Kyiv warehousing property market, Q3 2020
Supply and demand
In Q1-Q3 2020, there were no new deliveries on the warehousing and logistics property market in the Greater Kyiv area. Nevertheless, in view of stable low vacancy that decreased to record low levels towards the end of 2019 and the prospects of the sector in light of COVID-19, development activity picked up. As of October 2020, Cushman & Wakefield projects that around 103,000 sq. m of new warehousing space still may be commissioned in Q4 2020 with additional 60,000 sq. m in pipeline for 2021.
Take-up in the warehousing and logistics property sector in the Greater Kyiv area reached around 31,000 sq. m in Q3 2020, which was around 75% more than the figure for Q3 2019 and similar to Q3 2018. Take-up for Q1-Q3 2020 amounted to around 110,800 sq. m, which is similar to the figure in the respective period of 2019, but 30% less than the figure for the first 9 months of 2018.
Cushman & Wakefield estimates that net absorption in the sector amounted to around 8,620 sq. m in Q3 2020, which is similar to Q2. Though in March 2020 several lease transactions were postponed till after the quarantine, and in Q1 2020 net absorption was negative, occupier dynamics in the Greater Kyiv area remained generally stable during the most of Q1-Q3 2020.
Rents and vacancy
Primary vacancy in the logistics and warehousing property sector in the Greater Kyiv area reached 2.2% at the end of Q3 2020, having further decreased from 2.6% in Q2 2020. In view of no new delivery, warehouses scheduled for delivery in Q4 2020 are already partially or fully pre-leased.
After continuous rental growth in 2017-2019, in Q1-Q3 2020 base monthly rents for quality warehousing space were generally stable in the US dollar equivalent, being in the range of USD 4.0-5.8 per sq. m for prime warehousing space in H1 with some decrease in Q3 2020 due to currency depreciation, and at around USD 3.0-3.5 per sq. m for the highest quality B class properties. In a number of properties with UAH denominated leases base rents decreased in the US dollar equivalent due to the hryvnya depreciation by over 19% since the year start.