Elena Stryukova: ‘The development of Kazan’s office market is restrained by high rental rates’

Office real estate, market indicators

The development of the office market in Kazan is largely hampered by high rental rates and low availability of loans. Businesses prefer to stay in their current premises whenever possible.

In this regard, the demand for office space rental can be described as “frozen”. The number of requests from clients for office space rentals is low. Changed market conditions continue to constrain the business activity of organisations, hindering its active development. At the same time, the vacancy rate continues to remain at the same low levels and at the end of the second quarter of 2025 amounted to 6.2% for Class A business centers, rising by 1.2 percentage points and 2.9% for class B+ business centres, decreasing by 0.7 percentage points compared to the first quarter of this year.

As of the end of the second quarter of 2025, the weighted average asking rental rate for Class A stood at 2,743 RUB per sq. m per month, including VAT and OpEx, marking an increase of 10.3%.

The average vacancy rate across all quality business centres is 3.8%, indicating a high level of occupancy in business centres.

*Hereinafter, rental rates are quoted including VAT and OpEx

News, trends and forecasts for the office market

• In the second quarter of 2025, no new properties were introduced to the office market in the city of Kazan.
• The increase in vacant space in Class A business centres is due to rising rental rates during contract renewals. This creates additional financial pressure and forces companies to consider relocating to Class B+/B premises with more affordable terms, as well as to optimise costs by reducing leased space.
• The growth in residential and street-retail construction, along with small-format office properties in recent years, has partially offset the shortage in the quality office segment and satisfied investment demand from private investors.
• The ageing of the existing stock of office buildings creates favourable conditions for the implementation of new development projects in the city of Kazan.
• Next to the renovated TSUM building, another modern business centre will appear at 4 Yakhina Street. The commercial property, with a total area of approximately 4.3 thousand sq. m, will have four above-ground floors.

The average age of a Class A business centre in Kazan is 10.3 years and is formed by projects built between 2010 and 2024, which meet the demand for modern office space. In contrast, the majority of Class B+ properties (29.4 years) were constructed in the 1990s, based on industrial buildings. Their renovation only began in the 2010s, which explains the high average age.

Retail real estate, market indicators

In the first half of 2025, the vacancy rate for retail space remained consistently at around 6%. This trend is expected to continue. At the same time, in the second quarter of 2025, the pace of new store openings slightly increased — 20 stores by the end of the quarter, compared to 16 stores opened in the first quarter.

Retail centre news and trends

• The expansion of retail chains is slowing. Those that continue to open new stores are reducing their floor space. The structure of available retail units reflects this trend, with the majority being small premises of up to 150 sq. m.
• Asking rental rates for new tenants in shopping centres have not changed significantly, and there is no observable trend toward adjusting commercial terms. Retailers are shifting their focus toward improving existing locations.
• Developers are favouring small neighbourhood properties. This trend ensures profitability and preservation of accumulated capital.
• The trend of transforming standard shopping centres into multifunctional formats with recreational zones and social services remains relevant. For example, in MEGA, a fitness centre, furniture store, and children’s entertainment centre will replace the former OBI.
• Due to the deepening integration of online into daily life, many players prioritise online development, presenting their brand’s assortment on marketplaces. Retailers are also focusing on merging online and offline channels — for example, returning online purchases to physical stores or ordering goods online for in-store delivery.
• The reconstruction of Kazan’s TSUM is actively underway. In August, the Megastil shopping complex, with an area of over 16,000 sq. m, will open in Kazan, operating as a wholesale and retail centre.
• An increase in shopping centre footfall was not observed in the second quarter, despite additional public holidays.

Warehouse real estate, market indicators

During the first half of 2025, the warehouse real estate market experienced a decline in demand. At the same time, by the end of the second quarter, a significant volume of vacant warehouse space entered the market. The vacancy rate increased by 1.6 percentage points compared to the first quarter, reaching 5%.

It is worth noting that no new facilities were commissioned during the first half of the year, so the increase in vacancy is attributed to the release of space in already constructed and operational buildings. Despite the rise in available space, rental rates are not decreasing.

Built-to-suit construction: includes land plot, utility connections and landscaping, excluding VAT.

Warehouse market news and trends

• In the first half of 2025, the real estate market faced a slowdown in economic activity and a pause in company development. High borrowing costs, rising construction expenses, and the tightening of Central Bank policy are contributing to a cooling of the real estate segment.
• The pace of new construction has slowed. Developers have to find a balance between rising construction costs and the need to maintain project profitability. Careful site selection, optimisation of logistics and construction processes, as well as concept development, are becoming key factors.
• The average transaction size has decreased by approximately 30–40%. Tenants are requesting discounts in the range of 5–10%.
• The share of transactions involving e-commerce companies has dropped to 16%. At the same time, the food retail segment is strengthening its position, showing steady growth and increasing its share of commercial leasing transactions.
• Companies are seeking to use leased space more efficiently, which is contributing to the emergence of sublease offerings on the market.
• Operating expenses have risen to 2,200–2,500 RUB per sq. m per year, excluding VAT. The main drivers of this increase are rising labour costs and the growing price of components.

A new warehouse complex with a total area of 25,000 sq. m is being commissioned in the Zelenodolsk industrial park.A new warehouse complex with a total area of 25,000 sq. m is being commissioned in the Zelenodolsk industrial park.