Skanska to Finally Finish Novinsky 31

VedomostiConstruction work on the Novinsky Bulvar project next to the U.S. Embassy began in 1997 only to flounder after the 1998 crisis.
The long-stalled construction of the Novinsky Bulvar office and retail center next to the U.S. Embassy looks finally set to be completed.

Construction company Skanska announced last month it had won the contract to finish building Novinsky 31 at an estimated cost of $22 million. The first tenants are expected to move in next summer.

The project will be one of the biggest business centers in Moscow, with a total area of 65,000 square meters, or 80,000 square meters including parking. Class A office space will account for 38,000 square meters.

The building's final stage is to be financed by Globex bank in conjunction with City Hall, Skanska said. Globex representatives declined to comment on how the shares in Novinsky 31 would be divided. Moscow retailers have suggested the process might not be decided until construction is complete.

Management company Stolny Grad began work on the building in 1997.

Stolny Grad had hoped to rent 25,000 square meters to Price Waterhouse, which later merged with Coopers & Lybrand. According to real estate experts, the project was specially tailored to meet Price Waterhouse's requirements. But after the 1998 financial crisis, the newly merged PricewaterhouseCoopers rented 8,000 square meters in Riverside Towers, near Paveletsky Station, instead. Financing for the Novinsky Bulvar project ground to a halt, and for several years the virtually complete structure stood empty.

Fortunately for Stolny Grad, the building was fitted with wiring and heating before work stopped, which meant the building did not fall into disrepair.

Retailers say that while several office complexes are nearing completion in the capital, demand for office space has not slackened. Skanska East Europe Oy president Martti Rautee agreed. "New Western investors might be more cautious in their projects, but demand continues to grow on the Moscow construction market," he said.

Sergei Riabokobylko, director of Stiles & Riabokobylko, the local affiliate of Cushman & Wakefield Healey & Baker, which is marketing the project, said its interest in the building, in terms of both potential office and retail tenants, was considerable. He said the first document of intent had been signed and the first tenancy agreements for offices on the third to the ninth floors were likely to be signed in October.

Retailers are to occupy the lower three levels -- the "minus first" floor, ground floor and first floor -- a total of more than 10,000 square meters. These lower floors will house a food court, service stores -- such as a photo center, a ticket office and a tourist agency -- as well as boutiques, restaurants and shops selling housewares. "There will be no supermarkets, only very high-quality stores," Riabokobylko said. "It will be a kind of Petrovsky Passazh."

Stolny Grad also managed the construction of the Usadba office center in the City Hall complex off Tverskaya Ulitsa -- widely considered some of the finest Class A office space in Moscow.

Skanska was behind the Kuntsevo residential complex at the intersection of Mozhaiskoye Shosse and Rublyovskoye Shosse and the IKEA retail center. Currently, the company is building the Alfa Arbat Center on Arbatskaya Ploshchad.