St. Pete Realty Market Unsettled

ST. PETERSBURG -- Commercial office rents in St. Petersburg are converging as rates on high-end spaces continue to fall and many of the city's less-expensive business centers have begun to raise their rents for the first time since the 1998 ruble devaluation.

Property-management companies attribute most of the growth to an increase in demand among successful mid-sized domestic companies looking for better finished, less-expensive office spaces. "Today there is a lot of demand for offices among [successful mid-sized domestic] firms," said Bekar property management director Tatyana Skalandis.

St. Petersburg's more adaptable property management companies report that rental requests in January were nearly double those throughout the fall months. Some report increased demand has allowed them to raise their rents by as much as 10 percent, or $20 per square meter, since October and November.

Office-management companies able to offer space in a range of classes were best suited to stay afloat during 1999. "We were able to offer more humble locations in BCC's network to renters unable to afford even small spaces in the relatively expensive building on the Moil [Embankment]," said Yelena Cherevko, general director of the BCM property management company. "As a result, we've been able to hold onto our clients and minimize our losses."

Increased demand for cheap, comfortable locations has inspired a series of low-budget projects to turn administrative space at factories and other industrial locations into modern offices.

Averaging $500,000 to $1,500,000 to complete, these projects boast central locations and are often near train and metro stations. They include such complexes as Akvatoria, the office building on Burevestnik Embankment, the Bekar Business Center on Bolshoi Sampsoniyevsky Prospekt and Piskarevsky 25.

Usually well refurbished, these spaces tend to offer tenants fiber-optic telecommunications, large parking areas and on-site cafeteria dining.

One creative response to the demand for less-expensive office space has been the construction of so-called technoparks, production facility/office space hybrids that were popular in St. Petersburg throughout last year.

The Petersburg Realty company is building its own technopark at a factory on the Obvodny Canal Embankment. Company representatives said tenants at the nearly 15,000 square-meter building will be able to install their own production facilities at the site, or they can choose to have office space erected around some of the existing production equipment.


Rental Rates at St. Petersburg Business Centers

Business Address Total Annual Percentage

Center Sq. Meters Rent/sq. m Occupancy

Atrium Nevsky Prospekt 25 6,000 $350-$400 70

Swedish House Malaya Konyushennaya 1/3 3,070 $560 80

Northern Capital House

Nab. Moiki 36 8,000 $350-$500 20

Italyanskaya 5 2,500 $465-$515 85

Mikhailovsky Marsovo Pole 5 2,300 $140-$200* 90

Europe House Artilleriiskaya St. 1 10,000 $300-$350 90

Baskov House Baskov Per. 14 1,600 $200* 100

B. Morskaya St. 19 2,460 $180-$300* 92

American Business Center

B. Morskaya St. 57 2,000 $265-$515 50

Golden Kazanskaya

Kazanskaya St. 44 3,000 $390-$455 60

Marinsky Nab. Moiki 58 4,500 $200-$370* 80

JGB House 3 Zhukovskogo St. 63 4,800 $325-$375 75

The Admiralty House

Konnogvardeisky Blv. 3 2,500 $365-$565 50

JGB House 2 Serpukhovskaya St. 10 3,000 $250-$300 50

Tavrichesky Shpalernaya St. 51 6,400 $120-$250* 80

JGB House 1 Divenskaya St. 3 1,500 $250-$300 100

TV Polis Chapygina St. 6 5,500 $140* 75

Elizavetinsky 1 13th Liniya, V.O. 14 3,400 $300* 65

Inform Future Tambovskaya St. 12 2,780 $240 75

Neptun Nab. Obvodnogo Kanala 93 3,500 $200-$250 95

Obvodny 24 Nab. Obvodnogo Kanala 24 7,000 $100-$120* 100

Burevestnik Malookhtinsky Pr. 68 4,600 $80-$140* 75

Yuga Tallinskaya St. 6V 4,000 $130* 100

Bekar B. Sampsoniyevsky Pr. 61 2,000 $180* 100

Akvatoria Vyborgskaya Nab. 61 14,000 $120-$200* 50

Prin Vozrozhdenia St. 4 2,500 $300* 90

Energetikov Pr. 37 1,870 $120* 100

*including VAT

Source: the Petersburg Real-Estate Center