The Evolution of Flexible Office Space in Russia
In Europe and the United States, coworking spaces have been popular for quite a long time. Ryan Garibaldi, Community Manager of The Garibaldi Group/CORFAC International in Chatham, NJ, connects the format’s popularity abroad with flexible renting conditions for tenants.
“Coworking space is a hot commodity as it gives business professionals the same traditional office setting but with more flexibility,” said Garibaldi. “Whether it be cutting commute time, shorter lease terms, or the ability to network/collaborate with like-minded individuals, coworking operations offer many advantages. We are also a solution to those who need to step away from the many distractions at home to get some work done.”
Only a few years ago, the flexible office format in Russia was only used for students and freelancers. Today, such workspaces are rented by Yandex, Tinkoff and X5 Retail Group with the demand for flexible workspaces growing quite rapidly. The average occupancy rate in Moscow and St. Petersburg in September 2020 was 70-75 percent.
The coworking market was spurred on by the pandemic. Flexible spaces are becoming increasingly popular for small, medium and large businesses; hosting project teams; startups; and remote departments of large companies.
According to Bright Rich/CORFAC International, in Moscow, as of September 2020, there were approximately 190 flexible office spaces with a total area of 220,000 square-meters available with nearly half of them located in the Central Business District. The average rental rate for one workplace in Moscow ranges from $255-319 per month up to $573-637 per month (VAT inclusive).
In St. Petersburg, as of September 2020, there were about 50 flexible office spaces with a total area of 37,000 square-meters. Again, most are located within the CBD and are within walking distance of metro stations. The rental rate is $10 per day and $146 per month (VAT inclusive).
Victor Zaglumin, partner of Bright Rich/CORFAC International, notes that that future belongs to such flexible offices within classic business centers.
Offices in large, high-class business centers are often leased by large Russian and international companies. When a temporary project team or a separate department needs extra space, a flexible office in the same business center will be the most suitable option. It is much more convenient for a company to rent a smart office or workspaces in a high-quality coworking project than to look for an additional space in another business center in another location and think about how a team will get there and how to build communication with a main office effectively.
Among the trends in the coworking market, Bright Rich experts point out a trend that has begun to gain popularity in the post-COVID era: the sublease of premises. There is no secret that companies sublet their office spaces. This is more common in Moscow, but it is gradually beginning in the St. Petersburg real estate market, as well. Coworking spaces are also involved. For example, the Space 1 network of serviced offices manages 4,000 square-meters in the Aurora Business Park office center, which are leased by EY Company. This deal will not be the only one. Flexible office operators may take part of the subleased space in business centers and thereby increase their liquidity.
In addition, lifeworkings are gradually entering the market. This year, several large Moscow developers announced the launch of coworking projects within residential complexes. These “lifeworking” projects will be popular in the Moscow market. The trend is a reasonable continuation of the “city within a city” concept when new districts and residential quarters are designed with all necessary social and commercial infrastructure.
The St. Petersburg real estate market follows the Moscow market, but metropolitan trends are usually a bit delayed. Today, it is typical for St. Petersburg to rent separate workplaces in coworking projects. There are quite a few sites there that would suit corporate clients.
Content provided by Bright Rich/CORFAC International. This article was originally published on cre.ru.
