In Depth: A City in a City
The skyscrapers of Moscow-City business center - the first such area in Moscow – have become almost such integral symbols of the city as the Ostankino tower. Rumours of surplus surround the business centre, which has already managed to transform the skyline of the city forever overabundance, and there is already a lot of prejudice. And it is no wonder. In fact the complex development of the territory, the construction of skyscrapers and maintenance of the infrastructure have assigned huge risks to the developers. The developers are afraid that such a large volume of office space entering the market in one go will not be absorbed. Tenants, in turn, are concerned by the number of factors connected with the accommodation of a business center, so unusual to Moscow.
In large scale business centres, such as Moscow-City and London’s Canary Wharf, the risks are mainly connected with the following factors: the level of security of shopping and entertainment infrastructure (restaurants, cafes, shops, cinemas, etc), transport infrastructure (accessibility of the area to public and private transport), the period of realization of the project (the longer the project takes, the longer the tenants of already constructed buildings remain deprived of a fully developed infrastructure, and also the longer the tenants are surrounded by construction).
All tenants that have concluded contracts with us in Moscow-City have taken these problems into account. Despite all their reservations, they have chosen to occupy space here.
The result is a rather paradoxical situation. On the one hand, the transport problems, long-term construction and lack of infrastructure have been widely exaggerated in the press; many companies sceptically assess the declarations of the Moscow government on solving the transport problems and themselves seem not prepared to rent offices in such a "doubtful" project. But on the other, the center continues to be filled with record rates, showing that the above inconveniences for many companies are simply not so significant.
Why it’s happening like that?
There is demand for an integrated business area, for synergy that is created with the concentration of a set of companies, which more than compensates the inconveniences arising from the creation of such a large project.
There are risks and a lot of them, and having tempted tenants with the perfect image of a western business centre where "you can get everything at once,” they forget that these risks are somewhat inevitable. Any business centre of such a scale, be it in London or Paris, does not open suddenly. All of them face the same problems and have overcome the same difficulties connected with transport and infrastructure. The difference in our case is only that these problems are solved at our place, or if we talk about from the point of view of those tenants who have rushed to occupy the first places, at their windows. However, according to research carried out by the company, in comparison with Canary Wharf, Moscow-City not only copes with the same problems, but also has some advantages: high speed of realization; the problem of developing transport infrastructure is complex for the city as a whole, and accordingly, will be solved and in the interests of the business centre; a high degree of self-sufficiency of the business area.
As a matter of fact, Moscow-City is a more ambitious project than Canary Wharf. Moscow-City provides for the construction of more than 4.7 million sq.m of offices, a hotel, residential and recreational areas and 22 skyscrapers, of which the first tower of the complex – Federation Tower, and also Bashnya ha Naberezhnoi and the Northern Tower have already been put into operation. By 2010 Imperiya Tower (more than 98,000 sq.m of office areas), Evrazia Tower (more than 100,000 sq.m of office space), Mercury City (more than 71,000 sq.m of office space), and Gorod Stolits (more than 80,000 sq.m of office space) are planned to be completed. And except for square meters City offers a whole way of life: all infrastructure necessary for work and rest is concentrated in a single, integrated area. For companies, the direct affinity of a set of leading world companies and brands optimizes the growth of the business of each participant and stimulates the development of their business relations. For this reason such business cities are in demand worldwide.
If a tenant really wants to capitalize on the synergy that such business centres have created for many decades already worldwide, the mentioned claims - concerning a building site under your window, transport problems and shortage of infrastructure – should be treated critically, as well as any issue that arises in choosing a rented space.
Eternal construction or rapid development?
According to a decision of the government of Moscow on the preparation of the territory or a business centre which began in 1992, on a background of the cataclysms which had captured the country, it was difficult not to treat any initiative of the government with mistrust. Within 10 years of preparing the site for construction this mistrust inevitably tainted relations to the project.
The building process of such a large scale area as Moscow-City, cannot and should not restrict itself to deadlines - one business centre is not under construction. In the already "long time completed" London’s Canary Wharf, for example, the developer Canary Wharf Group intends to build 1.4 million sq.m more of new buildings, proving that any successful business area as a live organism, is first of all characterized by constant, dynamic development.
Long-term construction at times confuses some tenants, but many forget about how much quickly Moscow-City was built in comparison with other world business centres. By volume of office space and dynamics of its realization Moscow-City is unique. Though it is larger than Canary Wharf (2.1 million sq.m of office space compared with 1.3 million sq.m), it was also realized to shorter deadlines, which has both positive and negative consequences. On the one hand, time is required for the office segment of the Moscow real estate market to absorb such a volume of area. And quick construction of commercial real estate premises also demands dynamic development of transport infrastructure for the harmonious realization of the project. And on the other, fast realization of the project increases the appeal of Moscow-City premises due to a reduction in "the period of construction surrounding tenants." If you passed the territory of the completed projects today you can see the developed sites are located on large, well arranged, green islands on a huge building site.
It is worth noting that Canary Wharf’s route to success as a prestigious developed business district was long and difficult. When the first phase of the Canary Wharf project was put into operation, the share of vacant office space in it was more than 50 per cent. The London market of office premises could not absorb such a volume of office premises in the short term, and that was at the end of the 1990s. The total amount of the market was 16.7 million sq.m.
As for Moscow-City the aspirations of tenants to occupy the areas as soon as possible speaks volumes about the demand for the business centre. Before the appearance of Bashnya na Naberezhnoi, it was considered a serious success if a building was completely rented out before the construction was completed. When nobody still believed that construction of the business centre would begin, Turkish development company Enka decided it was time to prove them wrong, and started construction of the first skyscrapers. The first building of the complex (more than 18,000 sq,m), which was put into operation in October 2004, found all tenants four months prior to the end of construction. For Moscow at that time such a time period was a record.
Becoming the pioneer of business centers, Enka not only attracted tenants, but also instilled confidence that Moscow-City was not simply the words of the Moscow government, but a project that was actually demanded. It is clear that not everyone was prepared to be in the towers whilst construction proceeded. But even these restrictions have not stopped such significant tenants as IBM, international investment bank Lehman Brothers, Renaissance Capital and KPMG.
By completing separate plots the developers managed to minimize the inconveniences connected with the proximity to a building site. Already now completed offices are located not simply in buildings, but within specific, landscaped territories, which will be part of the whole territory of completed projects. Trees have been planted, parking is organized, and access roads have been laid.
This perception, however, is the first stage of construction. The majority of projects will be simultaneously completed, which will exclude inconveniences such as "construction under windows" for tenants.
How to get there
The transport problem is one of the most relevant for potential tenants of Moscow-City. Moscow-City, in this respect, is also not unique. Traffic jams are a problem not in just one area, but in the whole of Moscow, and they equally affect the employees of office complexes at Paveletskaya as those located closer to the MKAD. To solve the problem is complex, and there is no point waiting for panacea.
As for Moscow-City, a project on the optimization of access roads to the territory has already been developed. First of all this involves the construction of a second entrance onto the Third Ring Road and a left turn on Shelepikhinskaya Naberezhnaya which will be lengthened from Krasnopresnenskaya Naberezhnaya to the railway bridge across the river. It is also planned for 1st Krasnogvardeisky proezd to be expanded by 32m and lengthened and there will be an overpass for transit transport.
Though the planned parking at Moscow-City is for more than 23,700 cars, a deficit remains one of the sore points the business center. Developers currently use all underground resources on the territory of a business district to the maximum in order to provide additional parking spaces for employees. Enka has four levels of underground parking, and the developer is now planning the construction of an additional multilevel car park under the Third Ring Road, counting upon the fact that it will alleviate the situation. Visitors to Moscow-City can also rely on public parking. By the end of 2009 - a multifunctional project by AFI Development will give the central kernel more than 2,700 car parking spaces.
But it is already clear, that additional car parking spaces will not solve this problem. Public transport will solve it, and in this respect it is possible to be guided by the experience of foreign projects.
With Canary Wharf the emphasis was immediately placed on the use of public transport (the underground, railway and buses), and also by taxi and bicycles. There are a rather small number of parking places in the business district (a total of about 3,100) which limits the streams of personal motor transport and thus in many respects solved the problem of traffic jams (there are no conditions for spontaneous parking at Canary Wharf).
In 2007, only 6 per cent of workers at Canary Wharf used personal motor transport, while at Moscow-City, in the meantime, no less than 50 per cent of employees continue to drive to work in their own cars. Cultural prejudices are involved in many respects here. Despite congestion, the Moscow metro is one of the most convenient and effective in the world; nevertheless many citizens travel by car. However if you look forward 5-10 years, it i9s clear that Moscow will join the general global trend whereby people use public transport to get to work more and more.
Already now public transport in Moscow-City has helped solve these problems. Work on the mini-metro - in 2006 Delovoi Tsentr and Mezhdunarodnaya metro stations opened. A high-speed transport system is also expected. At the first stage there will be a line from Moscow-City to Kievsky Vokzal, and at the second stage there will be a line from Mezhdunarodnaya to international airports Sheremetyevo and Vnukovo. Completion of a transport terminal in 2011 will resolve many of the transport problems.
Getting citizens to use public transport more has its own set of complexities. But it is expected that the Moscow government as well as private investors, developers and participants of Moscow-City will help solve the problems of public transport. Development of the transport infrastructure of Moscow-City cannot be carried out without complex development of the transport system of Moscow, and the Moscow-City project may just become the catalyst to solving the transport problems of the whole city.
Office complex or business district?
The main advantage of such a large scale business area as Moscow-City compared with separate office complexes I that it has its own public and engineering infrastructure. When a large company is located in a business center, its independent infrastructure allows employees, partners and clients to exist comfortably and minimize movement in the city. At their workplace, people not only have consumer ability, but also access to necessary services: supermarkets, boutiques, bookshops, travel agencies, etc. Instead of going into the city to buy things, employees can make all their purchases within the limits of the pedestrian zone on their lunch break or after work. For those who will live on the territory of Moscow-City (construction of a set of apartments has been planned), these possibilities are especially important.
However the incompleteness of the whole business area makes potential tenants worried about both public infrastructure, and engineering. These fears come mainly from unrealistic requirements.
The same problems arose with Canary Wharf. But in comparison with Canary Wharf (65,000 sq.m of retail space), Moscow-city looks like a more developed business area in terms of the provision of shops and restaurants. The problem of the provision of retail areas in the business centre will be completely solved by the commissioning of the central kernel of Moscow-City (80,000 sq.m of retail space and almost 20,000 sq.m of entertainment areas) which is planned for the end of 2009. Shops and restaurants will be located also be located in Bashnya na Naberezhnoi and the Federation complex, on the ground floors of the building of the government of Moscow, in the Rossiya Tower, in the Gorod Stolits complex, in Mercury Tower, City Terminal, Dvorets Brakosochetanii, etc, and also in the central area near Bagration bridge. In the Northern Tower there is a fitness center, and on the top floors of Federation Tower there is a high class restaurant. Planned hotels, such as Hyatt International in Federation Tower, will not only provide more than 900 rooms, but will also provide businesses with conference rooms. In other words, for those that occupy areas in Moscow-City, a specific set of services has already been provided for.
Considering that the worn out and outdated engineering infrastructure of the whole city is far from ideal, Moscow-City has a huge advantage – self regulation of the complex and its new infrastructure.
For example, it has its own gas pipes and heat and power engineering with a capacity of 121.3 MW that has already been put into operation. Work on the external networks of water supply have been completed, and a 1,295m sewer network and 4,380m of rain water drains have been constructed. Moscow-City even has its own fire station, however, this is only the first stage, and it is necessary to remember how much will still need to be constructed seeing as now is only the beginning. Considering the speed and efforts by which the center is being constructed, it is safe to say that when tenants move into their premises in the next wave, they will have nothing more about what.