Office market Q1 2021

Stock

In Q1 2021 the increase in new supply amounted to 50.4 ths. m2 of rental space – four office buildings were delivered to the market. In contrast to 2020, only 3% of new office space built in Q1 2021 relates to speculative supply: the volume of new speculative construction was 1.5 ths. m2 compared to 24.6 ths. m2 a year earlier.

In Q2-Q4 2021, 218 ths. m2 of office spaces are expected to be commissioned (GLA). Speculative supply growth will amount to 216 ths. m2 (3.9 times higher than in 2020) provided the construction deadlines are met.

Demand

The main demand, as in previous years, has been formed by IT companies. The share of this sector accounted for 26% of the office space leased in Q1 2021. The service sector as well as the financial ones have been expanding their presence on the market. In Q1 2021, demand from the oil and gas sector increased following a prolonged moratorium on leasing new office space which was in force in 2020.

The volume of lease transactions on office market in Q1 2021 went beyond 43 ths. m2.

Occupancy

Taking into account insignificant growth in new speculative supply, the volume of vacant space did not change significantly by the end of Q1 2021 comparing to December 2020.

The average vacancy rate in class A and B business centers decreased by –0.4 p.p. and amounted to 7.1%. At the end of March 2021, 270 ths. m2 was vacant in class A and B office centers.

In class A office centers the vacancy rate drop by –0.7 p.p. by December 2020 , and made up 3.5%. 8.8% office space was vacant in Class B office centers (–0.2 p.p. to December 2020 ).

Rental rates

The average rental rates in class A office buildings increased by 1.6% compared to December 2020 and amounted to 1,950 Rubles per m2 per month, inclusive of VAT and operating expenses.

The average rental rates in class B office buildings amounted to 1,310 Rubles per m2 per month, inclusive of VAT and operating expenses. This parameter did not change since December 2020