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. Last Updated: 07/27/2016

Mokhovaya to Open Near Kremlin

ColliersMokhovaya Business Center is to open its doors Dec. 15.
The class A Mokhovaya Business Center is to open next month a stone's throw from the Kremlin.

Oleg Myshkin, head of Colliers International's office real estate department, said there are few projects as well positioned. Colliers is a representative for developer MCD.

The three-story building is across from the Manezh Gallery on one side and the Russian State Library on the other.

"Its most competitive advantage is the Kremlin view, which sets the project apart and allows the developer to command top rates," Myshkin said.

Consulting firm Deloitte & Touche, the Standard Bank of London, rating agency Standard & Poor's and mortgage bank DeltaCredit Bank have signed leases for 7 Mokhovaya Ulitsa's 11,650 square meters of rentable office space. The tenants are to start moving in on Dec. 15, MCD said.

Katya Semenchuk, marketing director for MCD, did not reveal the office building's cost.

The Mokhovaya center's rates are about $600 per square meter per year, plus operating expenses, Myshkin said. Operating expenses are estimated at $70 per square meter per year, Colliers said.

Myshkin said the rates are slightly above the market average for class A space.

Olga Ladorenko of DTZ Zadelhoff Tie Leung, which represented Deloitte & Touche, said the consulting firm leased space in the Mokhovaya Business Center because the building has a professional landlord, an efficient floor plan and is close to four metro stations.

MCD had originally negotiated to lease the entire center to news agency Reuters, but after a change of management at Reuters, the negotiations stopped. Reuters has since moved into Berlin House on Ulitsa Petrovka.

Mokhovaya's 52 underground parking spaces and 25 spaces in a garage will cost $250 per space per month, Colliers said.

MCD, a Luxembourg-registered company founded in 1997, is under Russian management and receives financing from Raiffeisenbank, Semenchuk said.

Myshkin said MCD is better positioned to keep costs low than other developers because it operates its own construction company and general director Sergei Gevorkian is an architect and project manager.

"There are very, very few quality projects in the center of Moscow. The amount of land that is available for development is quite limited, and it's very difficult to get sites," Myshkin said.

"The terms that the Moscow city government imposes on developers in terms of investment contracts are to cede 40 percent to 50 percent of the developed space to the city government. That makes the cost very high," Myshkin said.

The sites are not placed on the open market and thus have different conditions. Development costs downtown range from $1,500 to $2,500 for class A office space, he said.

MCD developed Romanov Dvor, an office complex around the corner from Mokhovaya Ulitsa on Romanov Pereulok, and Aptekarsky Ogorod, an office and entertainment center on the edge of the Moscow State University's Botanical Gardens beside Prospekt Mira.

It is now developing two other projects, one on Ulitsa Znamenka and a second stage of Romanov Dvor.

"The second phase of Romanov will also have a Kremlin view. Therefore, it's going to be quite attractive as well," Myshkin said.