MLP Management Company became a general partner of the Annual Roundtable Warehouse Property of Russia

The Radisson Royal Hotel, Moscow, hosted a significant industry event, i.e. the Roundtable Warehouse Property of Russia.

The event was co-organised by the international consulting company Colliers International and Kommersant Publishing House. MLP Management Company supported this event as a general partner. More than 350 guests attended the Annual Roundtable Warehouse Property of Russia.

The market professionals met to review the preliminary results of the expiring year and to define the prospects of the warehouse market of Russia in 2016.

Key topics of the discussions were the transition of the Russian market to rouble contracts, significant increases in the volume of the deals concluded, despite the negative forecasts of the last year, as well as a significant increase in the share of food retail in the deals structure. According to the experts’ forecasts, in the next 2-3 years, the food retailers will become the main driver of demand for upscale warehouses as such companies are now actively developing.

Opening the event, Nikolay Kazansky, Managing Partner of Colliers International, noted that, in spite of scepticism in the market, this year can be considered a record-breaking: ‘Even in the beginning of this year, it was hard to imagine that we would manage to overcome the 2014 indices. However, in 2015, we have delivered more warehouse space than we have built. According to our estimates, the scope of lease and purchase deals in Russia amounted to about 2 million sq.m. About 1.5 million sq.m were commissioned. Of course, the growth in demand was associated with the activity of trading companies. They accounted for about 72 percent of the total acquisition deals in Russia, with 85% in Moscow Region. The food retailers have shown a high level of activity in Russia, accounting for 50% of the total closed deals.’

Summing up preliminary results of the year, Veronika Lezhneva, Director of the Research Department at Colliers International, said in her report that the lease rate and selling price of the warehouse space reached the minimum value over 10 years - $ 62 and $ 600, respectively: “Reduced rates have contributed to an increase in the share of facilities sale deals of up to 31% following the results of the third quarter. While in 2015, retailers preferred premises of more than 20 thousand sq.m - the share thereof amounted to about 70% of the total space, 30% out of those were facilities larger than 50 thousand sq.m. We believe that in the next 2-3 years the retailers will retain their activity and continue to form the bulk of the demand in Moscow Region.”

Speakers of the session Results of the Crisis Year were: Alexey Sapon, Development and Logistic Support Director at Eldorado, Irina Dementyeva, Supply Management, Distribution and Logistics Director at M.Video , Gleb Belavin, Deputy Director General for Tenants Interaction at MLP Management Company, Oleg Mamayev, Executive Director at the PNK Group and others. There were discussed the problems related to the conversion of dollar contracts into rouble contracts, search for compromising solutions for the continuous dollar contracts, and new possibilities of operators in crisis.

Alexey Sapon, Development and Logistic Support Director at Eldorado, supported the thesis that the market now is entirely on the side of the buyer, so it creates ideal conditions for profitable deals: “This year, the company has moved several times to better quality facilities without having budget for logistical infrastructure increased. The cost of warehouses in Moscow now is minimal, neither rental rates nor the sale price will decrease any further.”

Irina Dementyeva, Supply Management, Distribution and Logistics Director at M.Video,  reported: “This year, we have expanded the area of our distribution centre at the Chekhov Warehouse Complex by 23,000 sq.m, its surface area has now reached 57,000 sq.m. This made it possible for us to move the accessories handling warehouse from Pushkino, thus having optimised the transport flows both for our suppliers and for distribution to our stores.”

Gleb Belavin, Deputy Director General for Tenants Interaction at MLP Management Company, noted that now the portrait of the primary tenant and consumer of the quality warehouse space has changed dramatically: “If in 2014, these were logistics operators renting the space for a specific retailer, now they were replaced by the retailers themselves. So, at the end of 2014, the logistic companies accounted for 46% in the structure of our renters, following the results of 2015, their share decreased to 35%, while the share of the retail trade increased by more than 2 times - from 14% last year up to 31% this year. It is worth mentioning that the percentage of pharmaceutical companies among our tenants has increased by 2.5 times (from 26,000 sq.m last year up to 68,000 sq.m in 2015).”

The panellists were unanimous that in 2015 there was an active demand for the warehouse space due to low rental rates and sale price of the facilities. However, a record number of deals in the difficult market period suggests that the retailers have taken advantage of the current situation to the maximum extent to improve their storage and logistics infrastructure.



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