Q3 2021

Kyiv Office Property Market in Q3 2021

The business expectations improved for the third quarter in a row during 2021, which was mainly attributed to improved total sales of the produced goods, increasing investments into the construction industry and positive outlook for further growth of the enterprises.

Despite a common belief that inflation will further increase, the CEOs surveyed by the National bank of Ukraine in Q3 expected further strengthening of the hryvnya.

 

Demand

According to a new report from Cushman & Wakefield in Q3 2021, occupier demand remained relatively robust with take-up estimated at around 57,800 sq m. Take-up in the sector reached around 143,000 sq m in Q1-Q3 2021, which was similar to the figure for Q1-Q3 2019, but doubled compared to the first 9 months of 2020. In contrast to its negative value in 2020, net absorption reached around 129,000 sq m in Q1-Q3 2021 (with ca. 76,000 sq m recorded in Q3 2021), thus indicating positive market dynamics.

 

Key office lease transactions, Q3 2021

Property

Submarket*

Tenant

Area, sq. m

Type

BC at 9 B. Khmelnytskoho Str.

CBD

Diplomatic mission

2,040

relocation

BC M8

Pechersk

Diplomatic mission

1,578

relocation

Roshen Plaza

NC-WB

Nemiroff

1,100

relocation

Horizon Park BC

NC-WB

Zoetis

362

renewal

* CBD – Central Business District; C – Central outside CBD NC-WB – non-central on the western bank of Dnipro River; NC-EB - non-central on the eastern bank of Dnipro River.

GLA – Gross Leasable Area.

 

Source: Cushman & Wakefield

 

 

New Supply

According to Cushman & Wakefield in Q3 2021, new office supply in Kyiv amounted to around 104,000 sq m GLA, which is similar to the annual figure for 2019 and by 17% exceeds the annual figure for 2020. During Q1-Q3 2021, new office supply reached 194,000 sq m with additional 32,000 sq m GLA of offices being under construction in Kyiv and scheduled for completion by the year-end.

 

Q3 2021

Source: Cushman & Wakefield

 

 

Vacancy

Despite significant new office supply in Kyiv, during the first 9 months of 2021 primary vacancy in the sector fluctuated in the range of 13-14% and reached 13.8% at the end of September.

 

Major office projects delivered in Q3 2021

Property

Submarket*

Area, sq. m

Owner / Developer

BC MAG.NETT (phase 1)

C

24,552

local developer

BC Eleven (phase 3)

NC-WB

22,473

Centre-Invest

BC at 23 Olenivska Str.

Podil

21,023

local developer

BC at M. Bazhana Ave.

NC-EB

15,555

local developer

BC at 26/14 Spaska Str.

Podil

11,320

Intergal-Bud

UNIT.City Innovation Park (phase 5)

NC-WB

7,952

UDP

BC at 9 B. Khmelnytskoho Str.

CBD

2,040

Stolitsa Group

* CBD – Central Business District; C – Central outside CBD NC-WB – non-central on the western bank of Dnipro River; NC-EB - non-central on the eastern bank of Dnipro River.

GLA – Gross Leasable Area.

 

Source: Cushman & Wakefield

Rents

According to Cushman & Wakefield since March 2020, the downward correction in occupational costs was witnessed across all office property classes in Kyiv, but still various properties were demonstrating differing rental performance. In Q1 2021, prime rents in the sector increased to USD 27 per sq m per month (net of VAT, service charge and utility payments), but remained stable during Q2-Q3 2021.

 

Q3 2021

Source: Cushman & Wakefield

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