Kyiv of­fice mar­ket tight­ens up af­ter years of low prices, high va­can­cies

Kyiv Post - - Business Focus - BY BERMET TALANT [email protected]

The Kyiv of­fice mar­ket will get tighter due to the lim­ited sup­ply of new busi­ness cen­ters and grow­ing oc­cu­pancy, ex­perts say.

How­ever, any de­vel­op­ment boom is un­likely in the fore­see­able fu­ture be­cause of eco­nomic in­sta­bil­ity in Ukraine, low rents and lack of credit.

As of the end of 2016, to­tal of­fice stock in Kyiv amounted to 1.7 mil­lion square me­ters. Last year five new busi­ness cen­ters were com­mis­sioned with to­tal vol­ume of about 40,000 square me­ters. It was the low­est sup­ply since 2008. The va­cancy level re­mains very

h igh , be­tween 14–22 per­cent, ac­cord­ing to var­i­ous es­ti­ma­tions, which brings down rental rates. Cur­rently, the monthly av­er­age rate for grade A of­fice premises is $16-$29 per square me­ter and $8-$16 for grade B. Four new busi­ness cen­ters are sched­uled to open in 2017 — Sigma, As­tarta, Pro­tasov Busi­ness Park, and K/Most. UNIT City plans to fin­ish rede­vel­op­ment by the end of this year. If all project are de­liv­ered on time, they will add ap­prox­i­mately 50,000 square me­ters of new of­fice space. Most of the new of­fice sup­ply clas­sify as grade B. There­fore, the de­mand for high qual­ity of­fice space will con­tinue grow­ing as more com­pa­nies seek to ex­pand or im­prove their work con­di­tions, said Kira Pruglo, head of re­search at CBRE Ukraine, a Kyivbased con­sul­tancy firm.

“Re­lo­ca­tions don’t af­fect va­cancy level on the mar­ket un­less oc­cu­piers ex­pand their of­fices. But we see de­creas­ing va­cancy in class A and B build­ings as more oc­cu­piers want to move to build­ings of bet­ter qual­ity or to ex­pand,” said Pruglo.

Re­cently it is also dif­fi­cult to find smaller suites in the cen­ter of Kyiv, said Nick Cot­ton, man­ag­ing direc­tor at Cush­man & Wake­field.

“I think of­fice mar­ket is be­ing rel­a­tively healthy. There are no large projects that are on­go­ing and that would sug­gest we will con­tinue see­ing va­cancy go­ing down,” said Cot­ton.

Ac­cord­ing to Col­liers In­ter­na­tional, nearly half of de­mand (41 per­cent) for of­fice space in 2016 came from IT sec­tor, fol­lowed up by phar­ma­ceu­ti­cal and man­u­fac­tur­ing com­pa­nies.

Busi­ness cen­ters be­gan to adapt the tech­ni­cal char­ac­ter­is­tics of their premises to meet the needs of IT com­pa­nies such as re­li­able power sup­ply, ad­e­quate air and suf­fi­cient room for servers.

One of the newest busi­ness cen­ters in Kyiv, As­tarta, is sched­uled to open in Septem­ber 2017 in Podil district. (Kostyan­tyn Ch­er­nichkin)

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