 30% where the sales of completed buildings to end users prevail. The total area under BTS construction was up 139% in comparison with the third quarter of 2011. 
Strong take-up combined with a limited number of completions is leading to vacancy shrinkage.
Vacancy rates decreased slightly compared to the second quarter of 2012 and are currently a bit below 1%. The majority of vacant premises, as it was during the first half of the year, are located in the south and south-west. These are mostly either not yet leased, just recently commissioned properties, or are relatively small blocks within warehouse properties built slightly earlier in the year. 
In the next 6-8 months the vacancy rate will stay low. Growth of this figure will be kept in check by demand, since currently the demand for warehouse space still far exceeds the existing square footage of suitable properties. Volumes of deals in the second and third quarters of 2012 exceeded construction by 56% and 70%, respectively. The structural deficit of supply is likely to continue for the next few years, since Moscow has 3-4 times fewer market penetration rate than, for example, Warsaw or Prague.
Overall, the base rates, the landlords are asking for Class A properties, in Q3 2012 have remained in the same range as before. The exceptions are for standalone properties, whose owners are asking higher rates basing on the strength of the current location. So in the north of the Moscow region we still may see some rates at $155-$159 per sq m annum. Nonetheless, with the delivery of projects, announced for 2013, to the market and its possible temporary saturation, these peak levels could disappear as uncompetitive. A second example of inflated rents can be seen in several warehouses, located near the MKAD. But, in general, the market situation is rather even and base rates from leading developers are all at the same level. 
Commercial terms for Q3 2012, warehouse market of Moscow and Moscow Region
Commercial terms                        Class A
Average asking rent                        $130-140 / sq m/ year
Operational expenses (OPEX)        $30-40 / sq m / year
Average sale price                        $1,000-1,200 / sq m
Average parking rates for trucks $250 / month
Average parking rates for cars         $50 / month
Average lease terms                         7 years
Lance Pilant, Director of Industrial & Logistics Agency Services Department of CBRE in Russia comments:
“The industrial & logistics property sector within 50 km of the city of Moscow continues to develop at a rapid pace, and is driven mainly by a high level of domestic consumption (the market entry and expansion of major retailers and the increasing availability of consumer lending are fueling this growth). We expect new supply to increase substantially over the next 12 months, but due to the very high demand for modern space, the vacancy rate in prime locations will remain low.”

About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2011 revenue). The Company has approximately 34,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.ru / www.cbre.com.


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