Quick Summary
- 1Moscow's office construction pipeline is shrinking, with new supply dropping 2.
- 2Despite the cooling market and reduced new supply, both rental rates and sales prices for office properties continue to climb.
- 3The market is experiencing a complex shift where scarcity is driving value upward even as development activity slows.
A Market in Transition
The Moscow office real estate market is entering a period of significant contraction, with new construction volumes set to drop sharply over the next two years. According to recent market analysis, the city's skyline will see a marked slowdown in the delivery of new business centers.
This shift represents a pivotal moment for the commercial real estate sector. The data indicates that the era of rapid expansion is giving way to a more cautious, constrained phase driven by economic pressures and logistical challenges.
The Numbers Behind the Slowdown
The projected decline in new office supply is not uniform, but it is consistently downward. For the year 2026, the volume of new office space entering the Moscow market is expected to decrease by 2.5% to 4% compared to recent periods.
The trend accelerates significantly in the following year. In 2027, the reduction in new office construction is forecast to be much more pronounced, with a projected drop ranging from 9% to 23%. This two-year trajectory suggests a fundamental recalibration of the city's commercial real estate pipeline.
The primary drivers behind this reduction are multifaceted:
- Rising costs of construction and finishing materials
- A persistent shortage of skilled labor
- Gradually slowing demand from tenants
Developers Hit Pause
Faced with a challenging economic environment, real estate developers are strategically postponing the launch of new projects. The decision to delay is a direct response to the increasing seebestimost (cost of construction) which erodes profit margins and makes projects less viable in the current climate.
Compounding the cost issue is a deficit of labor in the construction sector. This shortage makes it difficult to staff projects efficiently, further delaying timelines and increasing expenses. Developers are finding it harder to secure the necessary workforce to bring their plans to fruition on schedule.
At the same time, the market is witnessing a gradually decelerating demand. While not collapsing, the appetite for new office space is not growing at the pace required to absorb the previously planned supply, prompting a strategic pause in development activities.
The Paradox of Rising Prices
In a classic supply-and-demand scenario, the reduction in new office inventory is having an immediate impact on pricing. Despite the broader market cooling, both rental rates and sales prices for existing office properties are continuing their upward trajectory.
This creates a unique market paradox. While developers are pulling back due to high costs and uncertain demand, the scarcity of new, modern office space is driving competition among tenants and buyers for the available stock. The market is signaling that quality space remains a valuable commodity, even as the construction sector slows.
Rental rates and prices for office properties continue to rise despite the cooling market.
The resilience of prices suggests that the underlying demand for premium office locations in Moscow remains robust, even as the broader economic factors make new development more difficult.
Key Takeaways
The Moscow office market is at a critical juncture. The coming years will be defined by a tightening supply of new space, which will likely place upward pressure on prices for existing properties.
For businesses looking for office space, the landscape is becoming more competitive. For investors, the market presents a complex picture where rising prices exist alongside a slowing development pipeline. The key variable to watch will be whether demand can sustain the current price levels in the face of economic headwinds.
Frequently Asked Questions
The market is experiencing a significant slowdown, with new office supply expected to decrease by 2.5–4% in 2026 and a more substantial 9–23% drop in 2027. Developers are delaying new projects due to rising costs and labor shortages.
The primary reasons are the rising cost of construction and finishing, a shortage of skilled labor, and a gradual slowdown in tenant demand. These factors make new projects less financially viable in the current climate.
Despite the cooling market and reduced new construction, both rental rates and sales prices for office properties are continuing to rise. The scarcity of new, modern office space is creating competition among tenants and buyers.
