Breakthrough of the Year, or a Big Game

The warehouse real estate market has been in active development the entire year. Indeed, the previously announced large facilities are steadily being opened, thus hundreds of thousands of square meters of quality warehouse premises are entering the market. Experts confirm that the rate of growth in 2006 of the warehouse sector exceeded the development performance of the retail and office real estate markets, respectively.

The evolutionary development of the warehouse real estate market was noted by a number of interesting trends. For example, investment activity in the warehouse sector increased, as Western investment funds, which are ready today to enter a project at the development stage, expanded in Russia. Moreover, Western developers opened representative offices in Moscow in 2006, including for the completion of projects in the warehouse real estate area. Indeed, these developers have named this sector as one of the priority areas of their activity.

Finally, the wishes of large players to develop regional construction took shape, as 2006 was noted by the appearance of chain developers who are beginning to complete large-scale warehouse projects in the largest and most dynamically developing regional centers.

Additionally, the appearance of a large number of logistics services providers (including those from the West) did not go unnoticed. Today they are actively forming demand for quality real estate.

Furthermore, in terms of the Moscow Region, despite the high growth in developer activity, the current unmet demand for quality facilities is estimated at one million sqm. Indeed, in the next several years, even taking into consideration all of the announced projects, the deficit in offers will remain at the same level.

Next year the following warehouse premises, upon completion of the construction phases of the large projects, will be delivered to the market: NLC-Krekshino logistics park, TLC-Tomilino warehouse complex, Pushkino logistics park and MLP logistics terminal. Below are presented several interesting projects on which construction began in 2006.

MLP-Podolsk in the Moscow Region

The warehouse complex, on which construction began in 2006, will be located 17 km from the MKAD, next to Simferopolskoe Shosse, which is the main transport artery connecting Moscow to the south of Russia. MLP-Podolsk is located 10 km from Domodedovo airport, in direct proximity to the concrete ring highway (CKAD).

The overall area of the warehouse complex is planned to be 208,800 sqm, and the office block will occupy 9,554 sqm. The general contractor of the project is Evrostroi, and the exclusive broker is Knight Frank.

It was announced in September that MLP obtained a $300 million loan from Hypo Real Estate International for the financing and subsequent refinancing of two projects, MLP-Podolsk and MLP Utkin Zavod, at $150 million for each.

Technical specifications:

• Concrete floor with dust-resistant covering

• Floor-stress capacity - 5 t/sqm

• Work height12 m

• Possibility to store goods in the mezzanine

• Center-to-center distance between columns 12 x 24

• Facility temperature +14º C when -24 Cº outside

• Sprinklers in the warehouse and office premises

• 1 loading door at 1,000 sqm

• Level floor

Territory:

• Gated and secured territory

• 35-meter area for trucks

• parking

Offices:

• Shell-and-core

• Fiber-optics communications line

It is also worth noting that a railway will be built on the territory of the complex.

The warehouse premise of the first phase are comprised of three areas (the overall area of the first phase is 117,000 sqm), which are planned for delivery in July 2007.

As of today, 75% of the premises of the first phase have been leased. The first tenant of the complex was Russian Logistics Service, which will occupy around 41,000 sqm. Additionally, Gefco (a large provider of logistics services for industrial enterprises, and part of the Peugeot-Сitroen concern; around 25% of our WHOSE? activity involves managing Peugeot logistics) will lease space in MLP-Podolsk. Gefo will occupy around 20,600 sqm, whereas the name of the third tenant has not been disclosed. Moreover, MLP has not commented on the amount of the lease rates.

We would like to note that MLP-Podolsk is the second largest project of Multinational Logistics Partnership in the Moscow Region. In 2005 the developer began construction on the MLP Leningradsky Terminal, which is located 13 km from the MKAD, along Leningraskoe Shosse.

Class A Domodedovo Logistics Park Multi-functional Warehouse Complex

The complex will be located 29 km from Moscow, nearby Domodedovo airport, at the intersection of Moscow-Don (M4) federal highway and the CKAD (A107). Direct passenger train lines from the center of Moscow to Belye Stolby and Domodedovo train stations pass by the warehouse complex.

The overall area of the complex, situated on a 120-ha plot, is around 700 sqm of office and warehouse space.

Capital Partners is the developer of the project in partnership with ICD International.

Other project participants:

• Architectural concept - ARUP

• General contractor –ENKA

• Project manager - Bovis Lend Lease

• Technical client – DC Group

• Broker - Jones Lang LaSalle

Main specifications:

• 12.4 m height in the open warehouse zone • Sprinkler system • Dust-resistant floors • Center-to-center distance between columns 12 х 24 meters • Floor-stress capacity: 8 t/sqm • 1 loading area with a dock leveler at 1,000 sqm of warehouse space

Additional services:

• 24-hour security service

• Parking spaces for trucks and cars

• Mezzanine storage system

The park will be constructed in three phases. Opening of the first phase comprising around 266,000 sqm is slated for the first quarter of 2008. The land plot, where construction is being conducted, previously belonged to Coalco, and Capital Partners bought it at the start of 2006.

Class А Kulon-Vosthochny Warehouse Complex

The complex will be the first for the Western investment fund Raven Russia Limited and Aldama Limited (a company created by the Espro Russian group of companies). Expenditures on the project are planned to be around $184 million and generate profitability of more than 18%.

The 300,000-sqm complex is located to the east of the Moscow Region, in the area of the town of Noginsk, next to the Moscow-Nizhny Novogorod highway (M-7) and 44 km from the MKAD and within two kilometers of the reconstructed CKAD.

The overall area of the plot is more than 60 ha. The project envisages the division of the Industrial Park into several zones. The warehouse and logistics zone will be around 40 ha, while the overall premises of all the warehouse modules will be 197,000 sqm, part of which will be separated into everyday and back-up premises. The main selection of technical specifications will correspond to class A. The processing area will presumably occupy a 17-ha plot. Any construction on the processing modules will take place as per the exact orders of a specific client who is prepared to assume the responsibilities for financing the construction or purchasing (long-term lease) the ordered building.

Railroad siding facilities are located on the territory, and they will connect the industrial park with the largest railroad terminal in Podmoskove (Moscow suburbs), Orekho-Zuevsk. The plot is situated within the boundaries of Noginsk, thus resolving the issue of recruiting labor resources to work at the enterprises of the Industrial Park. The administrative zone and plot, set aside for constructing the administrative building, will occupy around four ha.

The infrastructure of the complex will include a cafeteria, mini-market, bank branch as well as a newspaper and tobacco shop.

The project will be equipped with parking for trucks and cars, guest parking, a switching area and a six-meter fire lane.

Espro Development will manage the construction of the Vostochny industrial park. Indeed, Estpro Development was the developer of two recently completed projects, Kulon-Yuzhny and Kulon-Baltia, which were acquired by Raven.

Raven, in conjunction with Aldama, is putting up the project financing for the creation of a joint venture by the two parties. The joint-venture contract stipulates Raven’s acquisition of 100% of the project upon completion of construction and delivery of the premises for lease.

Northern Domodedovo

Evrazia Logistic, warehouse premises developer and subsidiary of Evrazia, in 2006 announced the creation of 14 class A complexes, which will unite the retail sectors of Russia and neighboring countries into a single system of distribution centers. The first and most significant project will be the construction of the Northern Domodedovo logistics complex, which is being completed jointly with Mega Group (in December there are plans to begin construction on warehouses in St. Petersburg, with an overall area of 680,000 sqm).

The warehouse complex will be located to the south of the Moscow Region, in the area of Domodedovo, at 11 km from the MKAD, on a 262.6-ha plot. The overall area of the warehouse premises will be more than 1.1 million sqm

Construction of the first phase of the project (overall area of 360,000 sqm), which began in July 2006, is set for completion in August 2007. The entire complex is slated for delivery in May 2009.

The complex is equipped with a stand-alone power supply: a 43-MW gas mini-TPP, with the possibility of increasing to 160 MW.

The complex will also be equipped with a railway line, with the possibility to transport 200 train cars a day.

SpringsPark Industrial and Warehouse Complex

This complex is planned to be built 15 km from the MKAD, and it is slated for delivery in the second quarter of 2007. Right next to the complex is the Egorevskoe Shosse, while it is also possible to reach it from the Novoryazanskoe Shosse.

Leasable premises – 100,000 sqm

Technical specifications:

Ceiling height - 12 m

Dust-resistant floors - MASTER TOP

Rated floor capacity - 7 t/sqm.

Column grid – 12 х 24

Office and utility premises:

Number of loading and unloading doors - 14

Dock shelters - 14

Dock levelers - 14

Fire-extinguishing and sprinkler system

Shelf and rack storage system

Temperature control – (+18- +20С)

Heating system equipped

Deluge sprinkler system

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