Deals for 1.2 trillion and influx of investors: how the shopping centres, offices and warehouses ended the year
For the Russian commercial real estate market, 2024 was the best year in history — the volume of investments exceeded 1.225 trillion rubles for the first time, analysts reported. In Kazan, high demand for high-quality office and warehouse real estate remains, the replacement of international operators in shopping centres is being completed and traffic has stabilized. Read more about how much rental rates increased, learn the level of vacancies and the number of new stores the final review of Realnoe Vremya.
Record investments and shortage of spaces
The number of deals in the commercial real estate market in Russia has exceeded 1.225 trillion for the first time in a year. Therefore, experts called 2024 the best for the industry in its entire history. The largest share was accounted for by development sites — 575 billion rubles, while a year earlier investments in this segment amounted to 416 billion. High-quality areas in business centres have increased in price by 30% over the year, the vacancy rate was at a historically low level — about 4%, according to calculations by Ricci consultancy.
In general, record low vacancy is observed not only in offices, but also in the warehouse and retail real estate segments. Sites are becoming more expensive along with the cost of construction and management. At the same time, a trend has emerged: systemic tenants are going to buy, and landlords are selling, market participants indicated. As it has been traditional in recent years, 2024 turned out to be difficult for the real estate market, it lived under the influence of an increase in the key rate of the Central Bank, difficult economic conditions, and rising inflation. Nevertheless, the year was stable and showed amazing results — new projects entered the market, the volume of investments increased, experts note.
A similar situation is observed in Tatarstan, where businesses are facing a shortage of space. According to authorised representative of the Russian State University of Management in Tatarstan, managing partner of Perfect RED Yelena Stryukova, in Kazan the total quality supply in the office real estate segment is represented by 61 properties with a total area of over 568,000 square metres, including a multifunctional complex for shopping, work, recreation and entertainment opened this year on Yershov Street.
“In 2024, the occupancy rate in the office real estate market continued to remain low — less than 1%. At the same time, the demand for offices continues to grow. Office space in new business centres as part of UNO multifunctional complex under construction and the ART Community Centre (already delivered) is almost completely leased out during the construction process, the speaker noted.
According to her, almost all new properties entering the market are aiming for class A, and in rare cases, for B+. At the same time, with the commissioning of modern office buildings, existing properties are becoming obsolete and experiencing a decrease in demand from tenants. “The exposure period of premises in new properties was no more than one year, which indicates a high rate of absorption of office real estate in the city and high demand for high-quality office projects,” Stryukova said.
Investor flow from housing to offices
Another trend is gaining momentum in the office segment: the number of deals by private investors is growing. For example, in Moscow, the number of office space purchase and sale agreements has grown by 27% over the year. Moreover, in nine months, twice as many such premises were purchased as in January-September 2023. Participants in the Tatarstan commercial real estate market confirm this trend.
“The client profile has changed, people began to switch to offices. This saved the market, because clients came to commerce from housing. For them, housing is no longer a convenient investment. Plus, people have revised their views on other types of investments, such as cryptocurrency. Investors have also migrated from foreign real estate, and this was a fairly large volume of investments. Given current events, people have begun to invest money within the country. Housing cannot be bought (without an affordable mortgage) — it is unprofitable from an investment point of view, and they began to shift to commercial premises,” said founder of DOF Vyacheslav Pimurzin.
According to him, some investors have revised their attitude to deposits. Considering that not the entire deposit amount is insured, and recalling the negative experience with Tatarstan banks, many also preferred to go into commerce.
Rental rates have increased by 18-20%, the sale price — even more
“The office market is changing rapidly, experts note. The share of free space is approaching critically low values, and rental rates and prices per square metre, on the contrary, are reaching record highs. For example, in Moscow, according to the forecast of IBC Real Estate, the vacancy rate in the office market in class A by the end of the year will be 6%, and in the most popular business districts — only 1-2%. At the same time, building owners raised rates throughout the year, key business locations have risen in price most significantly — by an average of 20-25%.”
“In Kazan, the average rate in class A at the end of 2024 is 2,331 rubles per sq m a month, which is 18% higher than the figure at the beginning of the year. The growth in rates is due to several reasons: the entry of new high-quality projects into the market, high demand for offices in the absence of supply, and the rotation of tenants in existing properties,” explained Elena Stryukova.
Currently, according to her, the city knows about the construction and design of four office real estate properties with a total area of 34,000 square metres. Rental rates for new modern properties are more than 30% higher than in existing ones.
“Commercial premises for sale have become even more expensive; in Kazan, these areas, according to some estimates, have grown in price by 55%, outstripping the cost per square metre in other cities with a population of over a million and approaching the level of St Petersburg.
The attendance rate of shopping centre has increased, but has not returned to pre-COVID-19 levels
“The attendance rate of shopping centres has stabilised. Over the past two years, it has remained at approximately the same level. However, people's shopping habits are changing, so we should not expect a return to 2019 figures,” Elena Stryukova warned.
Kazan shopping malls are completing the replacement of international operators — 74 new stores have opened in a year. The opening rate is slightly lower than in 2023, with 90 new retail outlets opened.
Forecasts for 2025
When assessing the situation on the office real estate market, most speakers agreed that many of this year's trends will be observed next year. It is expected that the Central Bank's protective rate will hold back the market for another couple of years. Nevertheless, developers intend to build more facilities given the high demand. What should market players do in these conditions?
“First of all, pray, especially for tenants,” joked Vyacheslav Pimurzin, “Next year, I believe, and there are prerequisites for this, the commercial real estate market will also grow, but we are talking about liquid commercial premises. Because the shortage of space remains, more people come to us, they are ready to buy and rent ready-made premises from us. But at the same time, the number of premises does not grow at the rate that demand requires.”
According to Yelena Stryukova, office rental rates will continue to grow in 2025 due to the current economic situation and the shortage of space on the market. Landlords will take a winning position, since they retain the choice of a tenant from several applicants. They also have the opportunity to rotate tenants. In addition, the expert allows for the emergence and the same rapid development of the built-to-suit format in Kazan for office real estate, as in the warehouse real estate market.”
According to the expert, the following is expected in the retail real estate segment: a decrease in the pace and volume of construction of large-format shopping centres, based on the investment attractiveness of small formats of retail real estate; continued demand for commercial space as part of residential complexes with active growth in cost; an increase in Russian players in the structure of shopping centre tenants; rotation of current tenants and updating of store concepts opened 5-10 years ago, due to a gradual increase in rental rates indexation of rental rates higher than the indexation stipulated by contracts against the background of rising expenses and an increase in cadastral value.
“The warehouse real estate market is expected to continue to grow. In Kazan, record growth in rental and sales rates will continue — they have already reached the level of Moscow indicators. At the same time, zero vacancies have been maintained throughout the year,” Yelena Stryukova noted.
New facilities are being implemented in the built-to-suit format. The market for light industrial warehouse complexes is actively developing. The rise in the cost of borrowed financing for the construction of warehouse complexes has led to an increase in the popularity of private investment through closed-end mutual funds. The vacancy rate will remain at a near-zero value even as new facilities enter the market. “The main source of demand for warehouse space will remain companies from the e-commerce segment. They remain the main drivers of the market, generating 75-85% of transactions on the market,” the speaker specified.