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ITE Transport and Logistics

Warehousing in St Petersburg: The state of the market

2016 has been a promising year so far for St. Petersburg’s warehouse market. A collection of built-to-suit facilities have opened for business, which has led to a net increase in the absorption of warehousing space in Russia’s second city. 
Biggest increase in new space since 2009
According to research firm JLL, the first quarter of 2016 saw a 20% increase in the levels of warehousing space put into operation. 77,000 square metres was put into use across the year’s first three months. This is the second largest volume rise in recent history, when 88,000 square metres was built in 2009. 
JLL also suggests that a total pending input of 269,000 square metres will be put into use by the end of 2016. 60% of this will come from projects commissioned by individual companies or built-to-suit facilities. If estimates are correct, built-to-suit warehouses will account for 29% of St. Petersburg’s entire warehouse market by the end of 2016.
According to Colliers, there is currently 1.985 million square metres of total warehouse space in St. Petersburg.
A number of logistics firms have put into operation built-for-need warehouses across 2016. For example, Unimilk Logistics and Auchan commissioned new bespoke facilities in the 72 hectare A Plus Park located in Shushary.
Companies Octavian and Ruslan have also stated their intentions to build speculative projects in the city, located on Toksovo and Moscow Highways respectively.
However, the trend of increased built-to-suit facilities is having a knock on effect in terms of available space. The construction of purpose built units can take upwards of one year, which in turn means having to seek space in other facilities.
“This leads to a washing out of a market volume of around 10,000 square metres,” Andrey Amosov, Head of JLL’s St Petersburg explained.
An increase in trade volumes passing through St. Petersburg is also a crucial factor influence on warehouse expansion. Retail trade has increased 6% through January-May 2016 compared with the previous year, whereas wholesale increased 50% during the same period, according to Colliers.
Vacancy rates & rents drop
Vacancy rates of Class A facilities have dropped 24.6% across quarter two compared with rates seen in 2016’s first quarter, states a report from Colliers. However, the opposite is true of Class B warehouses where there has been a 26.9% increase in vacant units.
Fluctuations in the value of the ruble has led to a bottoming out of rental rates. The going rate for a Class A facility in St. Petersburg is currently 380 rubles/sqm/month, compared with 300 rubles/sqm/month for Class B warehouses. 
While the desire for quality warehousing facilities is prevalent across the whole of St. Petersburg, some districts are seeing higher demand than others. Knight Frank reported that 45% of demand came from the city’s southern regions, whereas the north accounted for 35%.
Central locations are not hot property, showing 5% of total demand, with the east of St. Petersburg seeing 15% of total demand levels in 2016’s first quarter.
The current hot trend, in St. Petersburg’s warehouse sector, is certainly built-for-suit. If the reported increases in trade turnover passing through the city, as reported by Colliers, then the future of the warehousing in St. Petersburg looks healthy.


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