Perhaps, lately, this is the most frequently asked question for our company consultants. Everyone is worried about the instability of the Russian economy and its dependence on the political situation, which has an impact on all spheres of life. Does the increase in the exchange rate affect the rental rate? Of course. Another question is how important it is.
Today, the Moscow office real estate market is in short supply of high-quality “A” and “B +” class office premises, which have been in great demand in the last couple of years. This trend leads to an increase in rental rates in such premises. According to analysts, the rental rate in high-quality premises by the end of 2019 - early 2020 will increase by 15-20%. This trend leads to a return to the “owner’s market”.
It is necessary to allocate a separate category of premium objects of class "A", owned by large, often foreign owners, they still have foreign currency rental rates. Of course, such objects are subject to the influence of foreign exchange rates. But for the peace of both parties, lease agreements with these business centers imply fixing the exchange rate, usually with a currency corridor method (fixed minimum threshold of currency value and maximum) with a validity period for the entire contract period, which gives a guarantee to the tenant that is more than a certain amount he will not spend on rent.
An important impact on the rental rate has a law. A couple of years ago, property taxes began to be charged not on the basis of the book value of the property, but on its cadastral price. This led to an increase in the tax burden in low-quality premises located in sought-after locations. The increased financial burden of the owner has led to an increase in the rental price in these premises.
Let's sum up. At the moment, the change in the exchange rate that shook Russia a couple of weeks ago had no effect on the office real estate market, in which the rental rate is fixed in ruble terms. However, the cost of renting in quality premises of class “A” becomes higher due to the lack of vacancies in them. Tenants should hurry to find a new office, as high-quality areas leave the market every day, and new construction is expected to be at a record low in the last 4 years.