Moscow’s new commercial district, “Moskva City”, is pretty swish. It’s home to six of Europe’s seven tallest buildings, giving it the only supertall skyline (yes, that is a technical term) in Europe. All were constructed over the last eight years.
So it may surprise you to hear that, on the 43rd floor of the Imperia Tower, the 19th tallest building in Europe, some young people have opened a hostel.
Image: BpbAlonka at Wikimedia Commons.
This is because most of the building is lying empty: developers can’t seem to flog office or residential space.
Here’s how the New York Times reported on the affair last November:
High Level Hostel, one of the newest tenants in the financial district here known as Moscow City, sits on prime real estate on the 43rd floor of a multimillion-dollar glass-and-steel tower. It is not a youth-hostel-themed work space, but an actual youth hostel — dirty socks and all…
Moscow’s skyscraper district, formally the Moscow International Business Center, reflects the broader problems in the Russian economy. The country, facing broad-ranging financial sanctions and largely dominated by state-run companies, simply has no need for vast office spaces for stock traders, auditors and bankers.
Since then, things haven’t improved. In fact, new data from Blackwood, an estate consultancy, shows that vacancy rates have risen from 32 per cent, as quoted in the Times story, to around 45 per cent. As if that weren’t bad enough, the district will gain another 280,000 square metres of office space in the coming year as new buildings are completed.
As a result, Blackhouse predicted, rents in the district are expected to fall from an average of $700 per metre per year in 2014, to $500-600 for 2015. This is partly due to the massive oversupply; but it’s also because sanctions over Russia’s actions in Ukraine have meant banks and foreign firms in Moscow aren’t in a position to invest in new offices. Developers will need to do everything they can to tempt them.
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