Main market trends outlined at the XVI Annual Knight Frank Warehouse Conference

The XVI Annual Knight Frank Warehouse Conference brought together over 400 market participants.

As part of this event, specialists from the international consulting company Knight Frank presented preliminary results of the third quarter of 2020 in the warehouse real estate market in Russia. One of the main trends is the shift in demand for warehouse space in the regions of Russia: according to analysts’ predictions, the volume of transactions by the end of 2020 may reach 800,000 sq. m., which is almost 3.5 times more than in 2019. It is also worth noting the uneven introduction of new supply: in the Moscow region and the Leningrad region, the volume of commissioning decreased, while in the regions of Russia, an increase of 3.6 times was noted. 

Konstantin Fomichenko, director of the industrial and warehouse real estate department at Knight Frank, notes: “We all have witnessed a very rapid recovery in demand for warehouse space after quarantine restrictions were lifted and are already reaching 2019 values, primarily due to two segments: e-commerce and grocery retail. As for supply, a sharp increase in commissioning space is expected in 2021 due to the revival of speculative construction after a pause during quarantine, as well as due to the construction of warehouses for customers under transactions concluded in 2020.”

Gleb Belavin, Deputy Director General for Tenant Relations at MLP Management Company, confirmed: “We completely agree with the trends outlined by Knight Frank analysts. Everything that we heard in their speech regarding the Moscow region is like a copy of what is happening at the facilities under the management of MLP. The vacancy rate for the group after quarantine ended has decreased and is at 2.3%, for our volumes it is almost zero. On some properties we can accommodate no more than one tenant, at the moment we can offer several small blocks. At the same time, we feel an active demand, which gives us confidence that transactions in these areas will be concluded in the near future. Regarding the forecast, we are confident that the growing demand from e-commerce and grocery retail will outpace the commissioning of warehouses this and next year."

Zakhar Valkov, executive director of Radius Group, comments: “During quarantine, online retail began to develop more actively. Due to the increased demand, many e-commerce companies had to rent additional space to store and process their goods. Almost half of all warehouse lease deals conducted in the first half of 2020 were with companies from this segment: these are fulfillment operators, marketplaces, and online retailers themselves. In general, the bulk of transactions from e-commerce companies in the first half of 2020 were speculative leases. In particular, in the first quarter, our company entered into a lease deal for almost 18,000 square meters in the Yuzhnye Vrata industrial park with the leading order fulfillment operator Marschroute, which serves companies from the e-commerce segment. Already in May, we signed a deal with VseInstrumenty.ru in the amount of 15,000 sq. m., with subsequent expansion to 25,000 sq. m. The client plans to use our warehouse for his online store, as well as for developing their own marketplace.”

The specialists at the international consulting company Knight Frank have created a preliminary report of the warehouse real estate market with the results of the third quarter of 2020, which can be downloaded from the link: https://cloud.mail.ru/public/nRuC/2qfrifrJJ

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