Survey Colliers International | Moscow 12/2018
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SURVEY COLLIERS INTERNATIONAL | MOSCOW 12/2018 123112 Moscow, 191186 St. Petersburg, 10, Presnenskaya emb. 3, Volynsky lane, BC Severnaya BC Naberezhnaya Tower, Block C, floor 52 Stolitsa (Northern Capital) +7 495 258 51 51 +7 812 718 36 18 SURVEY New-generation COLLIERS INTERNATIONAL staff increasingly prefer MOSCOW / DECEMBER 2018 a flexible working schedule and multiple office options Throughout the last 10-15 years we have seen rapid expansion of agile workspaces, including coworking schemes that are widespread abroad as well as in this country – particularly in Moscow and St. Petersburg. As per the original concept, coworking offers desks and a good environment for building a community, ensuring interaction and communication between users who represent a particular professional environment for them to exchange knowledge, ideas and contacts. At a time of explosive technological progress, businesses are on the lookout for new points of expansion and optimisation, which results in a drive for the transformation of existing goods and services as well as creating new ones. The emergence of agile spaces and coworking options on a global scale is caused by ongoing social changes generated by value-driven dynamics: those who belong to the latest generation increasingly choose creative professions to express themselves, giving preference to a flexible working schedule and they are looking for independence from a single office as a place of work. Based on global practice, two types of coworking users can be distinguished. The first group is represented by entrepreneurs, the self-employed and small businesses. The second group includes large international corporations using coworking options for temporary accommodation of their staff, and based on the size of office space and the term of its lease, they want to minimise their risks and the costs of a long-term commitment. 2 SURVEY COLLIERS INTERNATIONAL MOSCOW | DECEMBER 2018 3 International companies that see a ready solution for their business in coworking spaces in terms of economic gain and + convenience for their employees include high-profile firms such as IBM, Microsoft, HSBS, KPMG, Dell, Google, Toshiba and General Electric. The evolution of the agile office space market and the advent of large prominent consumers has resulted in coworking becoming a significant part of the office market in cities, such as London, New York, Hong Kong, Beijing and Sydney. In London, coworking space totals 722,000 sq m, accounting for 2% of the office space supply in that city (36 million sq m). HOW MUCH TIME RESIDENTS SPEND IN COWORKING SPACE? Walled office Non-fixed workspace Fixed (fixed)workplace 82% 54% 62% 18% 32% 34% 14% 4% Less than 3 days From 3 to 5 days Over 5 days The arrival of coworking operators was instrumental in boosting vibrant competition: as a rule, the coworking operator provides the client with a ready business solution so that the client has no need to contact the owner directly. In the future, provided a certain level of demand for agile spaces is reached, the availability of agile offices will be a must for any business centre, which in turn may motivate BC owners to create and manage coworking spaces on their own, thus avoiding engagement with Total agile office space the end-client via sublease, which is presently the case. in Moscow: 100 000 sq m 4 SURVEY COLLIERS INTERNATIONAL MOSCOW | DECEMBER 2018 5 74% Classical SUPPLY AND DEMAND 26% Specialized IN THE MOSCOW AGILE SPACE MARKET Coworking appeared in Moscow a few years ago, but there are already about 110 locations TYPES available. Compared to 2016, the number of operational coworking spaces has increased by 31%, OF COWORKING which exceeds global growth rates (15-20%, on average). Typically, at the early stage of the coworking market there was a high share of closed outlets: under stiff quality requirements and competition a large number of coworking outlets were forced to close. Structure 8% 46% 24% of coworking 9% 18% outlets, by area, 7% 2% 9% 5% sq m 2016 2017 2018 year year year <100 100-500 67% 36% 24% 500-1,000 1,000-3,000 >3,000 45% Specialised coworking space accounts for 26% of existing coworking outlets in Moscow, the rest being As of the end of H1 2018, the classical coworking space in Moscow already totaled 60,000 sq m, classical. Specialised coworking is the first step in developing the agile office space segment in Moscow. of which almost 70% was accommodated in Class A and B+/- premises. Thus, the share of coworking These premises have their target audience while their floor area normally does not exceed 50 sq m. premises in the total office space supply in Moscow (around 18.2 million sq m) comes to 0.33%. Among the most common types of specialised coworking areas are creative workshops and social Large coworking areas (from 1,000 to 3,000 sq m) can mainly (67%) be found in Class A and coworking venues provided by the state on a complimentary basis. The share of specialised coworking B+/- business centres, whereas most (70%) small coworking outlets (below 100 sq m) are found in venues is dwindling with each year due to the growth in classical coworking, which is evidence of the Class B- office centres, or those of lower classes as well as in other buildings, not office centres (residential development of the quality agile space market in Moscow. buildings, shopping centres and others). 6 SURVEY COLLIERS INTERNATIONAL MOSCOW | DECEMBER 2018 7 Average occupancy of coworking space ranges from 70% to 90%. Coworking premises in Moscow are mainly located in districts of high business activity: half of them (48%) are confined within central Moscow and the MIBC Moscow City business district, where coworking venues of operators such as Workki, CEO Rooms and Union Place successfully operate. The expanding geography of coworking venues was an important trend of 2017: for the first time new outlets were opened in New Moscow (Troitsk, Moskovsky settlement). The coworking operator START launched an entire coworking chain in Moscow’s near suburbs, such as Krasnogorsk, Odintsovo, Korolev, Reutov and Dubna. Overall, 14 coworking venues were opened beyond the Moscow Ring Road (MKAD) in 2017. The average space of newly opened coworking venues had grown from 300 sq m in 2016 to 1,300 sq m in 2017, which can be explained by the fact that chain operators Workki, GrowUp, SOK and Deworkacy opened several coworking outlets with areas varying between 1,000 and 2,500 sq m. An increase in the floor area of coworking venues is accompanied by a transformation in their functional zoning, with open space areas shrinking, whereas the number of private offices and event venues has increased. Changes in the inner structure of coworking reflect the needs of users: COWORKING BREAKDOWN BY teams with an increased number of participants have started choosing a CLASSES OF BUSINESS CENTRES walled office that creates a comfortable working environment, ensuring an atmosphere of privacy. Other things aside, open space is the least profitable coworking zone, as compared to private offices and event venues (in the current market where demand is generated by sole entrepreneurs), which also stimulates coworking operators to make a choice not in favour of open space in coworking space zoning. Class А Class B+ Class B- Class С Other (SCs, residential buildings) As of today, demand for coworking space from users is growing steadily. As estimated by coworking operators themselves, the average 16% 43% 12% 3% 26% occupancy level is in the range of 70-90%. 8 SURVEY COLLIERS INTERNATIONAL MOSCOW | DECEMBER 2018 9 HOW MUCH DOES COWORKING COST? 15,116 9,990 13,040 14,070 10,710 13,000 29,170 20,000 11,000 14,000 8,000 Based on the results of H1 2018, the av- resulting from increasing demand for such erage cost of a fixed workplace in a cowork- premises as well as the higher cost of work- ing amounts to 14,837 RUB/month – during places in coworking offices that opened in 2017 the first half-year this indicator demonstrated and were positioned as higher quality space. a 4% growth. Based on the results of 2017, the cost averaged 14,640 RUB/month, up 18% The upper limit of the cost range for a year-on-year. fixed workplace in a coworking office is shaped by premium coworking projects where the CAO Moscow region SVAO UAO SAO VAO Moscow- City ZAO UVAO UZAO SZAO The growth is caused by an escalation of monthly charge can be as high as 40,000 RUB. Number the cost per workplace in coworking venues, of co-working 42 15 13 9 8 5 5 2 2 2 1 Average price per fixed workplace (RUB/workplace/month) MOST POPULAR RANGE OF RESIDENT EXPENSES RATES: ON COWORKING (RUB) > leasing a non-fixed workplace Fixed workplace > leasing a fixed workplace > walled office lease 2% 18% 30% 35% 15% ADDITIONAL OPTIONS Non-fixed workplace FOR RESIDENTS: > leasing a meeting room > leasing a conference hall 40% 6% 22% 13% 19% < 5,000 > 20,000 10,000 - 15,000 15,000 - 20,000 5,000 - 10,000 10 SURVEY COLLIERS INTERNATIONAL MOSCOW | DECEMBER 2018 11 MOSCOW: DEVELOPING MARKET BIGGEST COWORKING TRANSACTIONS OF AGILE SPACES IN MOSCOW BUSINESS CENTRES Increasing the number and floor area of coworking outlets, the growing cost of workplace leases, transformations in coworking space zoning — all of these factors indicate that the agile Co-working Area, sq m Office building Class Address space segment is undergoing rapid development in the Moscow office market. SOK Arena Park 6,000 VTB Arena Park А 36, Leningradsky Ave. According to plans announced by coworking operators, about 10 new locations will hit the SREDA 6,000 Federation.