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At the end of 2007 total stock of office areas in St. Petersburg stood at about 1.1 million sq. m.

At the end of 2007 total stock of office areas in St. Petersburg  stood at about 1.1 million square meters, including 627,600 square meters of high-quality office areas, - says Alexei Chizhov, director for consulting at Praktis CB.

In other words, St. Petersburg had 250 square meters of office areas per one thousand citizens, which is half the level in Moscow and significantly less than in European cities. For comparison, Paris has 5,000 square meters of office areas per one thousand citizens and Warsaw has 950 square meters.This is a clear indication of unsatisfied demand for office areas in St. Petersburg. Occupancy levels are close to 100 percent in virtually all A- and B-class office centers. We estimate the deficit of office areas in St. Petersburg to be 2.9 million square meters.In 2008 we expect 500,000 square meters of A- and B-class office areas to be added to the total stock. A considerable proportion of these areas will be located in multifunctional business complexes, like Paradny Kvartal, Stockmann and Nevsky Plaza.If all the office centers scheduled to open in 2008 do start operating, by the end of the year the amount of office areas in the city will increase to 317 square meters per one thousand citizens.This year the share of C-class areas is due to decrease from 44 percent to 31 percent, while the share of A-class areas should increase from 12 percent to 20 percent.However, previous experience has shown that only around 65 percent of announced projects are actually completed on time. Thus we can expect that by the end of 2008, only 324,000 square meters of office areas will have begun operating. As a result, the total volume of office areas in the city will increase to about 1.45 million square meters.Most of the high-quality office centers (61 percent) are concentrated in the Central, Petrogradsky and Admiralteisky districts.

Traditionally, the most popular office areas are units of up to 50 square meters (accounting for 35 percent of demand).However, demand for office areas of over 1,000 square meters has started to grow while there is an evident lack of large areas on the market.Most tenants are IT, telecom, financial, service and real estate companies from St. Petersburg and Moscow, along with foreign enterprises. Regional Russian companies represent an insignificant proportion of tenants.This year we forecast a 14-16 percent increase in rent rates for A-class office centers, a 12-14 percent increase for B-class and 13-15 percent increase for C-class centers.