Industrial team spirit

Industry development in the region has reached a deadlock. We do have professional staff in St. Petersburg, but there is not enough area for construction. In the Leningrad region there are a lot of sites, but the shortage of specialists is felt. Market participants believe that the two subordinate entities of the Federation must urgently join forces.

Range of benefits provided by different regions is similar and usually includes reduced land, wealth and corporate taxes, as well as one-stop service, land use planning and management. The main difference is how these benefits are implemented on a specific area; how easy it is to get the parcel of land and the benefits in the region; how the support of investors works and so on.
Experts believe that the development of the industry will soon start due to industrial parks construction.
Vladimir Skigin, chairman of the boards of directors of managing company "Satellit Development" says: "Such industry development involves management and operating costs optimization, a professional approach to business. Most often, the industrial park has its own specialization since every segment of production has its own characteristics. Most industrial parks are designed for small and medium business, since for large-scale production its own project can be more expedient, as it is implemented in the format "built-to-suit".
Regions, that consider industry development as a priority, focus their attention not only on the creation of industrial parks, but also on the development of the entire infrastructure, both engineering and administrative, and social one in particular. In some cases, in parallel with the industrial sites development housing constructions as well as social infrastructure are being developed in the neighborhood. There are just few examples, though. The practice of construction of housing for employees of the plant is not very common in today's Russia. Typically, this need arises 3-5 years only after the plant launch, and only provided that there is a high labor market competition for qualified personnel.
"A characteristic example of one of these projects is Hakkapelita Village settlement, which was constructed by Nokian Tyres plant under Vsevolozhsk only four years after the launch of the plant. Another example is the industrial park "Grabtsevo", in proximity to which the housing project for the employees of the anchor tenant – Volkswagen plant – is being implemented.  "However, these examples are in the first wave of industrial parks," says Vladislav Fadeev, head of research at JLL in St. Petersburg.
All market participants argue that the policy on the development of industrial parks in St. Petersburg and the Leningrad region should be carried out in a coordinated manner. We do have land resources in the area and staff in St. Petersburg. High potential of the million-plus city can contribute to the industrial parks development. However, a lot of things depend on the land issues – the value of land is too high for projects' payback. "In addition, to date, only the Leningrad region authorities show interest in investors attraction, the regional authorities have gradually build the system of investors attraction and support," Mr. Fadeev states.
In St. Petersburg, this assistance is rendered to a lesser extent. Nevertheless, St. Petersburg has the experience in industrial parks development. If by an industrial park we mean the territory with dedicated engineering infrastructure, where production enterprises are located that are managed by a specialized management company, then we can say that in St. Petersburg and the Leningrad region surrounding areas, according to JLL, there are 10 industrial parks in the active state. Around eight more projects are announced for implementation as industrial parks. "However, in reality, these industrial sites can hardly be called industrial parks," says Mr. Fadeev.
Alyona Davydova, Property Advisor Corporate Services at Maris in association with CBRE, says: "In my opinion, the most effective method for the development of the industry would be the agreement by which the governments of the Leningrad region and St. Petersburg provide natural monopolists with such preferences as communications access points (water, gas and electricity) in close proximity to the development area. This practice exists in Canada, America and Europe, in Russia, such a model is implemented in the city of Kaluga. Thus, the parks will be cheaper and therefore more attractive to manufacturers that, in their turn, will build more factories and create new jobs, and as a consequence, provide guaranteed long-term tax revenue."