Rent an office in Kiev: prices are rising, and supply is declining
The market revival triggered an unprecedented increase in activity
From the beginning of September, the traditional business season began, which activated the rental market for office space. What trends in this market segment did the capital real estate portal 100realty.ua recognize.
Rental rates rushed up
Demand for rental of premises in the fall increased and this provoked an increase in rental rates for the most popular premises on the market. According to Park Lane real estate agency, rental rates have risen by an average of 10% since the beginning of autumn.
“The lower limit of the declared rental rates for class A premises has increased by 41% since the beginning of the year, and for class B premises by 17% since the beginning of the year. Thus, the declared rates for class A offices were in the range of 24-40 dollars / sq. m / month, for B-class offices – in the range of 14-27 dollars / sq. m / month. The significant gap between the lower and upper boundaries is explained by the characteristics of the leased premises and the location of the business center, which are the main factors determining the high level of rental rates, ”says Radomir Turcan, CBRE Managing Partner.
Rising rates did not cover the entire market; there are premises that, on the contrary, have fallen in price.
Related article: Real estate in Kiev: what awaits the market in the fall of 2019
According to the head of office brokerage NAI Ukraine Sergey Nemirovsky in some business centers rental rates decreased by 5-8%. This mainly affected areas that require significant investment in repairs and have been on the market for a long time. The reason for this, most likely, was the desire of landlords to fill the empty premises during the business season and enter the new year with minimal vacancy.
What rooms are missing
Not all premises have a line of tenants, at the same time there are “win-win” options that are always in demand.
“Traditionally, the demand is for premises in new business centers with good infrastructure and convenient location. An important factor is the proximity to the metro and the availability of parking, ”says Sergey Nemirovsky.
To rent an office in Kiev – as a market situation
Among the tenants’ wishes, Podolsky district (from Kontraktova to Postal Square), Pechersky, Shevchenkovsky (center) and Goloseevsky district (from Lev Tolstoy metro station to Lybedskaya) are leaders. Coworking, which opens in top-class Class A business centers, is in high demand. Following global trends, they attract tenants with a great location, original design, a large number of additional services and sensitivity to the wishes of their residents.
As for the required space, according to Victoria Barabash, Director General of Park Lane Academy of Sciences, these are premises of 100-250 sq. m
Related article: Professional warehouses in Kiev: supply shortages in the market
Increased demand is observed for premises in the central part of the capital. Here the vacancy of professional business centers averages 5%.
What was built
Since the beginning of the year, the supply has grown, but not significantly. According to Radomir Turcan, “the new offer in the first half of 2019 amounted to insignificant 30,600 square meters.”
Among the new objects, he distinguishes small-sized office projects:
BC Palo Alto on the street Starokievskaya, 10 – an area of 5,000 square meters. m;
BC Zitadelle on the street Citadelnaya, 3 – an area of 3,800 square meters. m;
Amarcord business center on 30 Goloseevsky pr. – area of 6,700 sq. m;
The new building B10 BC Unit.City on the street Dorogozhitskaya, 3 – an area of 10,400 sq.m;
Office building on the street. Lipkivsky, 14A – an area of 2,200 square meters. m;
Office building on the street. Dneprovskaya Embankment, 28 – an area of 2,500 square meters. m
Related article: Office and retail real estate in Kiev: demand is growing, and with it rental rates
Market activity aroused the interest of investors and developers. “The revival of the market provoked an unprecedented increase in activity, resuscitating almost all canned / frozen / deferred projects. At various stages of construction readiness, 22 business centers with a total GLA = 187,412 sq. M are located and announced for opening in 2019-2020. m (or 11.12% of the existing aggregate supply). In total, more than 35 projects have been announced on the market (GLA> 433,000 sq. M), ”says Konstantin Oleinik, Head of Strategic Consulting, UTG.
What will happen next
The market is prophesied by further development and stable demand.
According to Konstantin Oleinik, for the first time in 10 years, the office real estate market in Kiev has again turned into a highly profitable business – the average weighted vacancy rate has decreased to 6%, the range of requested rental rates shows an increase: in class A business centers – $ 19-40, in class B 10- $ 27 a month.
All the quality that appears on the market quickly finds a tenant.
“In general, the market