Three development formats of Industrial and Warehouse premises

Today in the warehouse sector, there are three development formats of industrial-warehouse premises, namely, speculative, build-to-suit (construction for the customer), light industrial. Here is IPG.Estate experts' opinion about the status and the prospects of each format.

The most developed and common format is speculative. The demand for speculative objects is constantly stable. Investors also remain interested in such objects. According to practice, investing companies who own a land plot, are ready to build class A warehousing facilities to certain characteristics: premises with one dock for 1000 sq.m, working ceiling height of 11-13 meters, floors with anti-dust coating at 1.2 meters, etc. In the future, such objects are leased like that or modernized according to the tenant's requirements, e.g. coldstore installation, docks extension, office premises on the mezzanine completion, an electric power increase.

According to practice, speculative warehouses on St. Petersburg market do not remain unclaimed for a long time. To attract first and large tenants, premises owners offer special conditions for rental rate, vacation, etc. If the object is idle for a long time, then it has either technical problems or problems with documents. For example, there is a B class object with good location on «Parnas», which was built at least a year ago but still not occupied by tenants as it has network connection problems, therefore, it has not been commissioned.

The minimum cost-effective area for the construction of speculative warehouses is 5000 sq.m, as the minimum autonomous unit in the "A" class is on average a multiple of 2500 sq. m. The construction of free-standing B class warehouse with an area of 1500-2000 sq. m is quite common. This format is popular for both lease and sales transactions. There are at least two examples of integrated land development in such warehouses' format: the complex «Terra Terminal» located in the southern direction 17 km from the ring road, and the «Eureka» complex in the «Thelman» village. In the «Terra Terminal» 13 warehouses were built with an area of 1500 meters each; the occupancy is close to 100%; it attracts by a low level of rental rates for the heated warehouse.

Build-to-suit is a relatively new format for St. Petersburg market, but it has already found its customers. More and more developers are offering this option. The specificity of build-to-suit is that the developers are ready to build on the land plot a facility according to the technical task of the client at their own expense or at the client's expense. And after the object is commissioned, it can be leased for a long-term or bought out. The potential clients for this format might be logistics companies that need cross-docking, food retailers which are interested in the availability of refrigerators and freezers or compliance with other technical specifications, pharmaceutical, and manufacturing companies, etc.

The popularity and relevance of the build-to-suit format is also explained by the fact that the industrial zones in the city are released and built up with housing. Manufacturers often can not find premises that fully meet their non-standard requirements, for example, electrical power, ceiling heights, lifting equipment, etc. Moreover, production companies pay great attention to location and proximity to the metro for the convenience of the staff, as usually a great number of employees with unique specializations are involved.

In search of premises, production companies are normally going through several stages. Initially they examine the premises in an area where production is already functioning. In the second stage they are ready to consider premises on the outskirts of the city. On the third stage, they start to monitor objects outside the city. And once they understand that they could not find a suitable object, they start to seriously consider a possibility of constructing a facility for themselves.

At the same time, the number of players who offer build-to-suit services is increasing. It is not only professional developers but also land owners who have a certain amount of financial resources, and who are willing to invest in build-to-suit facilities for the future long-term lease.

Light industrial has recently appeared on St. Petersburg market, and at the moment this format is poorly developed but it has a great prospect. Light industrial is a format of small production and storage premises with the area of 500-1500 sq.m.

In St. Petersburg, there are several examples when storage facilities with an area about 5000 - 7000 sq. m are cut into autonomous blocks of 700 - 1000 sq. m with the possibility of consolidation, and further leased as production areas or small warehouse. Mostly these are objects with 6-8 meters ceiling height, one gate per block, anti-dust floors at ground level, built-in office and utility rooms.

Light industrial is a promising format, but it is not clear yet which St. Petersburg player will occupy this niche first. The first steps in this direction have been made by «A Plus Development». On the territory of «Marino» industrial park and together with its owner they develop a project of warehouse complex which meets light industrial standards.It is 10,000 sq. m object which was cut into autonomous units of 500-1000 sq m. Each of them has an office, utility room, bathroom, and gates. There is also a possibility to combine blocks. The project has not been launched for implementation, as the developer wants to find a few potential clients, which is justified by the market. But in practice, such projects are filled in the final stages of construction, 1-2 months before the facility is commissioned. For example, 1.5 years ago on the «Furniture Technopark» territory, an industrial warehouse was built with a total area of 7,000 sq. m which was cut into 500-700-1000 sq. m premises blocks. The facility had started to fill in two months before commissioning, and by the time it was launched there was already a waiting list, so the deals were closing within 5 days.

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