We use cookies to give you the best possible experience on our website. By continuing to browse this site or by choosing to close this message, you give consent for cookies to be used. For more details please read our Cookie Policy.

ITE Transport and Logistics

Warehousing in Moscow: the state of the market

Volatility in Russia’s economy has meant uncertain times for some of key industries, such as transport and logistics. Specifically, warehousing uptake rates and construction have taken a knock in recent years – especially in Moscow. 

And while the Russian economy has been going through a rough patch recently, green shoots of recovery are starting to bud nationwide – signalling an optimistic future for Moscow’s warehousing market, making it better place for transport and logistics firms to do business.

2016: a strong year for warehousing in Moscow

“Important changes took place in the warehouse market in 2016,” stated Anton Alyabyev, Director of global real estate firm CBRE’s Russian Warehouse & Industrial Department, in January 2017. “From negative dynamics observed over the last two years, the market turned towards normalisation.”

The stats certainly back up Alyabyev’s words. CBRE data reveals a surge in warehouse take-up in Moscow over 2016, with the market showing stability for the first time since 2014. Q4 2016 witnessed a spate of deals covering 471,000 sqm of space – three and a half times larger than in Q3.

Supply of new warehouse space as a whole reached 870,000 sqm – 25% higher than 2015’s levels. CBRE believes growth is down to completion of built-to-suit buildings, although Alyabyev is keen to point out that “new demand sources” are driving the market onward.

“Some companies are moving from old warehouses to class A properties, others are consolidating the supply chain in new space,” Alyabyev explained. At the start of 2017, Alyabyev also expressed confidence in Moscow’s warehouse segment, expecting a strengthening of trends seen throughout 2016.
FMCG and food and beverage companies were at the forefront in Moscow warehousing take-up last year. Retailer Hoff & Bridgestone claimed 80,000 sqm of space alone, for example. Logistics companies secured deals too, covering a fifth of total transactions in Q4 2016.

A strong year, certainly, but how will this affect the market in 2017? So far, it appears to have provided a solid base to work on, as cautious optimism spreads amongst tenants, landlords, and real estate professionals.

Moscow’s optimistic warehousing outlook

The first few months of 2017 have not been as startling as 2016’s, but there is still reason to keep a sunny disposition towards warehousing in Moscow. After all, Q1 2016 was a record breaking period in pretty much all aspects, when as much as 93,000 sqm of space was put into use.

98,100 sqm was purchased or leased in Moscow during Q1 2017, accounting for 40% of all cross-Russia transactions during this period. While 46% of deals occurred in other regions, Moscow’s warehousing market still outstrips St. Petersburg’s considerably. 

Just 12% of total transactions took place in St. Petersburg, Moscow’s closest domestic rival in terms of economic performance and population, during the review period.

Total new supply came in at roughly 56,000 sqm. With this additional new space, Moscow’s total supply volume amounts to 12.7 million square metres, including 10.7 million sqm of class A and 1.9 million metres of class B space.

Vacancy rates stand at 12% currently, and this has meant lower rental rates. Currently, rents tend to flit between 3,000-4,500 roubles/sqm/year for class A facilities. Class B rates range from 2,000 roubles to 3,500 roubles/sqm/year. In US dollars, class A rates are around $50-75 per sqm a year alongside $33-58 a year for class B warehousing.

After dominating proceedings last year, Food and FMCG companies are losing their grip on Moscow’s warehousing. 36% of deals in Q1 2017 were from retail firms, down from the 50% deal rate in the same period of 2016.

Pharmaceuticals and e-commerce firms are expected to become the sector’s main drivers across 2017, according to Maxim Zagoruiko, Knight Frank’s Director of Industrial, Warehouses, and Land in Russia and the CIS.

E-commerce, particularly cross-border, is growing bigger every year in Russia – and could become one of the warehousing sector’s major influencers in the very near future.

It is worth reiterating that 2016 was an extraordinary year for warehousing activity in Russia’s capital city. 2017’s stats paint a more accurate picture of this segment’s development: an influx of fresh new space to cope with changing retail habits and Russia’s economic recovery.

A stable Moscow warehousing market = a better transport and logistics environment

For international transportation companies, emerging stability in Moscow’s warehouse and commercial real estate market can only be a good thing. 

A constant supply of warehouse space suggests a healthy environment for transport and logistics, making it easier for operators to perform those vital fulfilment and delivery operations in a more efficient way.
Additionally, the drop in rental rates also means operators, both domestic and international, can use Russia’s capital as a logistics hub at a cheaper cost too. When coupled with the 12% vacancy rate, Moscow makes ideal bedding for companies to root themselves into and expand across Russia. 

Manufacturers of WMS, warehousing tech, fulfilment solutions providers, and attended professionals: be aware Moscow keeps building and putting into action new warehousing space each year. The demand for warehouse-related technology can only keep on growing.

And, this being the case, you need a platform to help you connect with businesses on the hunt for the products and services you can offer…

Enter CeMat: Russia’s leading international show for intralogistics. Covering everything from warehouse technology, to forklift trucks, IT solutions, and more, this is the place to be to take the pulse of Moscow’s, and Russia’s, warehousing sector.

The event is the ideal place to meet highly qualified decision-makers and cultivate relationships with customers and business friends from important industry sectors. If you would like more information on the show, or to discuss your participation opportunities, contact our team today.


Related Events

Get in Touch

Want news like this in your inbox?