Aging Industrial Sites Attract Redevelopment

MT

Repurposing Moscow's many industrial areas will be key to relieving the clogged center and creating a world-class city.

When a city planner looks at Moscow, he sees a lot of ugliness, including new thoroughfares clogged with traffic, a subway system operating at its capacity and an unbalanced landscape of decrepit apartment buildings and sparkling office towers.

But he sees beauty, as well — in the city's cornucopia of aging manufacturing premises.

"Right now, what jumps out at me is the enormous resource of the industrial sites that are all around Moscow ... along the waterfront, along the small railroad ring," Christopher Choa, principal and vice president at AECOM Design + Planning, told The Moscow Times. "These are very useful for all sorts of functions," such as mixed-use development, including high-density development organized around transport cores, he said.

The redevelopment of industrial areas, which take up 15,000 hectares, or 14 percent, of the city's territory, should be a key component of attempts by the city authorities to manage Moscow's growth, concluded a recent panel of experts that included Choa. According to consultants, redevelopment will also be appealing to developers given the dwindling amount of open land in the city.

A number of redevelopment projects, ranging from office centers like LeForte to art centers like Winzavod, have already been built, and more are on the way. Most notably, Guta Development, the owner of the Krasny Oktyabr complex on Bersenevskaya Naberezhnaya, plans to build a mixed-use project analysts said could be worth more than $120 million. The former chocolate factory has already been partially repurposed into offices, nightclubs and exhibition halls and is a center of cultural life in the capital.

However, the complexity and cost of redeveloping industrial sites into commercial or residential properties, especially if the existing structures are historically significant and cannot simply be torn down, remains a limiting factor. The old maxim voiced by Choa still stands: "It's always easier to build on a greenfield site," he said.

Becoming a World-Class City

Choa heads the Urban Development studio in the London office at AECOM, one of the largest design firms in the world, working to create livable, healthily growing cities. He was in Russia recently for the Moscow Urban Forum, where the nonprofit Urban Land Institute (of which Choa is  a member) presented a set of recommendations for Moscow's development as a global city. Following Mayor Sergei Sobyanin's first full year in office, Moscow is striving to improve the quality of life and the investment climate, and President Dmitry Medvedev has even called for the city to become a global financial center. It won't be easy: Moscow took 61st place out of 75 financial centers rated last fall by the London-based think tank Z/Yen.

The institute's experts noted that Moscow is "one of the most burdened metropolises in the world," with 6 percent of the metropolitan area occupied by 40 percent of the workplaces, according to a Moscow Urban Forum press release. The city should redistribute this concentration of offices through mixed-use development, they said.

The experts called the project to expand Moscow's borders to the southwest an "important step" but  recommended intensifying land use within the existing city boundaries. Key to that will be repurposing industrial sites, as well as creating transport hubs and passenger transport along the little ring railway that connects the city's industrial zones, they said.

Although it may be easier to build on a greenfield site, Choa said Moscow needs industrial redevelopment more than new construction on its new territory. He said the first step it should take to become a "world-class city" is to review its policy on industrial zones.

"I don't believe we can necessarily solve [Moscow's problems] automatically by expanding into open greenfield sites," Choa said. "I think there are a wide range of solutions to look at, including smart growth, which is effectively redevelopment of the urban core itself."

No Greenfield Left

Redevelopment of industrial territory typically takes two forms: the construction of new buildings on previously used land, or adaptive reuse, in which old buildings are renovated for a new purpose. Even without a comprehensive city policy on repurposing industrial zones, the redevelopment of such areas will continue to grow naturally, according to a report by Welhome Real Estate Consulting.

Right now, what jumps out at me is the enor- mous resource of the industrial sites that are all around Moscow.

Christopher Choa, AECOM Design + Planning

Partly as a result of the ban on new construction in the city center, the percentage of redevelopment projects, including adaptive reuse projects, will increase throughout Moscow, the Welhome report said. City authorities froze all new construction in the Central Administrative District last March and will continue to do so, the only exceptions being major renovations, the renovation of housing blocks, or the adaptive reuse of buildings, Vedomosti reported in February.

Although a 2009 government decree listed some industrial zones where housing developments are planned to be built, there is no comprehensive plan for industrial redevelopment as a whole, including for the development of commercial real estate on these sites, said Tatyana Sharova, director of project consulting and analysis at Welhome.

Nonetheless, growth of redevelopment should happen naturally due simply to the lack of open land, she said.

"There are fewer and fewer land plots left," Sharova said. At the same time, the viability of various redevelopment projects greatly depends on each individual case, she added.

Since almost no empty land plots remain within city limits, redevelopment opens up possibilities for growth, agreed Natalya Chistyakova, a development director with consulting firm GVA Sawyer.

"Redevelopment of industrial buildings in Moscow stopped being a sporadic occurrence a long time ago," Chistyakova said. "We expect the continuation and even escalation of this trend."

Several landmark redevelopment projects are already underway. For instance, the construction of the Krasnaya Roza business quarter, where the red-brick facades of the pre-Soviet factory buildings have been preserved, is set to finish this year.

Previously, the LeFort business center, a 5-hectare complex with factory buildings from pre-Soviet and Soviet times renovated into Class B office space, opened in 2006. The first building of the Danilovskaya Manufactory, a multi-use complex of reconstructed 19th-century red-brick structures and new buildings, opened in 2008. Investment in the project has been previously estimated to be over $100 million.

The Welhome report also highlighted several industrial sites ripe for future redevelopment. These include approximately 15 hectares on the territory of the Frunze Central Aerodrome near the Aeroport metro station, where the construction of Moscow's largest trade and exhibition center Aviapark is planned, the Kazakov First Moscow Instrument Factory near the Kutuzovskaya metro station, where much of the former factory is already being rented out as offices, the Brattsevo Industrial Zone near the Voikovskaya metro station and the Moscow Freight Rizhskaya freight yard near the Rizhskaya metro station.

Challenges of Adaptive Reuse

Not every industrial site is suited to adaptive reuse, and in many cases, it's cheaper to tear down existing buildings and build from scratch, consultants said. However, some old buildings are protected as sites of historical value, or because they include historical elements such as bomb shelters. In addition, adaptive reuse can sometimes be cheaper than starting afresh, depending on a building's characteristics.

Several sites have been converted mostly into nightclub and gallery space, including Winzavod, Gazgolder and Artplay, because such venues are suited for the kind of large spaces found in former factories, allowing a developer to keep renovations — and therefore expenses — to a minimum, Sharova said. Meanwhile, placing offices or hotels in such spaces typically presents more problems.

"In the center of Moscow, there's a huge need for hotels, but if we take an [industrial] building, it isn't accommodating for a hotel" in many cases, Chistyakova said. Often, the thickness of the floors results in a loss of usable space and frustrates the installation of the extensive plumbing needed to put a bathroom in each room, she said.

For offices, former factories usually have an "unfortunate layout, with big spaces and thick walls," Chistyakova said. Even if these large areas are divided into separate offices, an unusable, windowless space will often be left in the center, she said.

On the other hand, administrative buildings and institutes located on industrial sites are often ideal for offices, and can be turned into Class C premises with a few minor renovations, the consultants noted.

Despite the occasional difficulties of redevelopment, developers will be forced to consider it as an option more and more often, consultants said.

"We shouldn't forget that there are almost no greenfield sites within city limits," Chistyakova said. "And while you can of course build a lot cheaper on greenfield outside the city, the question is what will the rents and occupancy rates be like there?"