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. Last Updated: 07/27/2016

Grandiose Tsar's Garden Shapes Up




Imagine stepping outside the office to stroll beside red tulips blooming in a 17th-century tsar's garden. Water streams heavenward from ornate fountains, and birds twitter in nearby trees. The majestic golden domes of the Kremlin are seemingly a stone's throw away, separated only by the winding Moskva River f and a five-story drop.


The planned garden, inspired by sketches of gardens on the Kremlin roofs 300 years ago, is the fifth-floor highlight of a towering office and retail complex under construction on 36/10 Sofiskaya Naberezhnaya.


And the eye-popping, 83,500-square-meter complex called f what else f Tsar's Garden looks set to take the meaning of grandiose in Moscow to new highs, city real estate experts said.


"If you look just beside the building, you will see the 18th-century Sofia Cathedral, which at one time overlooked the tsar's garden," said Vladimir Neretin, senior property manager at Keystone, the Moscow constructor, developer and owner of the complex. "Because of the church, the company decided the put the gardens on the business center's roofs."


The three-building complex is stunning many real estate experts, who say it will no doubt be a huge draw to local and foreign companies looking for the best of the best in office space.


"It is definitely going to be a landmark building, starting with its prominent location effectively across from the Kremlin," said Michael Lange, managing director at Jones Lang LaSalle.


"It's an amazing project, and an amazing amount of money is being put into it," said Chris King, director of business development at Colliers HIB.


Keystone, which said Sberbank was providing financing for a major portion of the project, declined to disclose how much was being sunk into the complex. Construction kicked off April 1998, but was soon sidelined by the financial crisis of August of that year. Delay costs excluded, real estate experts say Tsar's Garden was probably costing Keystone about $1,200 per square meter, or just over $100 million in all.


Construction restarted several months ago, and the first phase of Tsar's Garden, Building 1, is slated to be completed in October 2000, Keystone said. Building 3 will be finished in July 2001 and Building 2, which stands between the other two structures, in December 2001.


Space in each of the buildings is broken up for offices, shops, parking and other facilities. For example, Building 1 will have 249 square meters of retail space and 689 square meters of exhibition space on the first floor. The second floor will have 2,257 more square meters of exhibition space, as well as storage space.


The third to eighth floors will offer 4,886 square meters of office space. Some cafes and restaurants will be sprinkled throughout the floors, and a 1,300-square-meter garden will occupy much of the fifth floor. The first of four underground floors will have exhibition space, VIP lounges and eateries, while the remaining levels will be for parking.


The other two buildings in Tsar's Garden will follow similar layouts but with Building 2 offering almost three times as much space. Building 2's fifth-floor garden will cover about 4,500 square meters, Keystone said. The underground parking lots will provide spots for a total of 460 cars.


Space in the complex is being offered in shell and core condition for lease only, and although no firm leases have been signed, the number of interested potential tenants is growing, Neretin said.


"We are holding talks with many parties, but we do not want to talk about it until after we sign concrete deals," he said.


Rents will be determined on a one-on-one basis with tenants, but will fall into line with the average asking prices for office and shopping center space in downtown Moscow, Neretin said. He declined to provide precise figures.


The average leasing rate for similar class A office space in the heart of Moscow is currently $500 to $600 per square meter, including fit-out, according to real estate experts. Comparable retail space is going for as high as $2,200 per square meter at the GUM department store about a kilometer down the road.


Keystone intends to offer the retail space in packages of 40 square meters to 200 square meters for a total of 50 to 60 shops.


However, some real estate experts cast doubt on whether Tsar's Garden would prove a magnet for shoppers, saying the location was rather far from the district's apartment blocks and on a street better known for its corporate life.


"It is an odd location for a retail center," said Amanda Spring, managing director at DTZ Zadelhoff Tie Leung in Moscow. "But then there isn't really a place in Moscow that gets a lot of footfall and could be called the best retail location."


Keystone is confident consumers will stream into the shops even though the location is not a popular pedestrian thoroughfare and the nearest of the five surrounding metro stations is a seven- to 10-minute walk away.


"Around 150,000 people reside and work in the area within five to six minutes walk from Tsar's Garden ? [and] they mostly belong to the so-called middle class," Keystone said on its web site, www.keystone.ru. "There are no big retail centers available nearby, whereas there are several big hotels like Baltschug [and] Rossiya, as well as numerous tourist sights."


Keystone is far from a newcomer to the Moscow real estate scene. The company owns an office and banking complex on 42 Bolshaya Yakimanka Ulitsa and a community of cottages in the northern suburb of Khimki.


Keystone also has another project in the works, a 22,000-square-meter sports center near Moscow State University. Paperwork over the center is still being hammered out with the Moscow authorities, but once construction starts it should take one year to complete, Keystone said.