Professional warehouses in Kiev: supply shortages in the market
According to the results of the first quarter of 2019, the positive dynamics was observed in the professional warehouse market
The warehouse real estate market in the capital is actively developing. There is demand, and supply is gradually increasing. The capital real estate portal 100realty.ua found out what is happening on the market and what are the forecasts for the future.
According to the results of the first quarter of 2019, the positive dynamics was observed in the professional warehouse market, in particular, due to the growth of gross absorption to the level of 46,250 sq.m, which is 27% more compared to the previous year.
“During the 1st quarter of 2019, no new facilities were commissioned in the segment, while by the end of 2019 a new proposal of 83,000 square meters is forecasted. The average market vacancy at the end of the 1st quarter of 2019 was about 3.6%, ”said Natalia Sokirko, Director of Industrial and Logistics Real Estate at CBRE Ukraine.
She noted that in the previous year there was an increase in demand for warehouse real estate, which was explained, first of all, by the resumption of business activity in this segment after the recession in 2014-2016. The main share in the total gross absorption in the market of professional warehouses was made by lease agreements, while transactions for the acquisition of warehouse real estate amounted to only 3%.
Who buys and rents warehouses in Kiev
According to CBRE, the main tenants are wholesale and retail companies, which at the same time account for 59% of the total gross absorption in the warehouse real estate market in 2018.
“The rest of the gross absorption structure was divided among themselves by logistics operators (19%), tenants of the pharmaceutical and medicine sectors (17%), as well as other industries (5%),” says Natalia Sokirko.
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Warehouses are rented and bought both in the city of Kiev and in the suburbs.
“The main demand continues to be formed by e-commerce companies and retailers. Companies also show great interest in warehouses within the city – such locations can optimize the time for delivery of goods, both to the end consumer and to their own points. Many large companies, such as retailers, prefer to build large storage facilities “for themselves.” This circuit, known as Built-to-Suite. This format allows the tenant to obtain premises that fully meet his needs. And also, in advance guarantees the developer the presence of a long-term tenant, which minimizes financial losses from downtime. It is these two factors that make it so popular, ”says Irina Trunova, head of evaluation and consulting at NAI Ukraine.
Rental rates crawled up
Growth in demand also provokes changes in rental prices for warehouses in the capital and the suburbs.
According to analysts at CBRE Ukraine, the declared rental rates mainly varied in the hryvnia range of 125-162 UAH. ($ 4.6- $ 5.9) sq.m. / month for class A warehouses and in the range of 75-110 UAH. ($ 2.7- $ 4.0) sq.m. / month for Class B warehouses. The effective rental rate for the best premises remained stable in UAH, about 100-142 UAH sq.m. / month, and increased slightly in US dollars, due to the appreciation of the hryvnia, and thus amounted to $ 3.7- $ 5.2 sq.m / month at the end of the 1st quarter of 2019.
What awaits the warehouse market in Kiev?
The warehouse real estate market in Kiev and the Kiev region is predicting development. Rental rates will be changed, new warehouses will be built in Kiev.
“In the near future, demand is expected to grow due to the expansion of logistics companies, retailers and e-commerce companies. At the same time, about 100,000 sq.m. are expected. speculative offer announced for market entry in 2019-2020. In particular, it is planned to commission 3 phases of Unilogic Park (22,000 sq.m.), the Mirage 3 warehouse complex (9,000 sq.m.), as well as 2 phases of the Amtel Properties logistics complex (52,000 sq.m. ) until the end of this year, ”says Natalya Sokirko.
Given the current state of the market, it will be quite difficult to find a large warehouse space due to the low vacancy rate and the lack of high developer activity in this segment.
warehouse rental in Kiev
The effective rental rate for the best premises remained stable in UAH
“The volume of the new supply is likely to be quickly absorbed due to the shortage of warehouse space that has developed on the market. Thus, it is expected that both requested and effective rental rates in hryvnia will increase by the end of the year, as a result of a lack of supply on the market, with the possibility of an increase in the effective rental rate for the best premises in hryvnia by approx. 5% before the end of the year. Landlords of the best warehouse facilities on the market seek