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. Last Updated: 07/27/2016

$500M Business Park Gets City's Go-Ahead

Undeterred by the glut in high-class office and retail space, a British-Australian consortium is pushing ahead with a $500 million development project after gaining approval from the Moscow architecture committee.

The Gates of Moscow development project received approval from the architecture committee last week, clearing the way for more detailed planning on the development of 300,000 square meters of office, retail, and residential space over a period of five years.

"It is an important step," said Peter Long, project director at Moscow Gates, a joint venture between British firm Chelverton Properties, Australian developer Lend Lease Corp., and a local firm, Business Park.

The authorization will enable the developers to proceed with a feasibility study that should take six months, after which actual construction can begin, Long said in a telephone interview from Chelverton International's office in Warsaw, Poland. Chelverton International was set up by Lend Lease and Chelverton Properties to manage the Moscow Gates project. Business Park is the officially licensed developer.

The first, two-year phase of the project calls for investing about $100 million in building a business center of about 50,000 square meters of office space.

The development is slated for the shores of the Khimki water reservoir along Leningradskoye Shosse.

Moscow Gates is the only development of significant size being actively pursued today, said Michel Pascalis, partner at Jones Lang Wootton. "The idea is to create the first business park f not just a business center f which will be more pleasant to live in," he said.

The developers, who faced a fall in demand for office space after the ruble's devaluation and the banking crisis set off last August, were now drawing their optimism from medium-, rather than short-term prospects, Long said.

"In the short-term, it made many people to whom we would normally let our buildings delay their decision," he said. "But in the medium [term], these companies will need new space."

The project had been in the works for 18 months, he said.

The Moscow Gates project will not be in direct competition with the City project, a much-heralded but now seemingly stalled city-sponsored plan for the development of the southwest downtown area of Moscow, he added.

In contrast to the City, the Moscow Gates' concept envisaged edge-of-the city location, lower rise buildings, as well as "very competitive" rents, he said.

Pascalis agreed that the pricing at the park would probably be more attractive than in the center. Class-A office space now rents for about $500 a square meter after falling 40 percent in Russia's crisis.