Trends in the Commercial Real Estate Market in 2025

2025 has been a year of structural change for Russia's commercial real estate market. Despite persistent macroeconomic challenges, the industry is demonstrating adaptability and attracting substantial investment, opening up new opportunities for businesses and investors alike.

We continue to observe the Russian commercial real estate market operating under the pressure of sanctions and a high Central Bank key interest rate, which remains the principal constraining factor for major transactions.

Nevertheless, market participants have successfully adapted to the new realities. According to estimates by the consulting firm CMWP, the projected volume of investment transactions by the end of 2025 will reach approximately 350 billion roubles, indicating sustained interest in the market despite the turbulence.

At the same time, an interesting dynamic is emerging: the market for large transactions has slowed, while the small and medium-sized segment is experiencing heightened activity.

Principal scenarios for market development:

• Increased activity by international players — could lead to a recovery in demand driven by foreign capital and the exploration of new niches
• Prevailing isolationist restrictions — will create risks of higher operating costs but open opportunities for lowering barriers to growth for Russian companies

The Office Segment

The office segment is also undergoing a period of significant change. According to CMWP forecasts, demand in 2025 will amount to approximately 1.9 million sq m, below the record 2.24 million sq m seen in 2024. A high volume of new supply is expected — 730,000 sq m — but this will not have a material impact on vacancy levels, as the majority of space is being absorbed at the construction stage.

Key office market trends:

• A shortage of quality space has driven rental rates up by 15–20% per annum
• Vacancy has fallen by more than half: to 4.9% for Class A offices and 2.8% for Class B
• Upon lease renewals of three years or longer, office rates are increasing by 25–35%
• Purchases account for 40% of real estate transactions, while leasing accounts for 60%

The Evolving Role of Brokers

This year has made it especially evident how the role of brokers in the commercial real estate segment is undergoing substantial transformation. Agents need to be multidisciplinary and keep their finger on the pulse of the market — driven by broader digitalisation, the shortage of quality space, and changing client requirements.

In-depth analytics and consulting: The broker's task is no longer simply to find premises but to conduct a comprehensive market analysis, propose the most advantageous terms to the client, and forecast price trends. The ability to optimise a client's rental costs — by assisting with lease renegotiations or identifying alternatives — is becoming essential.

Expertise in quality and turnkey solutions: In an environment of scarce quality space, brokers must understand the specifics of fit-out standards, building engineering systems, and smart-building specifications in order to offer clients genuinely high-quality, modern spaces.

Legal and financial support: The broker is becoming a key link in minimising client risk. This includes due diligence on counterparties, legal structuring of complex transactions, and assistance with relocation matters.

Specialisation and personal brand: Success increasingly depends on reputation and deep immersion in a particular segment — be it luxury real estate, offices, or logistics. The trust of affluent clients and the ability to build long-term relationships are beginning to be valued more highly than transaction volume.

Retail Real Estate

The retail real estate market is demonstrating a trend towards larger average floor areas in new properties. While the average leasable area of new shopping centres declined notably in 2022, by 2024 it had risen to 12,400 sq m, with a forecast of 13,800 sq m for 2025.

A distinctive feature of the market's development is the emergence of larger properties of 20,000–40,000 sq m, driven by the active growth of Russian brands and the potential return of international players.

Ground-floor premises in residential buildings continue to enjoy particular popularity, remaining virtually never vacant thanks to the rapid occupation of new residential complexes.

The Warehouse Segment

Warehouse real estate, which experienced a surge in demand in 2022–2023 amid the rapid growth of e-commerce, is demonstrating stabilisation by 2025. Developers managed to respond to the heightened demand, and a more balanced ratio of supply and demand is now being observed. The vacancy rate for Class A warehouses stood at 1.6% as of March 2025, but remains at a sufficiently low level. Experts forecast a further rise in vacancy of up to 1.3 percentage points amid a certain deceleration in demand. At the same time, a shortage of quality warehouse space persists in certain regions, particularly near major highways and industrial zones.

Emerging Formats: Light Industrial and the Hospitality Sector

One of the most promising formats of 2025 is the light industrial complex — properties ranging from 200 to 2,000 sq m that combine warehouse, office, and often showroom space. This format is ideal for small and medium-sized enterprises, enabling them to reduce logistics and administrative costs by consolidating operations in a single location.

Another developing direction is the hospitality sector, particularly the apart-hotel segment targeting an "upper-middle-class" audience. The growth of domestic tourism is stimulating developer interest in creating hotels, especially in the central districts of Moscow and St Petersburg.

Investment Prospects and Risks

Despite the high key interest rate, investment in commercial real estate remains attractive. This is attributable to the limited availability of other effective and reliable investment instruments: investing in the Russian stock market carries significant risks, while investment in foreign securities is constrained.

Comparative advantages of commercial real estate:

• Potential yields of up to 20%, compared with 5% in residential real estate
• Attractive resale opportunities — selling a commercial property at two to three times its original cost is more achievable than with residential
• Inflation protection — property values rise substantially each year

Segment risks:

• High taxes — which can reach 2% of cadastral value, compared with 0.1% for residential property
• Elevated utility costs
• Location-dependent yields
• Downturns during periods of crisis

Conclusion

In conclusion, the situation in Russia's commercial real estate sector in 2025 points to a profound restructuring rather than mere adaptation to a changing environment. While risks have not disappeared, the industry continues to attract investors, increasingly orienting itself towards the needs of smaller companies and generating integrated, multi-functional solutions. The principal drivers of development are the shortage of modern premises, rising demands on professional consultants, and the need among investors for reliable instruments in conditions of instability. The current challenging environment is not paralysing the sector but rather setting new trajectories for its development, creating opportunities for players who possess deep expertise and agility.