The Moscow Times

5 July 2005

Leningradsky Terminal, a massive new logistics project in northern Moscow,
promises to add 172,000 square meters of Class A warehouse space to the market
by 2007, more than one-fifth of the current total.
Despite the fact that the project is just one of a series set to deluge the
market with quality space, analysts insist that strong demand will absorb the
extra supply without a significant fall in prices.
Construction work on Leningradsky Terminal, 13 kilometers past the Moscow Ring
Road on Leningradskoye Shosse, began last Thursday. The first 53,000 square
meters of the $120 million project are due to be completed in the first quarter
of 2006, with four more phases expected to be completed by the end of 2007,
according to Maxim Karbasnikov, marketing director at the project's developer,
Multinational Logistics Partnership.
MLP's ownership has not been disclosed.
Large-scale Class A warehouse complexes currently in the planning stages or
under construction include: the 211,000-square-meter Pushkino project, recently
started on Yaroslavskoye Shosse; the 600,000-square-meter Tomilino, southeast of
Moscow; the 300,000-square-meter Krekshino project, to the southwest; and the
Belaya Dacha complex to be built east of the city.
But analysts do not expect all of the promised space to come online at the same
time. Such projects are often completed in phases, and sometimes financing dries
up before the later stages are completed.
Max Hosford, principal at Lone Star Ventures -- one of the Pushkino project's
two developers -- said that none of its potential customers was waiting for
prices to nosedive.
"We have not talked to any client to date that is going to sit back and wait,
hoping that the rates are going to drop considerably, because that's just not
going to happen," he said.
Alexei Novikov, senior consultant at Knight Frank -- which with Colliers
International is to lease out Leningradsky Terminal-- said he expected little
short-term change in annual rental rates.
"We expect a slight decrease maybe in 2007, when the huge projects come to the
market," he said. "Right now we see that all the premises and all the projects
and square meters are occupied before they come to the market." Knight Frank
estimates net average annual rental rates at between $130 and $145 per square
meter, among the highest in Europe.
Darrell Stanaford, director at Noble Gibbons, said warehouse prices would fall
slightly next year, from $135 to $150 per square meter to $120 to $130.
According to Noble Gibbons, there are currently 780,000 square meters of Class A
warehouse space.
Ruslan Suvorov, warehouse consultant at Colliers International, said that the
main advantage of Leningradsky Terminal's site was its visibility and location,
which gives easy access to Sheremetyevo Airport and St. Petersburg.
Stanaford, however, said that access for the high volume of truck traffic it
would generate could prove difficult.