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. Last Updated: 07/27/2016

Gran Pins Hopes on 1st Tower

For MTThe Ovchinnikovskaya Naberezhnaya office tower is scheduled to open next October.
A $20 million office tower, which a new local developer is hoping will establish its reputation, has reached its full height of 14 stories.

Gran spent some five years planning the Moscow City Central Tower at 22 Ovchinnikovskaya Naberezhnaya and intends to complete the 24,500-square-meter office building by October 2003, he said.

The centrally located class A high-rise rose over the summer at the rate of about one floor every two weeks.

"This particular property is the way for Gran to enter the real estate market -- that's why they put particular emphasis on making this building as good as possible," said Vladimir Pinayev, associate director at Jones Lang LaSalle, which is the exclusive agent for the building.

Gran studied other projects in Moscow, spoke to property management companies about what tenants want and kept up to date with developments. Based on their research, Gran decided to design Central Tower's floor plans with a minimum number of columns, Pinayev said.

Gran, the real-estate arm of Platinum Bank, first consulted Jones Lang LaSalle, formerly Jones Lang Wootton, in early 1997, he said.

Platinum Bank will provide full financing, said Andrew Petrov, a senior consultant with Jones Lang LaSalle. The overall investment is estimated to be about $20 million.

After lengthy negotiations, City Hall approved the design by architects ABD, Petrov said.

"The plans were closely scrutinized because it is a tall building in a prominent location and in clear view of the Kremlin," he said.

At one stage, the centrally located tower was going to be 80 meters high, but City Hall requested the height be lowered. A compromise was reached for the building to be 60 meters high and an additional lower stage covering 14,000 square meters to be built after completion.

The first stage will have 52 parking places and the second will have 166, Petrov said.

After the 1998 financial crisis, the plans had been on ice until this year, when almost 100 percent of Moscow's class A office space was full and Gran decided to proceed, he said.

The tower's location, near the Novokuznetskaya metro station, is opposite one of the buildings occupied by the Economic Development and Trade Ministry, which could prove attractive to some tenants, and the clock tower on the Spassky Gate on Red Square is visible from the top 10 floors, he said.

The concrete is being laid by Turkish construction company Urban, but a tender is being held among a handful of Western companies for a main constructor, Petrov said. The legal adviser for the project is Clifford Chance Puender, with PriceWaterhouseCoopers as tax adviser.

The asking price is $550 per square meter per year for the 18,500 square meters of leasable space, exclusive of value-added tax, and the operating expenses are expected to be about $80 per square meter.

The tower will be the Zamoskvorechye district's second-highest building after the 111-meter Paveletskaya Tower under construction by Turkish developer Enka, Petrov said.

Erkan Erkek, Enka's marketing director of Moscow office developments, said the class A Paveletskaya Tower will have 35,000 square meters of leasable space and will be ready for occupancy in May.

With the development of Riverside Towers and the Paveletskaya Plaza, of which the tower is a part, Enka has played a key role in turning the area into a business district.

Erkek cited the area's advantages as being close to the Kremlin, linked to the Garden Ring and quiet. He said Enka is interested in building more in the district.

He also said the demand for office space was such that for the first time since 1998 all 130,000 square meters of office space in Enka projects in Moscow are 100 percent full.

Darya Afanasyeva, market analyst for Stiles & Riabokobylko, the local affiliate of Cushman & Wakefield Healey & Baker, said about 200,000 square meters of class A office space is expected to be completed by mid-2003.

"I think that about 90 percent of that will be let before completion," Afanasyeva said.

"Everything that is coming on to the market now is totally leased."