Quite recently – in the October issue of Pulse – we talked about several major projects announced at the PRO-Estate forum. Adamant announced its plans, a tender for Apraksin Dvor was announced, and VTB once more presented the future “Embankment of Europe”… Just two or three months went by – and there are already new projects under discussion, and familiar designs are taking on clear financial and spatial parameters. And if the hit of the first half-year was shopping and entertainment centers and warehouse complexes, in the second half-year office centers came to the fore. This means that the business community is convinced that business activity in Petersburg will only continue to increase. And I would ask you to note: this all started long before the announcement of the president’s successor and before talks about the likely premiership of Vladimir Putin…
The territory that is currently occupied by the manufacturing facilities of the Silovye Mashiny company may soon be the location of a new class A shopping and office center. In November, the CEO of VTB Andrei Kostin announced that the bank would finance a development project on a section next to the Elektrosila metro station. The investment is assessed by preliminary estimates at $100 million. 45,000 sq.m. will be used for offices, and 15,000 sq.m. for retail space. The developer, as in the other projects of the real-estate bank, will be VTB-Kapital company.
The project is currently on hold because of a change in owner: structures controlled by Oleg Deripaska are acquiring shares in Silovye Mashiny. The federal anti-monopolist service has approved the deal.
The bank has already bought a portion of the territory. This year the managers of Silovye Mashiny said they were prepared to sell around 7.2 hectares, and use the funds to overhaul the factory equipment. However, the company subsequently rejected plans to move the facilities to a site in Novo-Devyatkino. But the three main factories – LMZ, the turbine factory and Elektrosila occupy around 120 hectares…Hundreds of millions for a relocation is a promising option, but this will take time, and the energy monopolist (United Energy Systems) has announced its investment program – so there will be some major orders…
As it happens, Oleg Deripaska also has his own plans to transform industrial and depressing zones into business centers.
The corporation Glavstroi SPB which is part of his holding has won a tender to build on the infamous territory between Obvodny Kanal, Shkapin and Rozenshtein streets. Glavstroi offered $28 million (701 million rubles) to rent the ruins where a German film crew recently filmed the capture of Berlin at the end of WWII.
On a territory of 5.2 hectares, a class A or B+ business center will be built with an area of over 200,000 sq.m. There is also three-star hotels and a car park envisaged in the project (70,000 sq.m., 23-27,000 sq.m. of it underground parking). Investment will come to at least $300 million.
Initially, claimants included the Petersburg companies LEK and RBI, but they found the starting price – 561 million rubles – too high, so Glavstroi was competing with other Moscow firms (Dialog, for example). In the end, a square meter cost the winner around $550, with another $55 added to this for purchase of the section.
At the same time, the city was forced to reduce the territory (it was proposed to sell 7.1 hectares – but it was not possible to reach an agreement with the owners of several building), find new housing for 1,000 families, and demolish some of the buildings.
Deripaska’s Petersburg development branch is also taking part in another high-status project: Glavstroi have applied for a tender to reconstruct Apraksin Dvor. The second claimant was well-known – the Swedish company Ruric AB. But in December, the list of claimants was unexpectedly added to by another powerful participant: the company Russian Land, part of the empire of the Moscow entrepreneur Shalva Chigirinsky, will also be competing to give new life to Apraksin Dvor. But here the project suddenly came to a halt: literally one week before the application date closed, it was discovered that eight buildings had been lost from the original list of objects. The city decided not to make investor (which already has to spend over 10 billion rubles on reconstruction) deal with the problems of owners of building and those who have already spent money on repairs and infrastructure. As Kommersant reports, the area on sale has been reduced by 70,000 sq.m., but without any major difficulties. The results of the tender should be announced on 25 January.
In December, another company announced its plans to transform a factory site into an office and business center. Zvezda specializes in manufacturing engines and diesel generators, and occupies around 68 hectares between the metro stations Obukhovo and Proletarskaya. This year a new topic was discussed: Zvezda planned to take part in creating a Russian car and manufacture engines for Ladas. But after thinking this over, the company decided that it would be better not to invest in manufacturing car parts, but to earn money by turning almost half of the territory (around 30 hectares) into offices and planning facilities.
They will also have to look for funds to realize this project – according to consultants, from $100 to $300 million. The factory will continue its traditional work in the second half of the territory – manufacturing engines and generators.
The Progress factory, which manufactures stamps, press molds and other specialized accessories will be building the second part of the business estate “Progress City” on its territory (Chernaya Rechka embankment). A class B business center will be opened here with a total area of 28,700 sq.m. and underground parking.
The total area of the buildings is over 150,000 sq.m., and the volume of investment in the project is over 150 million Euros. It’s all very serious: the architectural concept was developed by the international Architectural office SUAR. T.
The first part, of 10,500 sq.m., was opened at the beginning of this year. The entire cycle of work will not be completed until 2014. Along with offices, the business estate will feature exhibition spaces and a service zone with hotels, sport and medical facilities.
A general tendency can be seen. Companies resort to radical measures increasingly rarely (bankruptcy, completely relocating out of the city); current and announced projects propose to maintain the same area of activity in more compact spaces and with maximum use of the freed space.
At the moment, factories are mainly being turned into offices. But will the market face a glut? At least, in the retail real-estate segment in certain areas (for example, Pulkovskoe highway), this is already happening.
The general director of Practic CB Ilya Eremenko believes that a glut on the office market will take place in five years: “The demand for class A and B offices in Petersburg and in the suburban zone is around 3 million sq.m. The rates are rising. A year or so ago a class A space could be rented for $650-750 per sq.m. per year, but now it costs from $750 to $1,100. Raw materials companies, Moscow firms and international corporations are opening offices in Petersburg.”
The president of the Avers company group Mikhail Zeldin agrees: “If we go from the tendencies that are prevalent today, the entire supply will be used by leasers,” he says. “New companies will come along, and old companies will have to expand their business, and ideas about what a comfortable office should look like will change.” Zeldin believes that the stability of demand for offices is linked to macroeconomic factors, including the rise of oil prices.
Incidentally, almost all of the experts we talked to see the possible presidency of Dmitry Medvedev as a favorable factor for the development of business in general, and for business Petersburg in particular.