[BY CHRISTOPHER VAN RIET]
CHRISTOPHER VAN RIET ( CHRIS.VANRIET@RADIUSRUSSIA.COM) IS MANAGING DIRECTOR OF RADIUS GROUP, WHICH BUILDS, FINANCES, AND
OPERATES WAREHOUSING AND MANUFACTURING FACILITIES IN RUSSIA AND UKRAINE.
panies need in order to serve Russian markets has
become dramatically cheaper and more accessible in
recent years. Vacancy rates for warehouse and logistics facilities in the Moscow area reached 13. 6 percent
by the third quarter of 2016, 3 the highest since 2009
and a dramatic shift in a region with a structural
shortage of industrial space. In 2012 and 2013, by
contrast, vacancy rates in the area hovered below 2
percent, and developers could not build fast enough
to meet demand.
Today the vacancy level in Moscow is over 1. 5
million square meters (about 16 million square feet),
the highest in the market history of the region.
Speculative real estate construction projects started
before the economic crisis have struggled to find
occupants. As a result, rents have fallen by around 30
percent, to well below the levels recorded during the
2008 financial crisis.
Tough market conditions also meant companies
with existing facilities in Russia could renegotiate
leases on favorable terms, or take advantage of additional capacity in the market—and the resulting commercial flexibility—to reconfigure their operational
footprints to better suit their current and anticipated
Since 2009, for example, U.S. agricultural equipment maker John Deere has operated one of its global
strategic spare-parts depots alongside a manufacturing