In the office and retail real estate market, 2015 passed without surprises and upheavals. According to the regional director of the department financial markets and investments by JLL Evgeny Semenov, there were three main trends: the market transition to rubles in almost all segments; its consolidation (acquisitions on the market were made mainly by the players already present on it); difficulties in obtaining project financing and its actual absence from Western banks.
According to R7 Group analysts, a significant trend for the market was the transition to ruble rental rates. “The transition to rubles can be both explicit and hidden - through a fixed exchange rate of the dollar / ruble pair. In objects of class B and C, we can talk about a total transition to ruble lease agreements; dollar-denominated contracts remain in premium properties,” says Yury Dogadchenko, CEO of R7 Group. Taking into account the average period of exposure of the premises - and it is approaching a year - the owners of the premises have become very flexible in terms of rent and are ready to offer significant discounts to potential tenants.
Difficulties in obtaining project financing led to a decrease in the commissioning of new areas. Managing Partner of S.A. Ricci Alexei Bogdanov notes that the commissioning of new office space this year has dropped to the level of 2012-2013, halving compared to 2014. According to S.A. Ricci, the increase in new supply in the second half of 2015 was 48% lower than in the first half of the year. The commissioning dates for many projects have been postponed to 2016. During the year, developers abandoned the office component in their projects or reduced it, while there were practically no announcements of new projects.
According to Yulia Bogomol, Senior Director of Research at Cushman & Wakefield, against the backdrop of a reduction in the commissioning of new square meters, the demand for new premises has dropped to a minimum. As a result, the amount of vacant space began to grow. The level of vacancies increased by December to 20% - this is already about 3.2 million square meters. m of free space. Against this backdrop, rental rates are hitting historic lows, declining every quarter.
According to Knight Frank analysts, compared to the fourth quarter of 2014, asking rental rates in class A offices decreased by 21% in dollar terms and by 16% in ruble terms, in class B offices the decline was 10% and 14% respectively. According to preliminary estimates, the weighted average rental rates in the fourth quarter of 2015 will amount to 25,904 rubles. per square meter per year in class A offices and 15,106 rubles. — in class B offices. next year a downward correction in dollar rental rates is possible, while ruble rental rates may show growth.
At the same time, Yulia Bogomol notes, the total volume of new lease and sale transactions by the end of the year will exceed 1 million square meters. m, which means that large stable companies do not leave the market.
Trade switched to percentagefrom turnover
Retail real estate, according to the definition of the managing partner of Knight Frank, Sergey Gipsh, is the “most affected segment” in the current crisis. According to preliminary calculations by Knight Frank, during 2015, 13 shopping centers opened in Moscow with a total area of 1.23 million square meters. m (GLA - 592 thousand sq. m). Large volume of new retail space accompanied by a decrease in demand for them. As a result, the vacancy rate by the end of the year, according to Knight Frank experts, will increase to 11.3%.
Demand shopping center largely depends on the concept of the shopping center. According to Anna Nikandrova, regional director of the retail real estate department at Colliers International Russia, successful large shopping centers in Moscow, which opened half-empty in late 2014 and early 2015, are filling up thanks to a good location and a high-quality concept.
Agreements on commercial terms, reached by the owners and tenants of shopping centers in the first-third quarters of 2015, for the most part remain in force, and after the expiration of the term, the parties try to renew them. For sustainable retailers, this is primarily fixing the ruble exchange rate in existing projects for a quarter or six months, and in new projects - from two to three years to the full term of the contract. “Thus, the rates are being reduced in dollar terms; in ruble terms, they have not changed much since the middle of the year,” says Anna Nikandrova.
According to Knight Frank's estimates, rental rates denominated in foreign currency decreased by 20-35% on average in the market compared to the end of 2014. It is also interesting that the ruble rate is currently being discussed, which includes not only the base rental rate, but also VAT and operating expenses. This is typical mainly for operators of the profile "grocery chains" and DIY. Knight Frank analysts also note that throughout the year, tenants and developers of shopping centers continued to search for balanced and beneficial terms of cooperation for all participants in the transaction.
Anna Danchenok, Deputy Director of the Strategic Consulting Department at NAI Becar, also notes that the trend of the outgoing year in retail real estate was the transition of tenants from a fixed rental rate to a percentage of turnover. The size of the average rental rate in shopping galleries, according to the company, has decreased by 10% over the year and for anchor tenants is in the range of 6-37 thousand rubles. per square meter per year shopping galleries-120-225 thousand rubles, and rent payment as a percentage of turnover is 2-5 and 10-15%, respectively. When negotiating the terms of the lease, the practice of gradually increasing the rate and floating rate depending on the level of vacant premises is also often used.
One hand gives, the other takes away
The current situation in the real estate market forced the Moscow government to make some concessions and change its decision to increase the corporate property tax rate, calculated from the cadastral value. Today this rate is 1.2%. The authorities planned to increase it by 0.3 percentage points (p.p.), but from January 1, 2016, it will be increased by only 0.1 p.p. On the one hand, this is undoubtedly a positive step, according to market participants. But if you look deeper, it's not even a half measure.
The situation with the tax, calculated from the cadastral value of real estate, is very difficult, says Sergey Belov, director of the appraisal department at Cushman & Wakefield. “Often the cadastral value is overstated, sometimes by several times, which places a very heavy burden on the business. In general, the increase in the rate by both 0.3 percentage points and 0.1 percentage points. may become critical for owners of heavily indebted properties with high level space vacancies, a fatal drop in profitability is possible,” warns Yury Taranenko, director of the commercial real estate department at RRG.
The main problem, according to experts, lies not in the rate of increase in the tax burden, but in the way the tax is calculated. “Initially, it was clear that the introduction of a calculation scheme based on the cadastral, and not the book value of objects, could lead to negative consequences for the market: in Moscow, the cadastral value of many objects is higher than the market value. Cadastral valuation is today the subject of major litigation, and real estate revaluation is a real source of income for appraisers. That is, the evaluation system itself needs to be improved. We need a more flexible mechanism for calculating the cadastral value of objects,” says Yuriy Taranenko.
But, as Sergei Belov notes, now the assessment can at least be challenged out of court in the commissions for the consideration of disputes about the results of determining the cadastral value at the regional offices of Rosreestr by ordering independent evaluation object. However, after the commissions were inundated with statements about the revision of the cadastral value, the regulator decided to change the rules of the game. Currently, it is proposed to introduce a state monopoly on the determination of the cadastral value, under which the cadastral valuation will be carried out by specialized budgetary institutions (fully controlled by the administrations of the constituent entities of the Russian Federation), whose employees are not subject to any requirements. “In fact, an attempt is being made to return to normative pricing with the subsequent abolition of the institution of contestation,” Sergey Belov warns. — The evaluation community must understand that the next step will be the transfer budget institutions powers to assess state and municipal property, as well as the property of state and near-state corporations. This is where the appraisal activity in Russia will end.”
To help businesses, additional steps are needed, experts say. “As effective measures to reduce the tax burden on businesses, in our opinion, one could recommend increasing the preferential category of taxpayers by providing them with a reduced tax rate or tax exemption,” said Sergey Ostashevich, a member of the board of directors of IPT Group. According to the department director strategic analysis and planning CBRE Olesya Dzyuba, business can be helped by exemption from payment or reduction of the real estate tax rate until a certain level of occupancy of the object is reached, when the owner will have cash flow. Grigory Vaulin, General Director of the Ferro-Stroy Group of Companies (the developer of the Pallau-RB business center), believes that it is necessary to introduce a temporary moratorium on the growth of the cadastral value and tax rates, as well as tax incentives for enterprises in the manufacturing and science-intensive sectors of the economy.
FORECAST
Many retailers will take a wait-and-see attitude, focusing on managing existing portfolios. Vacancy rates in existing malls will rise significantly (many outlets will be closed). Attracting tenants to new shopping centers will be one of the main problems (along with financing issues) for shopping centers under construction. Despite the high volumes of announced projects, most of them will be frozen in 2015-2016.
During 2015, contractual relations in the retail real estate segment will completely shift to the ruble zone. Rental rates will be adjusted for all groups of retailers, both under existing and new contracts.
TRADING COMPANIES
Since mid-2014, the demand for retail space has declined significantly. Development plans are announced mainly by market leaders in their segments.
The main problems of merchants are:
Rising costs. Rising prices for goods sold lag behind rising purchase prices.
. Reducing the range, which is a prerequisite for a decrease in sales in the near future. The main reasons for the reduction in the assortment are the restriction of imports and high purchase prices.
. The unpredictability of the future, which increases the risks of investing in the rental and marketing of new outlets, as well as the signing of long-term lease agreements.
. After a sales boom in December 2014, sales volumes are expected to decline in early 2015 due to lower consumer activity, with operating costs remaining or rising.
Rising costs and the expectation of a decrease in sales in 2015 leads to the fact that tenants of retail space from the end of Q3. 2014 began to initiate revision contractual relations with landlords. To attract merchants to new trading platforms the most important argument is an evidence-based assessment of the potential sales volume (revenues) and marketing costs of the new outlet (expenses).
Based on these data, an assessment of the allowable costs of real estate is carried out. The most stable will be retailers with efficient logistics costs from the manufacturer to the consumer.
Federal and international network operators will be relatively stable. By commodity groups we expect the children's and DIY segments to be relatively resilient.
CONSTRUCTION—RESULTS OF 2014
2014 was a record year in terms of new retail space both in Moscow and throughout Russia. A total of 2.2 million square meters of retail space was commissioned in 63 shopping centers in 49 Russian cities.
14 new shopping centers were opened in Moscow with a total retail area of 0.68 million sq.m. 2014 was a record year for Moscow in terms of the volume of new retail space in the entire history of the development of shopping centers. The most important event in Moscow was the opening of Europe's largest shopping center Aviapark.
Outside of Moscow, 49 shopping centers were built with a total retail area of 1.55 million sq.m. In most shopping centers, only technical openings have taken place; there are a lot of free spaces in shopping galleries.
Mostly medium-sized district shopping centers are being built (GLA 20-30,000 sqm)
CONSTRUCTION - FORECAST
In 2015-2016 construction activity will be constrained by the following factors:
. Vacancy in existing shopping malls that started to increase in 2014 and will continue to grow in 2015
. Occupancy of new shopping centers. Growing vacancy rates in existing malls lead to high competition for tenants between old malls and new sites. Under these conditions, old sites with established coverage areas and predictable target audience will have advantages over new projects. New projects will experience significant occupancy problems, the elasticity of demand for new sites will be low. Low occupancy will lead to a slowdown in construction and the postponement of opening dates indefinitely (until tenants are attracted).
. Currency risks. Until 2014, financing of trade projects was carried out mainly in foreign currency (US dollars). Due to the massive shift to ruble-denominated lease agreements and the instability of the exchange rate, the servicing of foreign currency loans needs to be restructured. This process may affect the pace of construction of those shopping centers that are planned to enter the market in 2015-2016.
. Credits in rubles. Since the beginning of 2014, lending to construction projects in Russia has been limited to a narrow group of Russian investors and is increasingly carried out in Russian rubles. A high rate of ruble loans (from 15%) increases the risks of investing in real estate, which may lead to a decrease in the number of new projects. The decline in construction activity stabilizes the balance of supply and demand.
COMMERCIAL TERMS
Currently, a new market practice of price formation for commercial real estate is being formed. There is a complete rejection of two fundamental principles of rental relations that were unique for Russia and appeared at the stage of the emergence of the commercial real estate market in the conditions of a severe shortage of high-quality retail space in the late 1990s and early 2000s:
. Fixed rental rate. In an environment of extreme volatility and unpredictability in retailer sales and cost dynamics, fixed property prices are becoming an unacceptable risk. Tenants consider it fair to share the risks associated with real estate with landlords. This means that real estate costs must be in line with the volume of sales generated by the outlet. Until 2014, even those tenants who paid a percentage of turnover often also had a fixed part of the rental payment. The transition from a fixed rental rate to paying for real estate only with interest from the turnover of the outlet is becoming the most popular practice.
. Settlements in rubles. Until 2014, ruble-denominated lease agreements were typical for anchor tenants and the most popular tenants of shopping galleries among buyers. The most common were lease agreements in US dollars or conventional units. The retail real estate market will switch to settlements in rubles in the short term, according to our estimates, by the end of 2015, the vast majority of lease agreements will be concluded in rubles. Currency (or their analogues conventional units) contracts will remain only in exceptional cases in prime objects.
Cushman & Wakefield Research believes 2016 will be the toughest year in commercial real estate history. The basic strategy for property owners will be to minimize losses. The use of vacant premises in the face of shrinking demand will require creative solutions from owners and consultants.
Foreign exchange rental rates will reach their minimum values in 2016. Retail real estate may be the first to show signs of recovery, but this will not happen until the second half of 2016.
Real estate market indicators will show the minimum indicators in the first quarter of the year. First of all, by reducing business activity in the financial and consumer sectors. The consumer market may find a bottom by the second quarter. Accordingly, stabilization of the commercial real estate market can be expected no earlier than summer-autumn 2016.
Investment activity will remain low - at the level of $2 billion a year. First of all, investors will be attracted to assets with predictable returns.
Volume of investment in commercial real estate
The total volume of investments in commercial real estate in 2015 amounted to 2.8 billion US dollars. Cushman & Wakefield experts expect bottoming to be a matter of the near future and expect investment by the end of 2016 to be at the same level of approximately $2.8 billion, one of the lowest levels in the past eleven years. A certain revival of investment activity in late 2016 - early 2017.
Comparison of the volume of investments in various segments of commercial real estate from 2006 to 2016
As the end of 2015 showed, the interest of retail chains in the capital region has decreased, and further demand for warehouse space in the Moscow region will be determined by the situation in the consumer sector of the Russian economy and will be lower than in 2015. At the same time, rental rates in rubles and the level of vacant space will remain at the level of the end of 2015 due to a decrease in developer activity in the warehouse market.
After the peak of development activity in 2014, the volume of warehouse construction in 2015 decreased by half, in 2016 the downward trend in the construction of warehouse space will continue.
Compared to 2014, the volume of new construction in 2015 decreased by half and amounted to 867,000 sq. m. m, thus, in 2015, the supply of warehouse space increased by 7% and amounted to 11.7 million sq. m. m. No new warehouse projects were announced in 2015. Warehouse real estate developers continue to build projects announced back in 2014. According to preliminary estimates, in 2016 the supply of warehouse space will increase by 700,000-750,000 square meters, the construction of projects that are in a high stage of completion will be completed and new warehouse facilities will be built under concluded built-to-suite contracts.
The new warehouse complexes introduced in 2015 did not generally change the distribution of warehouse space in the directions of the Moscow region. Most warehouse facilities are on Simferopolskoye Highway (17% of the total area in the capital region), 15% on Novoryazanskoye Highway, 14% on Kashirskoye Highway. The smallest warehouse space is on Kaluga and Minsk highways.
The main volume (46%) of warehouse space is concentrated at a distance of 10 to 30 km from the Moscow Ring Road.
In 2015, the basis of demand for warehouses made inquiries of retail chains specializing in food and household goods. The volume of concluded transactions for the lease and purchase of warehouse real estate in 2015 exceeded the value of 2014 by 23% and amounted to 1.1 million square meters. m.
The growth in the volume of transactions was provided by the companies of the segment retail food and household goods. The volume of concluded transactions for the purchase of warehouses in 2015 amounted to 21%, which is 7 percentage points lower than in 2014.
Cushman & Wakefield experts note an increase in the activity of tenant companies in revising the terms of lease agreements in leased warehouse complexes. It should be noted that a significant amount of existing leases are still denominated in US dollars and it should be expected that the renegotiation of contracts will be the main focus of many tenants in 2016. Also, companies are increasingly abandoning excess warehouse space, consolidating warehouse space and moving to higher-class warehouse complexes.
The share of retail chains in the structure of transactions in the warehouse market increased from 31% to 54%, against the backdrop of a reduction in the shares of all others. The share has declined the most logistics companies- doubled compared to 2014.
The size of the average deal in 2015 in most all segments decreased by 20-25% compared to the same period in 2014. The exception is the retail segment, where this figure doubled in 2015 and amounted to 27,000 sq. m. m of warehouse space.
In 2015, there were big changes in the sectoral structure of demand. The share of companies in the "food and beverages" and "household goods" segments increased sharply, compared to 2014, the growth was 4 and 7 times, respectively. Growth occurred both in terms of the volume of transactions and their number.
At the same time, the warehouse market saw a sharp decrease in the segments "automotive components", "electronics", "clothing and footwear", "logistics", which is associated with crisis situation in these sectors.
Since mid-2015, all vacant warehouse space in the capital region has been offered for rent at ruble rates, and a return to dollar rates is not expected.
For the first half of 2015 net ruble warehouse rental rates decreased by 8% and remained at the level of 3800-4500 rubles per square meter per year. In the second half of the year the rates did not change.
Considering difficult situation in the market, the owners of warehouse space are trying to optimize their costs. Operating expenses in 2015 remained at the level of 1000-1300 rubles per square meter per year, depending on the facility.
Review prepared by Cushman & Wakefield Research
Experts told RBC-Nedvizhimost how the new tax on commercial real estate will affect rental rates.
Photo: Depositphotos/elenathewise
On the eve of the State Duma in the second reading approved a draft law, according to which the tax on non-residential real estate for business (office, retail) will be calculated based on the cadastral, not book value.
The State Duma amended the bill: the norms of the bill will apply to administrative, business and shopping centers, non-residential premises, providing for the placement of offices, facilities Catering and consumer services and real estate of foreign organizations that do not operate in the Russian Federation through permanent representative offices.
Another amendment establishes the possibility of introducing increased tax rates for Moscow. Thus, with respect to the tax base determined byas the cadastral value of real estate, the tax rate cannot exceed in 2014. 1.5%, in 2015 - 1.7%, in 2016 and subsequent years - 2%. At the same time, for other subjects of the Russian Federation, the rates will be in 2014. no more than 1%, in 2015 - no more than 1.5%, in 2016. and subsequent years - no more than 2%.
The editors of RBC Real Estate asked experts how this innovation will affect the income of owners of retail and office facilities, as well as rental rates.
According to experts, this will lead to an increase in the tax burden for commercial property owners who underestimate the book value of their properties. Olga Parshikova, head of the commercial real estate department at Tashir Group of Companies, believes that for owners of large objects, the cadastral value is approximately equal to the book value.
CBRE Market Research Director Valentin Gavrilov is less optimistic. "The introduction of this bill into practice will affect a significant share of the Moscow commercial real estate market. According to our estimates, this bill will affect at least 2/3 of the market areas. Those buildings that are registered at book value, and not at market value, will suffer the most," says Valentin Gavrilov.
According to him, their revaluation at the cadastral value and the application of a tax rate of 1.5% will lead to the fact that the costs of building owners may increase by 1.2 thousand or more rubles. per year per 1 sq. m. Class B buildings will suffer the most from this change, the expert believes.
For class A prime offices, the increase in expenses can be at least 3-5%, class A - 5-7%, class B - 9-12% of the average annual rental rate, predicts Valentin Gavrilov. Nevertheless, the owners of class A prime offices will most likely be able to negotiate with tenants one way or another without a significant loss of profitability. "In retail real estate, a similar picture will be observed: costs will increase by 4-10% of the average annual rental rate," the expert adds.
"After the adoption of the new bill, there will be a huge layer new work for appraisers of commercial real estate, as well as for lawyers in matters of contesting the cadastral value," says Renat Zhamaldinov, head of the marketing and consulting department at Base Property Group.
"On the example of shopping centers, the property tax occupies about 20% in the structure of operating costs. The transition to the cadastral value will increase the tax amount. In such conditions, some owners may have difficulty servicing bank loans," the expert believes.
Rental rates will rise
Real estate tax will also eventually affect tenants. The owners of the premises will shift part of their costs to their shoulders. According to Marianna Romanovskaya, Director of Consulting at GVA Sawyer, in the short term it is hardly possible to speak about the presence of significant prerequisites for the growth of rental rates, since in the field of high-quality real estate, rental rates are fixed (taking into account some indexation) by long-term lease agreements. Among the factors influencing the difference between the book value and the cadastral value, the expert notes the period from the start of depreciation of the building and the volume of reconstruction costs.
"The expenses of the owners of offices and retail facilities will certainly increase significantly," says Natalya Yakimenko, Director for Russia and the CIS for real estate management and operation at Jones Lang LaSalle. "And they, in turn, will try to share these expenses with tenants - to increase rates or costs incurred by tenants on a regular basis.
"Owners, of course, can raise rental rates. But then the question arises: will rental space be in demand? Most likely, rental rates will remain the same. However, the profit of owners of retail and office space will decrease," says Elena Zemtsova, managing partner of Delta Estate.
Vera Kozubova
The low level of business activity is forcing the owners of business centers to make more and more concessions to tenants. Shopping centers continue to empty: the average level of vacant space at the end of 2015 broke another record - 13%, and this is not the limit, experts are sure.
40% of offices in the City are unoccupied
The crisis in the capital's office real estate market is intensifying. The level of vacant space in the office market at the beginning of 2016 reached 20%. In the "B" class, the vacancy rate is "tolerable" - 14%. But expensive offices are much less in demand: in class A, according to various estimates, 28-30% of the space is empty. The most critical situation is in Moscow City: 40% of offices are not occupied there.
The low demand for offices has drastically dampened the construction activity of developers. According to the consulting company Cushman & Wakefield, last year the area of commissioned offices amounted to 721 thousand square meters. meters, which is twice less than in 2014. Moreover, developers have to freeze already started projects: at present, about 1 million square meters. meters of office space is in a fairly high degree of readiness, but a few projects will be completed this year. According to Cushman & Wakefield, about 300,000 sq. m. will be put into operation. meters. Completion dates for a number of projects are delayed by more than two years. All "paper" projects and facilities at the early stages of construction are frozen or being revised.
The low level of business activity and high vacancy rates are forcing business center owners to make more and more concessions to tenants. “In 2016, the trend towards the transition of the commercial real estate market to the ruble zone will continue. By the end of the year, the market may completely switch to ruble-denominated lease and sale agreements,” says Alexander Shibaev, director of the consulting, analytics and research department at Blackwood.
The recent court decision will also contribute to the transition of the market to settlements in rubles. At the end of 2015 Court of Arbitration Moscow has taken a precedent-setting decision in a lawsuit filed by Vimpelcom against the owner of an office building where it rents space. The plaintiff demanded that the dollar exchange rate be fixed in the lease agreement at a rate denominated in foreign currency. The court sided with Vimpelcom and ruled that "the rent, calculated at the current dollar rate, exceeds the market value of the lease, and its significant increase may lead to unjust enrichment of the landlord." According to Elena Mishina, head of the Est-a-Tet commercial real estate department, this case can become an unpleasant precedent, allowing tenants to interpret contractual terms in their favor. In this case, ruble contracts will remain the only reliable tool for working on the market for real estate owners.
However, it is quite possible that this case will remain the only one. “There is no case law in Russia. Each similar case will be considered by the court separately, the outcome of the case may be different,” says Vitaly Lebedev, director of commercial real estate development at BEST-Novostroy.
In addition to the transition of the market to the ruble zone, there is a significant drop in rental rates. Their decline is most noticeable in class B and B+ buildings. “Relative to the end of 2014, rental rates for these classes in ruble terms fell by 44% and 39%, respectively. Class A offices in 2015 were characterized by more stable dynamics, as the rates were largely denominated in foreign currency – class A fell by 5% over the year,” says Alexander Shibaev. “Within the Third Transport Ring, a good class B business center today will cost an average of 24,000 rubles. per sq. m/year, while at the end of 2014 the rate of such objects was at the level of $650 per sq. m. m/year. The level of rates for class A business centers is now in the range of 32–45 thousand rubles. per sq. m per year, while before the crisis this figure was $1,100 per sq. m. m/year. Within the Moscow Ring Road in a business center of class "B" or "B-" you can now find objects for 6 thousand rubles. per sq. m/year,” says Elena Mishina.
The wave of tenant moves to new offices continues. “The tenant usually thinks about changing the office if the cost optimization during the move is on average from 15% to 20%. Or if there is a unique opportunity to rent a better office on terms that were previously unattainable. According to the results of the first two months of 2016, we are seeing a fairly high activity on the part of users of Class A premises, as well as a growing demand for the purchase of high-quality offices, for example, such as the Aquamarine III business center on Ozerkovskaya Embankment,” notes the General Director of LLC “ AFI RUS" Mark Groysman.
According to Elena Mishina, among tenants in equally two trends are observed. On the one hand, in order to save money, companies combine different offices into one. On the other hand, representative companies are moving some of their divisions to more remote locations, leaving the front office in an A-class business center.
Some large tenants are considering the acquisition of rented space in the property. “For example, in December biggest deal in 2015 for the sale and purchase of office real estate: TKS Bank acquired 8.1 thousand sq. m. meters of offices in the IFC "Vodny". The Yandex company is also trying to take advantage of the low price level in the office market, which is negotiating the acquisition of a part of the Krasnaya Roza business center, which it currently rents,” says Alexander Shibaev.
Experts expect that in 2016 we will not see either an increase in demand for high-quality office space or a sharp drop. "Most successful business will take advantage of the situation to improve the parameters of its office space. And vice versa, some companies will optimize their financial costs by downgrading their offices. In addition, this year the structure of demand will change – the share of transactions with B- and C-class office premises will increase, the size of the requested area will decrease,” says Margarita Moiseeva, head of real estate marketing at IPT Group.
“The increase in the tax rate on commercial real estate in 2016 will only exacerbate the problems of the segment, which began to emerge in 2014. Taxes are not the worst. The main problem is the contraction of the economy and, as a result, a reduction in effective demand for goods and services, which led to a decrease in the profitability of the business of small and medium-sized entrepreneurs - the main "consumers" of street retail on the first floors of residential buildings. At the same time, the segment of such retail space itself (the “convenience store” format) has been increasing over the past 5 years, also due to urban planning requirements of the authorities. In the Moscow region, one of priorities urban planning policy is to reduce commuting and create jobs in the nearest transport accessibility from places of residence. For example, in houses of even medium height, the first floors can only be non-residential. Against the backdrop of a decrease in the number of floors and population density in individual projects, tenants and owners in some types of business cannot always count on customer traffic sufficient to ensure that the business remains profitable, and not only covers the rent, communal payments, payroll and other operating expenses. According to analysts, 25% of commercial space in Moscow is vacant, in the region this figure is higher - up to 30% (including offices). At the same time, even without a tax increase, the situation would not be rosy - if a business does not have money to develop networks, to purchase space, equipment, if a business does not see prospects, then there is no money for taxes, regardless of the size of these taxes. The circle closes, the tax base continues to shrink.”
Shopping malls open half empty
Unlike offices, the construction of retail facilities almost did not slow down due to the crises. In 2015, seven new large shopping centers were opened at once: Kuntsevo Plaza, Central baby store, Maple, Tiara, Columbus, Mari, Zelenograd. Almost all announced projects were launched on time. Although it is worth noting that many of them have seen so-called technical discoveries - the launch of anchor tenants with low occupancy of shopping galleries. The vacancy rate in new shopping centers did not exceed 50% on average. For comparison: two years ago all shopping centers were completely occupied by tenants. At the same time, in general, the commissioning of retail space last year corresponded to the average level of previous years - about 550 thousand square meters. meters of leasable space, that is, the market of shopping centers in Moscow increased by almost 12%.
This year, the construction of shopping centers continues at the same accelerated pace. There are a large number of projects on the market at a high stage of completion, so analysts predict the commissioning of facilities at the level of 2015. However, starting from 2017, there will be a logical collapse in the volume of new construction, since developers do not start new projects. “In the period from January to December 2015, the volume of retail space under construction decreased by 38%. This trend may lead to a shortage of new supply in the future,” says the report of the consulting company KnightFrank.
Shopping centers continue to empty. The average level of vacant space in shopping centers at the end of 2015 broke another record -13%. Given the high volume of new construction, an increase in the level of vacant space this year is inevitable.
In the context of economic and political instability, as well as a decrease in the purchasing power of the population, many network operators have changed their development plans, significantly reducing the pace of expansion. Some retail chains began to actively experiment with new formats. "X5 Retail Group” plans to open Rospechat newsstands in Pyaterochka chain stores and launch a network of cheap cafes “Vkusnaya Kukhnya” in the checkout area of Karusel hypermarkets. Restaurant holding Ginza Project invests in the creation of a network of "restaurants on wheels" under the Ginza Truck brand, Russian company Melon Fashion Group will develop stores youth clothing befree in a new format of "fashion hypermarkets," according to the Cushman & Wakefield report.
The rent rates of most shopping centers were denominated in foreign currency two years ago, but now the retail space market has almost completely moved to the ruble zone. Another important trend is that owners of retail space are increasingly working with retailers on the terms of receiving a percentage of turnover, and also offering them additional options (for example, rental holidays or finishing the premises at the expense of the owner).
The growth of competition between shopping centers is forcing the owners of objects with outdated architectural and planning solutions to resort to reconception and search for their niche in the market. Last year was marked by the opening of two shopping facilities at once after a global reconception: the old shopping centers were demolished and new objects appeared in their place. These are the Central Children's Store on Lubyanka and the Kuntsevo Plaza multifunctional complex (former Ramstor shopping center). “In Kuntsevo Plaza, after the redevelopment, not only was the total area radically increased, but office and residential parts appeared, which made the project more liquid on the market,” says Alexei Streletsky, Investment Director of IPT Group.
In most shopping centers, however, the reconception is much milder, without demolition. “Consumer behavior and shopping habits are constantly changing, so in one way or another, shopping centers are being re-imagined all the time. Reconception is not always associated with a major restructuring of the building, it can be a change in the structure of the pool of tenants, positioning of the object or marketing campaigns,” says the deputy CEO for analytics and consulting at NDV-Nedvizhimost Elizaveta Gudz.
In the street retail segment, the most prestigious and overvalued shopping streets of the city – Tverskaya, Stoleshnikov pereulok, Kutuzovsky and Leninsky avenues – suffered the most from the crisis. “In these locations, prices were overheated, and most tenants kept there not profitable, but exclusively fashion outlets. In connection with the crisis, as well as the departure of a number of foreign manufacturers from Russian market these retail outlets are experiencing an acute outflow of tenants,” says Elena Mishina.
The dynamics of rental rates in street retail was multidirectional. It was mainly connected with the decisions of the city authorities to reconstruct the streets in the center. “On Tverskaya, Myasnitskaya, Maroseyka, the rates have decreased primarily due to the appearance of paid parking there or the lack of parking spaces. Let me remind you that parking on Tverskaya was completely banned. Rates remained stable on Kutuzovsky, Leninsky, Leningradsky prospects, Prospekt Mira and Profsoyuznaya street. And on some pedestrian streets that opened after reconstruction, for example, on Pyatnitskaya or Petrovka, rates increased by 10–20%,” Vitaly Lebedev notes.
In general, the level of vacant premises in street retail has increased. However, according to market participants, this is due not so much to the crisis as to the decision of the Moscow authorities to place commercial facilities on the first floors of residential buildings. Some of these areas simply do not have time to be absorbed by the market, the other part (premises that do not have access to external pedestrian traffic) has passed into the category of illiquid assets.
It will certainly have an impact on the capital's street retail market in February 2016. The decree on the demolition of unauthorized buildings near metro stations was adopted by the capital's government in December 2015. The list of buildings to be demolished included more than 100 objects, the owners of which were notified of the need to demolish illegal structures. For 97 objects out of 104, the period for independent dismantling expired on February 8. On the night of February 9, a large-scale demolition of shopping pavilions began, and on February 21, the dismantling of the Piramida shopping center on Pushkinskaya Square began. Although Muscovites supported the initiative of the authorities, many market participants consider it untimely. “Small businesses and wage workers involved in this area are the first to suffer from such a measure. It is unclear when these businesses will find new premises. Rates in shopping centers, and even in such running locations, they can not afford. Most likely, such owners will frantically search for street retail premises, but there are few such sites, and the consumer flow is not comparable to tents near the metro. And it is absolutely unbelievable that the proposal of the authorities to provide similar premises in New Moscow will suit one of these tenants,” Elena Mishina believes.
Crisis stronger, taxes higher
In times of crisis, any additional expenses, which is carried by the business, are reflected in the commercial real estate market. Thus, the transition to the payment of tax on the cadastral value and the gradual increase in the rate of this tax have a negative impact on the market. “For many commercial facilities, especially those built a long time ago, property tax payments have increased many times, and sometimes dozens of times. This led to a decrease in net operating income generated by the property, and, as a result, to a decrease in the value of commercial real estate,” says Alexey Streletsky.
In 2016, there was another increase in tax rates on commercial property. In Moscow, the property tax rate will be raised slightly - from 1.2% to 1.3% of the cadastral value. Initially, it was supposed to raise the rate in 2016 to 1.5%, but the Moscow government decided not to drastically raise taxes. Market experts assess this step positively. “Relief on property tax and a not so sharp increase in the rate will have a positive impact on the investment attractiveness of real estate. We do not expect prices to rise, but the attractiveness and liquidity of the market may increase slightly,” Alexey Streletsky is sure.
At the same time, in a crisis, any additional burden will become tangible for business. “Additional costs landlords will be forced to include in the rental rate. In turn, the tenants will have to compensate for the losses at the expense of the end consumer by increasing the cost of services or the price of goods. An additional rise in the cost of goods and services will have a negative impact on everyone - both on impoverished consumers and on the state, which in the future will receive less tax from closed unprofitable facilities, ”says Elizaveta Gudz.
According to Alexander Shibaev, director of consulting, analytics and research at Blackwood, in the future, owners of small and medium-sized retail and office buildings will suffer the most. From January 1, 2017, taxation on the cadastral price will be extended to all retail and office buildings, before that it only applied to objects with an area of more than 3 thousand square meters. meters. “Many companies will not be able to withstand the increase in tax costs and will cease their activities. Accordingly, the taxable base of commercial facilities will be reduced, while the number of unemployed will increase,” says Alexander Shibaev.
How to disable ads on Android: remove pop-up ads
The Russian received a term and a million fine for "piracy Negative consequences of the law
Identification of key factors
The criteria for classifying organizations and individual entrepreneurs as small and medium-sized businesses have changed
See what "Royalty" is in other dictionaries Pitfalls of legislation