Lakhta Center – a large scale project of the construction of a modern business area in the north-west of Saint Petersburg. Opening in 2018.
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Business Area without any Public Area is a Dead Area
Kommersant Business Guide
In an interview to BG Lakhta Center Executive Director Alexander Bobkov told BG about tight works timing at site, transition to domestic construction materials and vague future of the improvement of transport accessibility of the complex.
BUSINESS GUIDE: At which stage is the project at the moment? Which works are planned to be completed by the end of this year?
ALEXANDER BOBKOV: We completed a two-year work related to the construction of overall underground area of the complex, bearing structures and foundation. Since August 2015 we have started the works related to the superstructure part, at the moment we are at elevation of floor six in the tower core and at the level of floor two in the adjoining building of the multifunctional complex. For the time being we manage to stick to the directive time schedule. Until the end of the year we plan to build 10-11 floors of the tower and three floors of the multifunctional building.
BG: It means that the last months will be crushing for you?
А. B.: In order to stick to the timing, starting from October we have to build one floor per eight days. I am convinced that we will manage such a pace.
BG: What is the cost plan of the construction for 2015 and the total cost of construction?
А. B.: The construction of the complex in relation to the cost of a square meter is within a range of an average cost of A class business complexes in Petersburg. There is the sole allowance for the height of the complex, and the tower itself occupies less than half of the area of the complex. At present the cost of the works completed is about 26 billion rubles. Next year this figure will be much higher because it is in 2016 when the main construction and installation works are to be performed.
BG: Previously you referred to construction project optimization plans. Which parameters have been reconsidered?
А. B.: As part of the multifunctional center adjoining to the tower we cancelled its hotel in favour of additional business area. And all the associated functions and auxiliary areas were cancelled together with the hotel. Furthermore we have designed and in the nearest future will start the construction of a stand-alone heat supply system including heat generation. All the rest is being implemented according to the decisions taken previously, there are no revisions of the quantity or functionality at present. We hope that the city and the investor will have a complex in its original form by the planned date, i.e. 2018.
BG: And from the point of view of its technical part?
А. B.: Certainly we are exposed to an effect caused by macroeconomic perturbations and changes in the market of construction materials. But we increased a share of domestic materials and thus released a rather tangible currency exchange load and dependence of a weakened rouble. For example we managed to use composite bearing columns in the tower structure and thus saved considerably on costly imported steel.
BG: Did domestic materials provide final saving or rather did they save the project from increase in price?
А. B.: I would say the latter. The price of Russian products has gone up, within a range of 5-10%, not at 100% as imported materials. Here we did not get any additional effect but we managed to mitigate adverse repercussions of rouble devaluation.
BG: How is the foreign general contractor at site?
А. B.: The Contractor tends to complain but proceeds his work. He complains of complexities, shortage of funding, too tight conditions of the contract. We are not always pleased with him but what is the most important is that the work is within the time schedule. Originally we chose quite a complicated scheme of work under the contract with the contractor but in our opinion this scheme is the only one possible in the current market situation. Contracting of the general contractor is done in sequence by large work packages. We have an opportunity prior to each signing of a contract to take into account the current market situation, a currency exchange rate, the cost of construction materials. Thus we manage on the one hand to avoid any obvious excessive payments, and on the other hand any conditions which the contractor is unable to meet.
BG: Slightly over 40% of the areas will be occupied by Gazprom group companies and other tenants. The rest areas will be occupied by commercial enterprises. Has a rental campaign for these areas started?
А. B.: We had a clear understanding how and in which quantities the complex will be occupied as early as at a concept development and functional areas distribution stage. The complex completely justifies its name, a public and business complex. It is the public function which is ranked first, as a consequence, there will be more public areas than business areas in the complex. A campaign aimed at attracting operators will be conducted a year prior to the commissioning of the complex. At present we are collecting offers, negotiating with a few large companies, leaders in their market segments. And at the moment there are no legally binding documents which would adhere any location to anybody. We provide all the required info regarding functionality, areas and connections to all parties concerned.
BG: To which extent will your rental fees be higher than market rates?
А. B.: They are unlikely to be much higher than the market ones because in this case we risk of being left with areas unoccupied.
BG: A lot of business representatives say that location is more important than a rate...
А. B.: Well, the location here will have a multidirectional effect. On the one hand, undoubtedly there will be a high effective demand concentration here, on the other hand until city’s plans are implemented in relation to transport infrastructure development, provision of access roads, the overall background of this area will not be too attractive as compared to any more centrally located districts. And future users of the complex will definitely keep in mind both factors. When we prepared a concept of the complex we continuously kept in mind a sad experience of mono-functional business centers in other large cities. For example, there are the similar complexes in Paris. Located away from residential districts these turn into dead areas after 6pm and till 9am. Let alone weekends. When we moved to Lakhta, we tried our best to avoid the similar situation and did everything to include a public function. We were aware that such a business center needs something positive, it is necessary to attract various public flows to the complex, to create a point of attraction interesting to city dwellers. That is creating a space not only for «people in suits” but also for local dwellers, tourists. Our objective is to create not a Gazprom business center but a public multifunctional district in Lakhta.
BG: What are the future of the transport accessibility of the complex?
А. B.: As any owner of property we have a close eye on the plans related to the development of adjoining areas and we are very concerned when these plans are delayed to an unknown date. Prior to selecting a site to build a business center we carefully studied city’s plans related to the infrastructure development within the adjoining area. And the future of Lakhta Center looked promising, it is the construction of road 32, a flyover on Primorskiy avenue and an exit road to the Western Speed Diameter. Most plans were to be implemented in 2015-2017 and we were happy that the construction completion dates of our complex were synchronized with the completion dates of announced large road facilities. However as soon as we started works at site, a synchronic movement of the city and Lakhta Center was over. It is bad enough to have city’s priorities changed without a city’s budget deficit… As a result in the current transport infrastructure development program there is no facility to appear together with the commissioning of our complex. Except for one thing, the arrangement of a U-turn on Primorskoye highway in the area of Lakhta. And it is this U-turn which is to be built by the end of this year under a city’s program. However we do not see that the works have even started. As a result visitors of a yacht club and other commercial infrastructure have to go far behind Olgino to U-turn.
BG: But business planned to take part in the improvement of accessibility of this part of the city. Does МСС consortium plan to connect Lakhta Center to the Western Speed Diameter?
А. B.: Above all, the connection of the Western Speed Diameter to a street and road network needs allocation of land. At the same time exit and access roads to the Western Speed Diameter strongly differ from other facilities in relation to area requirements. These facilities require a considerable area for runway lanes and toll plazas. As early as at a discussion stage we understood that it is fairly difficult to find a place in a densely developed Primorsky district. It is unclear how this story will end up but we do hope that the need in improving a transport accessibility of this area of Primorky district is obvious to everybody.