Year-End Review
Total Page:16
File Type:pdf, Size:1020Kb
Ukraine March, 2018 2017 Year-End Review Office Supply Summary The main office buildings delivered to the market in 2017 were: In 2017 the total office supply in Kyiv amounted to Astarta BC (1st phase) at 58 Yaroslavska St. 1 823 000 m². The new supply grew only by ~ 40 000 (GLA ~ 15 000 m²); m². During the year, new phases were commissioned Astarta BC (2nd phase) at 58 Yaroslavska St. in already existing business centers: the first two (GLA ~ 13 000 m²); phases of Astarta Business Center (15 000 m²), Unit Business Park at 8 Simyi Khokhlovikh St. (GLA ~ 4 000 m²); Forum West Side (8 000 m²), and phase 1 of UNIT Forum West Side at 6 Teligy St. Innovation Park City (4 000 m²). (GLA ~ 8 000 m²). The commissioning of new office space was activated In 2017 the total office supply in Kyiv amounted to in the second half of 2017, which indicates a lack of 1 823 000 m²*. developer interest. Provided that all business centers scheduled for completion in Compared to 2016, in 2017 the vacancy rate dropped 2018-2019 are commissioned on time, 71 000 m² of new office by 6.8%. The steep decline was primarily caused by space will enter the market in the next 2 years. the growing demand for office space combined with the lack of new supply of Grade A and B business Total Office stock, Kiev, ths. m² centers. In 2017 the gross take-up of office space in Kyiv reached approximately 170 000 m²*, a 13.3% growth compared to 150 000 m² in 2016. The total vacancy rate** dropped from 14.4% at the beginning of 2017 tо 7.6% at the end of the year. At the same time, there was a trend towards stabilization of rental rates: the prime headline rent remained at $28/m2/month, while the average rental rates in Grades A and B settled at $16/m²/month. In 2017 the demand for office space was mostly driven by IT companies. Source: Colliers International * Includes all classified office buildings with GLA exceeding 5,000 m² that are ready for lease. State institutions are not included. ** The vacancy estimate does not include business centres that are officially commissioned (according to the documents), but are not suitable for occupation due to ongoing construction works 2 Year-End Review | 2017 | Ukraine | Colliers International Take-up, ths. m² Demand In 2017 the gross take-up of office space in Kyiv reached 170 000 m², a 13,3% growth compared to 150 000 m² in 2016. The renewal to relocation ratio was approximately 50:50, which means that, compared to the previous year, a larger number of companies decided to move to a new office. The main reasons behind this trend are the economic and political stabilization, and tenants’ desire to improve the quality of their offices while rental rates remain relatively low. The demand for high quality office space mainly Source: Colliers International came from IT companies (36%), professional services (18%), and manufacturing (12%). Co-working spaces are becoming increasingly common, with IT Demand Structure companies and start-ups as their target clients. According to the market analysis, in 2017 27%* of all lease agreements were signed for 1000-2000 m² lots. Following the general trends of the previous year, the demand for quality office space came primarily from international companies, which accounted for 78% of the total transaction volume. Overall, the demand structure remained relatively unchanged. If economic stabilization continues, an increase in demand coming from Ukrainian companies may be expected. Source: Colliers International Vacancy and rental rates Vacancy and rents The total vacancy rate* dropped from 14.4% at the beginning of 2017 to 7.6% at the end of the year. The vacancy rate in Grade A dropped by 10% from 19.8% to 8.8%. Low construction and commissioning rates of Grade A and B business centers is the main reason for such steep decline. *Selective data used Source: Colliers International 3 Year-End Review | 2017 | Ukraine | Colliers International The main business centers (Grades A and B) Vacancy, % scheduled to enter the market in 2018 are: Astarta BC (3rd phase) at 58 Yaroslavska St. (GLA ~ 9 000 m²); Unit Business Park, at 8 Simyi Khokhlovikh St. (GLA of sections scheduled for commissioning is ~ 20 000 m²); BC Podil Heritage at 28 Verhniy Val St. (GLA ~ 3 000 m²); Office building at 101 Volodymyrska St. (GLA ~ 5 000 m²); Office building at 1 Sagaidachnogo St. (GLA ~ 8 000 m²); BC Forum Amursky at 6 Amurska St. (GLA ~ 9 000 m²); Europassage BC at 54 Gaidara St. (GLA ~ 12 000 m²). Source: Colliers International The prime headline rent remained unchanged at $28/m²/month. The average rental rates in Grades A Average base rent by grade and B settled at $16/m²/month. In 2017 rental rates ranged as follows: Grade А: $16-28/ m²/month Grade B: $10-17/m²/month Grade С: $6-11/²/month Forecast 2018 71 000 m² of new office space are expected to enter the market in 2018-2019, provided that all buildings scheduled for completion are commissioned on time. A slight growth of rental rates in grades A and B is expected. The vacancy rate will drop even further as the number of new projects under construction remains insignificant, while the construction cycle is three Source: Colliers International years on average. 2018 will remain favorable for both tenants and investors, as it will still possible to find high quality office buildings with favorable rental rates and prices. In the present situation, it would be reasonable to boost developers’ activity in the office real estate market. In addition to the IT sector, in 2018, demand may be generated by e-commerce companies, major local companies and agro sector. Multinational companies will continue to move to high-quality office premises on compatible or more favorable commercial terms, using the new opportunities offered by the market. 4 Year-End Review | 2017 | Ukraine | Colliers International Major Completed and Pipelined Business Centers, Kiev, GLA over 7 000 m² Year of Gross leasable area № Property Аddress completion (GLA), m² 1 Citygate BC 1 Magnytogorska St. 2019-2020 45 000 2 Astarta BC 58 Yaroslavska St. 2017-2018 35 000 3 Unit BC 8 the Khokhlov family St. 2017-2018 34 000 4 Forum West Side BC 6 Teligy St. 2017-2018 8 000 5 Europassage BC 54 Gaidara St. 2017-2018 12 000 6 Forum Amursky BC Amurskaya St. 2017-2018 9 000 7 Sigma BC 6 V. Havela (Lepse), Blvd. 2015 19 500 8 BC at Holosiivskyi Ave. 132 Holosiivskyi Ave. 2015 15 000 9 BC at Dorohozhytska St. 8 Dorohozhytska St. 2015 8 000 10 IRVA BC (phase 3) 10/14, Radischeva St. 2016 8 000 13/15 Bolsunovska 11 IQ BC 2014 32 100 (Strutinskogo) St. 12 Forum Victoria Park BC (phase 1) 7 Ohtyrskyi 2014 14 400 13 Domino BC 51 Nyzhnii Val St. 2014 9 000 14 Volna BC 36 Konovaltsa (Shchorsa) St. 2014 27 000 15 Podol Prestige BC 27-29 Nyzhnii Val St. 2014 13 000 16 Silver Breeze BC 1v Pavla Tychyny Ave. 2013 26 000 17 SP Hall BC 28а Bandery Ave. 2013 22 000 18 MERX-2 BC (phase 2) 15 Leiptsyzka St. 2013 15 400 19 Europe BC 101/103 Stolychne Highway 2012 20 000 20 Crystal BC 175-177 Kharkivske Highway 2012 10 000 21 Forum Victoria Park BC (phase 1) 7 Okhtyrskyi Lane 2012 7 000 5 Year-End Review | 2017 | Ukraine | Colliers International Year of Gross leasable area № Property Аddress completion (GLA), m² 22 Premium Center BC (phase 1) 6 Lepse Blvd. 2011 38 000 23 Rialto BC 18 Novokostiantynivska St. 2011 15 500 24 Shchekavytskyi BC 23-25 Frunze St. 2011 10 300 25 BC at 19 Druzhby Narodiv Blvd. 19 Druzhby Narodiv Blvd. 2011 8 000 26 HPBC II (phase 2) 12 Amosova St. 2010 18 300 27 Forum Kinetic BC 12 Lyvarska St. 2010 9 900 28 Eleven BC (phase 1) 11 Solomianska St. 2010 9 500 29 Flora Park BC 8 Tankova St. 2010 8 300 30 Cosmopolite BC 6 V. Hetmana St. 2010 8 600 31 Tsaksky BC 13 Staronavodnytska St. 2010 14 000 32 Protasov BC 2/1 M. Hrynchenka St. 2009 22 700 33 HPBC II (phase 1) 12 Amosova St. 2009 16 000 34 Irva BC (phase 2) 10/14 Radyshcheva St. 2009 11 300 35 Prague BC 6 V. Sosiury St. 2009 8 500 36 Vremena Goda BC 16 Kudriashova St. 2009 7 100 37 Illinskyi BC (3 phases) 8 Illinska St 2005, 2007, 2008 37 100 38 Palladium Plaza BC 172 Antonovycha St. 2008 16 000 39 BC at Fizkultury St. 28 Fizkultury St. 2008 11 000 40 Vector BC 10h Starokyivska St. 2008 16 000 41 Granit BC 8b Raisy Okipnoi St. 2008 12 600 42 Mikom Palace BC 27 Dehtiarivska St. 2008 10 000 43 OB at 5 Zoolohichna St. 5 Zoolohichna St. 2008 9 200 44 BC at 6 M. Dontsia St. 6 M. Dontsia St. 2008 7 000 45 Karavan BC 12 Luhova St. 2008 7 000 46 BC at 4 Verkhnii Val St. 4 Verkhnii Val St. 2007 13 800 47 Faringeit BC 30v Fizkultury St. 2007 10 600 48 Komod BC 1 Lunacharskoho St. 2007 12 800 49 Grand Step BC 24d Polieva St. 2007 9 500 50 BC at 68 Verkhnii Val St. 68 Verkhnii Val St. 2007 7 500 51 BC at 92-94 Dmytriivska St. 92-94 Dmytriivska St.