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. Last Updated: 07/27/2016

Cosmetic Surgery: New Business, Old Buildings

Any company planning on a permanent presence in Russia must find a way to fit its local offices into Moscow's crazy-quilt architectural mosaic, where Stalin skyscrapers jostle with imperial manor houses, exquisitely wrought churches are jammed with clapboard apartment boxes, and modern steel-and-glass throws shadows over ancient stone. With new construction space at a premium -- but with the proper corporate image also a must -- many businesses are choosing the path of historical renovation.

That path is strewn with many obstacles, of course -- including high costs, labyrinthin bureaucracy, preservationist ardor and legal restrictions. But despite the relatively low level of investment in the current real estate market and the frequent delays endemic to most Moscow development projects, renovation is booming in the city, with several successes on view.

One example is the renovation of the Prokhorov Manor on Podsosensky Pereulok, an elegant 18th century estate converted into office space by Samsung Corp.'s Engineering and Construction Group. The manor itself and a former carriage house were meticulously restored while a new office building was constructed in the courtyard, above an underground parking lot. Samsung official Peter Sheshko said the development plans had to pass through almost 40 different organizations and offices before the project was completed.

This kind of red tape is compounded by the legal difficulties surrounding ownership and leasing. Sometimes historical buildings are sold at tender where the developers promise to renovate the building in lieu of payment. Maya Loskupovo, of S + T Handel, a development company, said her company has obtained 11 properties on that basis. Similarly, the Russian firm Intelmas-Okron negotiated the purchase of a mansion on Ulitsa Ordynka for its headquarters.

Developers who obtain ownership of a property are also more likely to invest in an expensive renovation, said Jonathan Ennis of the Global Resource Group, an architecture and construction firm. Few developers are willing to invest the large sums required for historical renovation in leased property. But many are hoping that they will be able to turn their leases into ownership.

When the building has been designated an historical monument -- and there are several degrees of classification, according to aesthetic, historical and cultural value -- the level of difficulty, and cost, increases.

Whether leased or owned, the rules for developing historic buildings are usually bristling with tight restrictions, and impose strict controls over any alterations, requiring consistency with the original structure. This can often pose hardships, especially when trying to provide the old building with the modern infrastructure -- such as wiring, plumbing, and safety features -- that a business needs. But Ennis says the city's Monuments Department, which oversees the historical aspects of renovation, can be flexible. "If there is room for changes, they can be made, even if the facade is changed," he said.

Indeed, the combination of old structures with new outer construction is being seen more frequently. Mosenka, a development firm joint venture between the city and the Turkish firm Enka, has carried out two such projects with office buildings on Taganskaya Ulitsa and Tsvetnoi Bulvar. But not everyone is happy with this kind of compromise.

Andrei Lash, chief engineer of Mosproject-2's massive renovation of the Bolshoi Theater, said this approach results in a bastardization of architectural styles. "There are no strict objective criteria in architecture, it is always a matter of taste," he said, but such combinations represent "the lack of professional tact. Intrusion into the integrity of an old building with new elements is always doubtful."

Whatever the architectural approach, the bureaucratic maze is the same. Once the lease agreement is signed, developers face months of plan submissions, corrections, re-submissions and so on, with the Monuments Department, the Land Use Commission, utilities departments, city engineers, environmental impact appraisers and many others, until they finally grasp the Holy Grail: official, final approval by the Council of Moscow Architects.

For all the difficulties, most companies involved in historical renovation find the cachet and convenience of mixing business and history to be worth it.

"Why bother building something new, if there are nice places already existing in very convenient locations?" said Sergei Mescheryakov of Stolichny Savings Bank, which has an extensive program of historical renovation. "Our goal is to help the Moscow government to preserve as much of the city's architecturally grand mansions as we can."

That kind of attitude chimes perfectly with a city administration under Mayor Yury Luzhkov determined to bring a modern look to the city while enhancing its value as a cultural and historical attraction ? and reap big profits for the city coffers while doing so.