Those of us who have lived in Moscow in the late 1990âs and early 2000âs will probably not remember the area opposite the Belorusskaya station, known then as âTverskoi Zastaviâ. It was typical of many parts of Moscow at the time; run down, with non-descript class B or C office buildings and narrow scruffy streets leading off from Lesnaya Street. The one resounding landmark of the area was, and is, the small, but harmonious Nikolay Chuotvortsa church, one of the few remaining Old Believers churches in Moscow, and even this was in need of major repair work.
Enter developers AIG/Lincoln who together with Coalco, a Russian development company, transformed the area with construction of a massive two-phase construction project. The first phase, called White Square is a massive 76,465 square meters, class A office complex with 840 underground parking spaces, and was fully opened in 2009. This complex, which consists of three main office blocks was 100% pre-let when it opened, which goes to say just how bubbly the Moscow office market was at the time. The offices were taken over en block, literally, by PricewaterhouseCoopers, Deloitte, and McKinsey & Company. Having accomplished what they set out to do, and more, AIG/Lincoln sold the whole White Square complex to Russian investment company O1 Properties in 2013 for a reported $1 billion, making it one of the biggest real estate transactions ever completed in Moscow. White Square is still fully occupied but the major tenants have subleased/looking to sublease about 15,000 square meters of their office space, according to CBRE.
AIG/Lincoln continued to build, and have just finished the second phase of their project âWhite Gardensâ. These buildings have been constructed within the same overall design concept on the north side of the White Square complex. The two projects look similar and are clearly designed to function together as one large business centre. White Gardens was sold to Roman Abramovichâs company Millhouse for another whopping $800 million last year, and consists of 64,000 square meters of office space. The offices are about 30% full. Baker and McKenzie have moved as anchor tenant alongside Dentons, Microsoft, Baring Vostok Capital Partners, which will only further the journey which this business centre is making, to become a de facto financial centre. However it seems unlikely that the offices are going to be let out with the same gusto as those in White Square, and the reason for this is not hard to see. There is a glut of class A office space on the market and we are heading South in this particular commercial real estate cycle. Elena Denisova, Director, Head of Office Agency of CBRE Moscow commented: âWhite Gardens is pretty successful taken market conditions, but they will need some more time to fill it up. The market is cyclical; White Square was let at the peak of the market when clients were taking up 30,000 square meters of space in one go. White Gardens is probably even better than White Square; it was AIGâs second try on the White Square district. Lobbies are bigger and tenant facilities are a good addition to WS, itâs a beautiful place all together.â
The architects, APA Wojciechowski, seem to have done an incredible job. The church and the office buildings seem to complement each other. Lanes between the office blocks, which are all pedestrian walk ways in the White Square part of the development, radiate out from the central building â the church, making it visible from all parts of the complex.This is one of Moscowâs only successful attempts to actually harmonise the old and the new, without demolishing the old. Whilst sipping coffee at Starbucks or eating Italian food at Osteria Bianca you enjoy pretty striking views of the church and a square, complete with a fountain, created between the church and the office buildings. In the evenings, people stroll about the square or visit one or more of the restaurants or bars. The place has a western European vibe about it, and has become a magnet for both expats and Russians. An exit of the Metro pops up inside the complex, next to the church, which makes this a Moscow centre, not just a great business centre near Belorusskaya Station. The place feels like an island as it is surrounded with not so brilliant office and residential buildings. The community feeling is enhanced by various concerts and events, which O1 Properties organises throughout the year. The buildings are BREEAM certified (meaning that they have attained certain European standards in sustainability, the BREEAM standards measure the amount of energy a building uses, so it is energy-efficient, and gives additional points if construction has been carried out in an energy-conserving way). Some dismiss this as a fad, but BREEAM and LEEDS certification means a lot in office leasing these days, particularly when major foreign tenants are involved; who are used to these kind of buildings back home. The offices themselves will have a longer usable life. It also means that the lease rates will be a little higher than the norm, but that is a price such companies are prepared to pay.
I donât like to write real estate articles without finding any major negatives, but in this case, criticism is hardly justified. The retail tenant mix seems to have been achieved with care, with due attention paid to the overall concept, and whether or not there are any similar shops or restaurants in the surround area. Elena Denisova commented: âThey [AIG/Lincoln] were very choosy about the retail outlets. If there was a similar kind of restaurant in the area, they didnât want it. If a restaurant applied to join the scheme, the whole leasing team of AIG would visit that restaurant and that chain, they checked several locations, they would have lunch or dinner there themselves, to make sure that this was really something they wanted to have. Thatâs why the eateries they have, are good. They didnât have to have too many because there is already a choice of restaurants in Belorusskaya vicinity.â
The Hudson Bar is well known in the Moscow expat community, and the concept was created specially for the White Square development. As Hudson Bar manager Eric Withers commented: âMe and my brother developed the concept specially after White Square had already been developed. I think we got it about right.â Eric mentioned that the bar is doing well, âat least compared to many of the other bars on Moscow. Our client base is mixed, about 50% Russians, and 50% expats. On the Russian side, most of them are upper middle class, fairly well-off. Most of them are English-speaking, people who have travelled extensively, and enjoy the overall experience they have at the bar. We have a good base of clients who come from the offices here, but itâs a lot less than what most people think. The location is what drives the business, and of course it is very important that itâs close to the Metro. So expats who are living around the city can use the Metro to get here, and itâs easy to get home using a taxi.â
Being right next to the main Moscow-Sheremetyevo transportation route also has advantages. As Thomas Hodgkinson, a director in CBRE Moscowâs Industrial and warehouse division commented: âWorking here means that I very often have the chance to welcome clients to Russia, because they tend to fly in and out of Moscow from Sheremetyevo. I invite them for a cup of coffee, and provide them with free internet. Offices are a tool, and if you know how to use it properly, then that really helps do the job.â
Parking is a problem as it is throughout Moscow, and paid parking has just been introduced in the vicinity of the business centre, making the situation worse. This has caused some angst amongst tenants, but the building managers have the spirit of the times on their side, that is, the move away from driving to work altogether, which is fine for those who live near the office buildings but not for those who donât.
If there was a Moscow expat Life building rating system, then this development would get a 5 out of 5.