Moscow, 9 December 2022. Gross leasable area of all existing commercial properties in Russia (including offices, warehouses and retail facilities) reached a record level of over 100 million square meters. Retail properties (including hypermarkets) accounted for over 37 million sq. m of the total and warehousing segment’s GLA amounted to 35 million sq. m, with the remaining area falling into the category of office spaces. Earlier, in 2017-2020, we saw a somewhat moderate pace of new projects commissioning in Russia.

In 2021, commercial properties commissioning in Russia totalled 4.2 million sq. m. In early 2022, full-year commissioning was projected to be approximately the same – a total of some 4.2 million sq. m, but as some developers later scaled back their plans current projections imply a total full-year commissioning of 3.8 million sq. m.  

It is expected that in 2023 a total of some 4.0 million sq. m to be commissioned in the commercial real estate segment, including 2.0 million sq. m of warehouses, 1.2 million sq. m of offices and 486,000 sq. m of shopping malls. Warehousing continues to be the segment’s leader in terms of commissioning volumes (it has been boasting largest commissioning volumes since 2017). To remind, developers commissioned 2,950,000 sq. m of warehousing facilities in 2014, 2,686, 000 sq. m in 2021, and 2,873,000 sq. m in 2022.

Supply of new retail facilities historically has been driven by regional markets (outside Russia’s two largest cities) with an aggregate share of 63%, whereas Moscow and St. Petersburg contribute 26% and 11%, respectively. Over the last decade, the largest volumes were recorded in 2014-2016, and after that we see a sharp downtrend – total commissioning in this subsegment has been averaging around 600,000-700,000 sq. m in recent years, hitting a low of just 256,000 sq. m this year. Retail facilities penetration in Russia currently stands at 207 sq. m per 1,000 people, which is 3% higher than in the previous year.

Nikolay Kazansky, Nikoliers managing partner: “Over the past few years, we have seen a limited supply of new facilities. It made the market more balanced than in the previous crisis periods. Even though demand is shrinking in all the segments, we have not seen a dramatic increase in vacancy rates so far. Developers have adapted to current conditions and even if they have to push back deadlines for some projects they continue to launch new facilities.”