MOSCOW-Office rents for class A space here and in St. Petersburg, Russia have showed the best growth in the Europe, Middle East and Africa region during the first half of 2011, according to a new study by Colliers International. London’s West End also showed strong growth of about 10% to $103.53 per square meter, but the rest of the EMEA region was flat, with the exception of rent declines in Athens, Dubai and Sofia, Bulgaria.

Rents in Moscow rose 11% in the first half to about $54.32 per square meter, and St. Petersburg saw rates rise by 10% to $31.86 per square meter. Maxim Gasiev, managing director of Colliers International Russia, tells GlobeSt.com that the increases are a result of a significant gap between take-up and commission volumes. The gross take-up amounted to approximately 8.4 million square feet during this period, and the amount of space completed was only 3.2 million square feet, he says.

“Class A business centers within the Garden Ring have the most dynamic growth of rental rates, mainly due to prohibition of new office construction in the center of Moscow,” Gasiev says. “We expect a decrease in vacancy rates and an increase in rental rates in this segment of the market which will, in turn, make developers more interested in redesigning former industrial areas in the city center. Another consequence will be that demand will partially shift towards other districts of Moscow.”

Colliers officials claim that the negative number posted by Athens (-7%, $24.20 per square meter) is a result of the low demand there, partly because of the debt crisis. Both Dubai ($34.96 per square meter) and Sofia ($12.10 per square meter) rental rates dropped 8% in the first quarter due to an excess of new space in those areas, according to the Colliers report. The outlook will likely remain flat for the next 12 months, with the suffering markets expected to continue to drop in rates, while core markets such as London, Moscow, Munich and Stockholm should see some growth, according to the report.

Instant Insights /

Low Development Boosts Office Rates in Russia

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