After several years of steady growth, the commercial real estate sector appears to be heading toward a significant downturn. Analysts predict that by the end of 2026, new office construction in Moscow will decline by 51% year-over-year, warehouse development by 29%, and shopping center projects by a staggering 71%. This sharp slowdown is driven by soaring construction costs and the increasing expense of borrowed financing.
According to consulting firm CMWP, the volume of office real estate commissioned in Moscow is expected to decline by 51% year-on-year by the end of 2026, reaching 360,000 square meters. The firm also projects a downward trend across other segments of commercial real estate. New warehouse construction in Moscow and the surrounding region is forecast to drop by 29% year-on-year to 1.2 million square meters, while retail real estate development is expected to fall by 71%, totaling just 76,000 square meters.
The projected decline in commercial real estate commissioning in 2026 is primarily driven by the rising cost of borrowed capital, influenced by the Central Bank’s high key interest rate, as well as increasing construction expenses. In this environment, many developers are choosing to delay the launch of new projects.
The retail real estate sector has proven to be the most sensitive to geopolitical shifts, with consultants forecasting the sharpest decline in new supply. This segment is also facing additional pressure from the growing shift toward online shopping, prompting a reassessment of retail development concepts and formats.
“A phase of rapid growth is inevitably followed by a period of market correction. Naturally, a sharp decline in commissioning rates will lead to some market turbulence, but this should be seen as a normal cycle rather than an exceptional event,” notes Sergei Khestanov, economist and associate professor at RANEPA. “Prolonged periods of strong growth can create the illusion that expansion is permanent, but this is a common misconception among market participants.”