Based on the results of the second quarter of 2024, experts from the consulting company COLLIERS reported the end of the rise in the industrial and warehouse real estate market (hereinafter referred to as I&L) in the Minsk region. Rate growth ends and demand growth declines. The volume of supply is also growing in the absence of commissioning of new production and warehouse space.
Stock
The rise of the industrial and warehouse real estate market (hereinafter referred to as I&L) in the Minsk region in the first quarter of 2024, based on high demand and rising rates in the second half of 2023, has ended. The volume of supply of high-quality I&L real estate remains at the level of 1,637 thousand sq. m. m. Rates are falling, vacancy is growing. Moreover, these trends are observed in the absence of commissioning of new production and warehouse space in the first and second quarters of 2024.
By the end of the year, new facilities with an area of 150-170 thousand square meters are expected to be commissioned. m, taking into account part of the Wildberries LC in the Great Stone industrial park, where construction work is already underway, as well as in the NeoPark IC and in the 2nd location of the Minsk Technopark.
New offer
The situation on the I&L real estate market is changing: as vacancy increases, the supply of rental space increases, rates decrease, the range of rates in class B expands, and the requirements for premises from potential tenants increase. There is also a new trend of large areas (more than 10 thousand sq. m.) appearing on the market in free access. The expected commissioning of new premises in the second half of the year will further increase pressure on vacancy growth and lower rental rates.
Demand
Demand for I&L real estate in the second quarter remained at the level of 60-80 thousand sq. m. m. As before, it is formed by rotational processes: changing the location to a more convenient one, searching for favorable conditions, as well as optimizing the rented area (reducing, increasing or consolidating disparate areas in a single location). However, if previously such processes were observed in small rooms with an area of 2-4 thousand square meters. m, now they occur with large objects of 10-30 thousand square meters. m.
Rates
During the second quarter, average rental rates on offer decreased for class B space by 14% and for class A space by 16%. At the same time, the lowest rates are fixed for large areas (from 10 thousand sq. m), which until recently were completely unavailable on the market. The increase in the range of rental rates in class B indicates that market participants are searching for new mutually acceptable conditions.
Vacancy
In the second quarter, there was an increase in vacancy to 3.5% (by 2.5 percentage points). Even a large rental deal for 14 thousand sq. m. m with the participation of Ozon does not hold back the increase in vacancy.
In the near future, vacancy is expected to increase to 4% or more and rental rates to decrease to 4-6 euros/sq.m. m/month until equilibrium values are reached, as predicted by COLLIERS at the beginning of 2024.
Sales and purchase transactions
In the second quarter, compared to the previous quarter, the number of transactions* increased by 10, the value of transactions increased by 3.5 times, and the number of areas in transactions increased by 4 times. The largest transaction in terms of area and amount is the acquisition by Belinvesttorg (First Battery Company) of part of the Modern Warehouse complex in Kolodishchi.
Under the influence of high demand and low vacancy of previous periods, in the second quarter of 2024, transactions with an expensive price of 1 sq. m. were recorded. m. For example, a warehouse in the Shabany industrial zone was purchased at a price of USD 850 per sq. m. m without VAT.
A deal that claims to be a record price for 1 sq. m is the acquisition by Quality Food (Mak.by chain) of the low-temperature complex Havi Logistics (logistics partner of the McDonald's chain).
