In his CRE column, Artem Tsogoev, an independent real estate investment expert, discusses a new trend in the office market. There are several projects being implemented in Moscow that combine two strategies: the speculative one, where premises are sold in lots, and the built-to-suit one, where the construction meets the requirements of specific tenants. Using the example of COLDY's TALLER business space combining the both of these strategies, the expert reveals the advantages of such innovative approach.
It is well known that what matters the most in real estate is “the location, location and, once again, the location”. TALLER is located in Paveletsky business district traditionally attracting both tenants and buyers of office real estate, which fully complies with the fundamental investment rule.
The project’s western building is being sold as a speculative project, which means that it is offered as individual blocks ranging from 90 m2 to 1 700 m2, whereas the eastern building will be fully built for a single tenant or buyer, and will not be offered in the open market.
“To my mind, it was very wise on the part of our colleagues from COLDY to combine, in the current unsteady economic environment, the speculative and the build-to-suit strategies in one project thus improving the project’s reliability and balance”,
Artem Tsogoev notes.
The author highlighted the developer’s unorthodox approach to project financing and sales. TALLER premises are sold under Federal Law No. 214-FZ, whereby the proceeds from sales are credited to escrow accounts, and the developer receives the money from the project partner bank – Sber – only after the project has been commissioned. Although such form of financing is not a standard on the residential real estate market, BC TALLER is just about the only project implemented under this scheme on Moscow commercial real estate market.
Read the column on CRE website.
Artem Tsogoev is Russia’s leading real estate investment expert. He has over 20 years of experience in development, redevelopment and brokerage giving him a unique practice and professional industry expertise.