The rising cost of construction, borrowing, increased tax burden and operating costs make offices less interesting for investors. At the end of 2018, their delivery in Moscow decreased to a record low level, while the activity of tenants, by contrast, increased. In such conditions, the vacancy rate of the premises decreased, their rental rates increased, and the amount of discounts offered fell three times. These trends will only strengthen this year, the consultants are confident.
The total delivery of high-quality office space in Moscow following the results of the last year amounted to 125 thousand square meters - it is almost 3.3 times lower than the similar value of 2017 (408 thousand square meters) and at the same time the lowest figure since 2009.
The sharp decline in office construction is due to a complex of reasons: "The cost of construction, land, bank loans, taxes, cadastral valuation have increased, and the cost of operating business centers has almost doubled since 2014." At the same time, developers are not sure that effective demand will grow.
According to ILM managing partner Andrei Lukashev, in some projects, construction costs have increased by 1.5 times. “Another component of the reduction in office development is a shortage of suitable sites,” he adds, adding that within a kilometer radius around existing metro stations everything is built up with housing, and the new stations turn out to be unclaimed office locations. “Professional business center developers - Capital Group, Forum Properties - no longer build such facilities, reorienting to housing or investment in Europe,” says Mr. Lukashev. He is confident that the office market will not return to serious volumes of construction: “The volume of free space will be about 200 thousand square meters per year plus built to suit (construction for a specific customer. - “Kommersant”)