Why is it so interesting to work in our market?

Commercial Resl Estate, #13 (188)

The statistics for the warehouse market are showing that this segment is showing signs of life at last. Vacancy has been as low as 1% since last year, and now we finally see a significant increase in supply - nearly a million square meters for 2012, with nearly 400,000m2 of new space brought to market so far this year, if the S. A. Ricci report can be believed.

It remains difficult for developers to develop logistics space because of the relatively low yields on investment costs, compared to other segments, combined with high cost of capital in our market, but obviously developers are finding a way now. This is great news for the market.

I read with alarm about the possible closing of the lower part of Tverskaya Street to make a pedes-trian zone. Don`t the city fathers think about the traffic situation in the city? European cities which created such pedestrian zones did so in parallel with the construction of tunnels to divert traffic under the historic cores of cities - Munich is a good example. Tverskaya is a crucial traffic conduit through the central core of the cities - without tunnels to replace (or better, augment) the lost capacity, closing Tverskaya will simply create chaos. Besides that, we hardly need a pedestrian zone there - the street is extremely wide by European standards and has lovely, wide sidewalks.
I read with great interest the very well-researched article about the office market in Voronezh. Our company has been involved with a number of office projects in the regions since more than a decade ago, sometimes as consultants, sometimes as developers, and we have been surprised that this market has developed so slowly. By analogy with other countries, cities such as Krasnodar, to name one example, should require several million square meters of modern office space, but to this day a civilized market has not yet appeared, with most office space users preferring to buy blocks of office space as if they were apartments, or to stay in Soviet-era reconfigured buildings.

Voronezh appears to be far ahead of the curve, with a supply of modern office space greater than what Moscow had at one time during my memory - about 270,000m2. My hat is off to those developers with the vision to build these markets – they will be rewarded for having won market share early. This CRE contains a lot of proof of why it is so interesting to work in our market, even while global real estate markets continue to languish.

Автор: Cameron Sawyer, Chairman of Board of Directors at GVA Sawyer

Commercial Resl Estate, #13 (188), July, 1-15 2012