The 12th Annual Knight Frank Warehouse Conference Took Place on September 15

The 12th annual Knight Frank Warehouse Conference took place on September 15, 2015 in the Lotte Hotel Moscow.

The Frank Knight international consulting company served as the organizer of this conference. Currently, this event is the largest specialized platform for interaction among this professional community.

The conference’s audience included over 400 modern warehouse facility owners and developers, as well as consumers of high-quality logistical operations: distributors, FMCG companies, logistics operators, representatives from financial institutions, industrial parks, etc.

Topics discussed in the organized panels included the current situation in the high-quality warehouse real estate market and possible methods for further development under existing conditions. Warehouse developers and consumers discussed how the economic sanctions have affected their business and determined the optimal format for interaction in the new reality.

Discussion began with the Knight Frank company’s research. The company’s analysts believe that the total investment in warehouses in Russia in 2016 consists of $184 million, which is 6.8 times lower than in 2013, the most active pre-crisis year ($1,250 million).

“The amount of warehouse construction has decreased overall. More than half of all projects are based on the built-to-suit system, which tells us that the market needs specialized decisions, and developers are prepared to make concessions and create complex, non-standard facilities, small facilities of 1,500-5,000 square meters. For example, self-supported storage units from COMITAS, selling parts of a building (like PNK), constructing units on clients’ property (Stroialiance PNK),” remarked Vyacheslav Kholopov, a partner at Knight Frank.

Analysts at Knight Frank identified the largest investment purchase in four years as the Bin Group’s purchase of a series of units from the Renova Group and PKN Chekhov-1 for $200 million. Over this period of time, the Bin Group invested the most in warehouse real estate: $1.06 billion. 

In terms of Moscow’s warehouse market, the pace of commissioning and constructing warehouses has declined here as well. According to data from Knight Frank, around 600,000 square meters of warehouses will begin construction in the region in 2016. This is the lowest amount in the past five years.

By the end of 2016, experts anticipate that vacant lots for storage facilities in the Moscow region will be 8.5%, an increase of 6.4 percentage points compared to 2013, and will reach 1.1 million square kilometers. Vacancies remain high from 2015, and are staying at their highest level in the market’s entire history. In 2013, 200,000 square meters of storage space was vacant.

Currently, the average advertised rent in the Moscow region is 3,900 rubles for one square meter per year for a Class A warehouse premises. Over the course of four years, the amount of rent has decreased by 17% from 4,700 rubles for one square meter per year.

 In the discussion, Gleb Belavin, Deputy Director General of Tenant Relations at the MLP Company remarked: “Despite the fact that rent for one class of warehouses fluctuates from time to time to twice its amount depending on the storage facility’s “birth year” and its distance from Moscow's Ring Road, we can actually see a temporary stabilization in the warehouse real estate market; but it is impossible to have stability in one market when the situation surrounding it is what we have now, for example, manufacturing is simply not growing.”