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