Vacancy rates in Moscow’s office sector dropped to 15% in the second quarter, according to a report by Jones Lang LaSalle. Buoyed by demand for quality office space, the decrease marks a significant fall from the 19.6% recorded at end-2009 and suggests a general trend towards lower vacancy and market growth.

Vacancy rates in Moscow’s office sector dropped to 15% in the second quarter, according to a report by Jones Lang LaSalle. Buoyed by demand for quality office space, the decrease marks a significant fall from the 19.6% recorded at end-2009 and suggests a general trend towards lower vacancy and market growth.

Andrey Postnikov, executive board member at Jones Lang LaSalle, commented: 'The vacancy decrease in Q2 could well be a signal of a long-awaited trend towards better occupancy and a stronger market in general. After 2010, we expect the supply pipeline to slow considerably, while absorption will continue to grow. We may expect a slight correction with vacancy rates edging towards 15.5-16% over the next two quarters, but after that the figures will continue a steady decrease within the current cycle.'

Figures from H1 2010 show that the office market is rebounding faster than was previously expected. A frozen pipeline during the economic slowdown was expected to restrict supply in 2011, which in turn would have brought down vacancy rates. But according to Jones Lang LaSalle, the pressure on vacancy rates has already begun.

Postnikov continued: 'The chief factor behind the vacancy decrease is a sudden increase in demand from both state and private corporations in Russia and abroad. We saw a number of important deals over the quarter, such as the purchase of an office building on Malaya Dmitrovka Street by RusHydro, while major tenants included international corporations like Panasonic, Avon and Nycomed; and Russian companies like Acron and IT. At the same time, however, we saw no new Class A or B projects introduced on the market during the second quarter.'