Record rental and sale rates of warehouses in Kazan equal those in Moscow

Kazan office real estate market in 2024

The total quality offer in the office real estate segment in Kazan is represented by 62 objects with a total area of more than 584,000 square metres, including the IFC Community Centre ART, which was opened in 2024, and the UNO multifunctional complex, which obtained a commissioning permit at the end of the year. In 2024, the vacancy rate in the office real estate market continued to remain at a low level — less than 1%. The increase in this indicator at the end of the year is due to the commissioning of the UNO multifunctional complex and the ART Community Centre, as well as a change in rental policies in a number of Class B business centres.

The average rate in Class A at the end of 2024 is 2,485 rubles square metres per month, which is by 33% higher than at the beginning of the year. The increase 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 facilities.

New development

Almost all new facilities entering the market qualify for Class A, in rare cases — for B+. At the same time, with the introduction of modern office buildings, existing facilities are becoming obsolete and are experiencing a decrease in demand from tenants.

The exposition period of the premises in the new facilities was no more than 1 year, which indicates the high rate of absorption of office real estate in the city and the high demand for high-quality office projects.

At the moment, it is known about four office real estate facilities under construction and under design in Kazan with a total area of 34,000 square metres.

Rental rates for new modern facilities are more than 30% higher than in existing ones.

Key news and trends

• There is still a trend towards the reconstruction of old administrative and industrial buildings for offices.

• In April, Gazprom Transgaz Kazan PLC obtained the permission to build an administrative and production building on Spartakovskaya Street. Gazprom's headquarters is planned to be built here on a 1.3-hectare site.

• Amendments to the regional law “On Corporate Property Tax” were adopted in July. Now shopping complexes and administrative and business centers of the republic with an area of over 1,000 square metres will be taxed at 2% of the cadastral value of the facility (a transition period and tax benefits are provided for certain categories of facilities located in cities with a population of less than 145,000 people).

• Reconstruction of Suvar Plaza shopping centre started in the first half of 2024. The project provides for the renovation of the facade, renovation of four floors of the shopping centre and parking, as well as changing the functions of retail space to office and business. The work carried out in this facility has led to an increase in demand for office space from tenants of office space.

Outlook

• Rental rates for office space will continue to rise in 2025 due to the current economic situation and the shortage of space on the market.

• Landlords occupy a winning position, as they retain the choice of a tenant from several applicants.

• The emergence and rapid development of the built-to-suit format in Kazan for office real estate, as well as in the warehouse real estate market, is possible.

Kazan office real estate market in 2024

Throughout 2024, the warehouse real estate market in Kazan demonstrated a high increase in rental rates with a continuing shortage of premises. Thus, the requested rate for facilities under construction reached the following indicators: gross — 1,580 rubles per sq. m. per month, triple net (net rate excluding operating expenses and VAT) — 14,300 rubles per sq. m. per year. Let us remind that at the end of the first quarter of 2024, these figures amounted to 1,150 rubles per sq. m. per month and 10,000 rubles per sq. m. per year, respectively. The rapid increase in rates is justified by the current macroeconomic situation in the country, the lack of supply and high demand from warehouse users.

The projects announced for implementation in 2024 (about 60,000 square metres) were leased before commissioning. In 2025, we expect an increase in the volume of warehouse real estate by another 204 thousand square metres.

Light industrial

The popularity of light Industrial warehouses remains. To date, the total volume of the finished offer of facilities of this format in Russia is 739,000 square metres.* There are no existing light industrial warehouses in Kazan. However, five projects with a total area of 80,000 square metres are at the design and construction stage. The deadline for the implementation of the first of the facilities is scheduled for 2025.

Key market news

• In the third quarter of 2024, PNK group began construction of a class A warehouse complex in the Pestrechinsky district. The project is designed for two stages of implementation. The total area is 200,000 square metres.

• In the second quarter of 2024, the construction of the Druzhba Industrial Park with an area of 130,000 square metres began. The project will be implemented in stages until 2028.

• The Russian market is faced with a shortage of warehouse space, and it is becoming unprofitable to build new facilities due to the high key rate and rising cost of building materials, which significantly increases the payback period for warehouses.

• The segment of high-quality storage facilities is beginning to develop in Zakamye. In Naberezhnye Chelny, a Moscow company is planning to build a class A warehouse with an area of 70,000 square metres for a specific tenant (built-to-suit). In addition, the construction of the Deng Xiaoping logistics complex is actively underway. Warehouse space is already being offered for rent. There will be more than 100,000 square metres in the structure of the complex.

• The Naberezhnye Chelny Pipe Plant, part of the TEMPO group of companies, plans to implement an investment project to create a port logistics hub. The planned location of the warehouse complex is Nizhnekamsk district of the Republic of Tatarstan.

Trends and outlook

• There has been a record increase in rental and sale rates for warehouse real estate in Kazan. They have reached the level of Moscow indicators.

• There is zero vacancy throughout the year. New objects are implemented in the built-to-suit format.

• The market of light industrial warehouse complexes continues to develop actively.

• The rise in the cost of debt financing during the construction of warehouse complexes has led to an increase in the popularity of private investment through the ZPIF.

• The vacancy rate will continue to remain at about zero even as new facilities enter the market.

• Companies from the e-commerce segment will remain the main source of demand for warehouse space. They remain the main drivers of the market, generating 75-85% of transactions on the market.

* According to Nikoliers.

** Net rental rate in facilities under construction with a planned commissioning date of the end of 2025-2026.