NAI Ukraine: Office real estate market in Kyiv expects decline in vacancy
According to results from 2016, the Kyiv office real estate market was replenished with the commissioning of the new business centre’s class “B" phase. “Protasov” (4th phase), "Lagoda" (3rd phase), "Irva" (3rd phase), and BC in 15 Leipziska street (3rd phase), with an overall leased area of 36,900 sq.m, according to NAI Ukraine’s analytical report, "Overview of real estate markets in Kiev in the first half of 2017".
Thus by the end of 2016, there were over 100 business and office centres in Kyiv, with the total market supply having reached 1.7 million sq.m.
In the first half of 2017 there were no new commissions, but by the end of the year, commissioning of approximately 25,000 sq.m of office spaces can be expected. There is a continued tendency to slow down the developer's activity in the office real estate.
2016 was marked by increased demand from tenants: a large number of companies moved to new offices in order to optimise their lease conditions, or due to structural changes within corporations (increase / decrease of offices).
"In 2017, positive business tendency has continued and trends of 2016 are still relevant: existing companies are using market conditions to improve business conditions. Furthermore, the influence of the world tendency towards companies’ reorganisation (absorption, merger, division, etc.) is preserved, and in some sectors of the economy the preconditions for expansion of businesses are already set in place", — Vitaliy Boyko, CEO of NAI Ukraine.
The requested price range for 1 sq.m of premises in "A" class business centres was $18-30 / sq.m / month, and in class "B" — $12-18 / sq.m / month (excluding VAT and operating charges). The vacancy rate is steadily low compared to previous periods — up to 19%, while in the best sections of the market, vacancy does not exceed 10%.
Under these circumstances, the further reduction in vacancies and stabilisation of rental rates is likely. However, due to the pegging of the price per sq.m to foreign currency, a steady increase in rates will be postponed until normalisation of the macroeconomic situation in Ukraine.
As was previously reported, trade turnover in Ukraine has increased by 10.7% against the backdrop of a record improvement in consumer expectations.
About NAI Ukraine
NAI Ukraine represents NAI Global in Ukraine since July 2016. In the first 11 months, the company has become a leader in commercial real estate consulting and leasing. NAI Ukraine is a consultant and leasing agent of the major Ukrainian commercial real estate projects – such as Lavina Mall, Rive Gauche, Ocean Mall, Blockbuster Mall and many others. NAI Ukraine team has a vast experience: 700 consulting projects, over 100 properties put into operation, and over 3 million sq.m. leased. To learn more, visit http://naiukraine.com/en