Rental rates in the market of commercial space as part of residential complexes in Ukraine have almost reached the pre-war level, but only in hryvnia equivalent, market experts say.
“Rental rates in 2022 sagged by 30-40%, but since the middle of 2023 a gradual stabilization began. Today the rates are close to pre-war indicators, especially in densely populated areas,” Ramil Mehdiyev, CEO of the development company ENSO, told Interfax-Ukraine.
According to him, the company maintains flexibility of conditions for tenants. For example, there is a possibility of lease with the right to buy out the premises, individual approach to the payment schedule in the first months of business, in particular, the introduction of rent “vacations” for the first months.
Mehdiyev noted that the company reserves 20-30% of commercial space for further management or lease to fill the LCD with necessary services. For the rest of the premises there may be restrictions fixed in the contract, for example, a ban on opening nightclubs, pawnshops or establishments with harmful emissions.
A similar approach is practiced by KAN Development, its press service reported. Thus, the developer leases a certain share of premises to ensure the availability of key services – medical services, pharmacies, grocery stores. Agreements also fix restrictions for types of business, for example, a ban on noisy activities.
More recently, lease agreements are also often supplemented with special clauses that regulate relationships not during power outages or reimbursement of alternative energy costs, said Avalon Chief Operating Officer Jaroslaw Wozniak.
In general, rental rates for commercial lots in the residential complexes depend significantly on the specific object, its location, traffic and functionality, said commercial director of Intergal-Bud Anna Laevskaya. According to her, “Intergal-Bud” leaves in its own rental fund premises with a payback period of up to 12 years.
“In residential complexes with high occupancy the price may be even higher, because the flow of people and cars there is very large,” she explained.
About 50% of commercial premises in Perfect Group’s residential complexes remain in the developer’s ownership, said Alexey Koval, the company’s project manager. At the same time the share may vary depending on a particular residential complex and its location.
He emphasized that although now there are no “anti-crisis” discounts, which were offered to tenants at the beginning of the full-scale invasion, the developer still provides loyal rates for the first year of rent with a gradual increase in subsequent years, which is fixed in the contract.
According to Alexander Gorlach, founder of TKN-Consulting, rental rates were as high as 70% of pre-war levels at the end of 2024.
“In fact, rates have now almost recovered in hryvnia, but not in currency. However, commercial real estate in newly settled residential complexes is the most predictable investment. As of the end of 2024 the rates at some landlords were up to 70% of pre-war rates”, – he commented to the agency ‘Interfax-Ukraine’.
According to him, now the rates for commercial premises in the LCD are 800-1.5 thousand UAH/sq. m/month for the most popular format – premises up to 60 sq. m. with active traffic. Premises with inconvenient layout, stairs, low traffic are rented cheaper, for 200-500 UAH/sq. m/month.
The expert noted that today the most active solvent tenants are pharmacy chains and food direction (cafes, pizzerias, etc.), which choose lots with the area of 40-50 square meters. m.
At the same time, some development companies, in particular Alliance Novobud, do not lease commercial premises, but sell them completely.
“We do not lease commercial premises, but sell them. The owners of the space make their own decision on what exactly to do. Usually they study the already available business infrastructure, weigh their possibilities, studying supply and demand,” said Irina Mikhaleva, CMO of Alliance Novobud.
In the first half of 2021, in the commercial real estate market of Ukraine, there was a decrease in rental rates for office premises by an average of 0.8%, for retail space – by 10%, at the same time, rent of warehouse premises grew by an average of 3.1%, Director General of the group of companies Uvecon Volodymyr Shalaev has told Interfax-Ukraine.
“Social and economic uncertainty, as well as uncertainty with the further course of the pandemic left their mark on the situation on the commercial real estate market. Prices jumped or sank from one month to another, but one could trace the general trend towards a moderate increase in prices after the next dive,” he said.
As for the facilities put up for sale, in H1 2021 all over the country, offices have risen in price by an average of 8.4%, the cost of premises for retail has decreased by 7.5%, the cost of warehouse premises has increased in price by 8.6%.
Based on the research of Uvecon, the expert said that in the country as a whole H1 2021 there was a decrease in the prices of both rent and sales of retail and office real estate, but in the largest cities the dynamics was somewhat different.
According to Shalaev, the cost of retail space in Kyiv has remained almost unchanged: the rise in prices is an average of 0.4%, to $2,381.4 per square meter, rent increased by 1.3%, to $24 per square meter.
In Dnipro, retail space has risen in price by an average of 7.3% to $1,051.4 per square meter, rent has increased in price by 7% to $15.2 per square meter.
In Odesa, Kharkiv and Lviv, there was a decrease in the value of retail real estate by 24.6% (to $1,184.2 per square meter), 9.5% (to $1,050.3 per square meter) and 6.7% (to $1,464 per square meter) respectively.
At the same time, the average rental rates for retail premises grew in Odesa (by 22.8% to $18.3 per square meter) and in Lviv (by 1.7% to $17.6 per square meter), and in Kharkiv decreased by 8.1% to $15.9 per square meter.
Office real estate grew in major cities, both for sale and for lease, demonstrating a recovery in economic activity.
In Kyiv, in H1 2021, the cost of offices increased by an average of 18.4% to $2,269.5 per square meter, rent increased by 13.3% to $18.7 per square meter.
In Lviv, there was the most significant increase in average selling prices – by 28.7%, to $1,209.9 per square meter, rent rose by 8.1%, to $9.3 per square meter.
In Odesa, the price increase was 13%, to $1,162.8 per square meter, rent increased slightly – 2.8%, to $11 per square meter.
In Kharkiv, the average prices for office space rose by 15.4%, to $1,016.1 per square meter, rent increased by 9%, to $9.7 per square meter, in Dnipro – sale by 13.9%, to $962.9 per square meter, rent – by 3.6%, to $8.7 per square meter.
Shalaev drew attention to the fact that the largest price hike was in the segment of warehouse premises. So, according to him, warehouses in Lviv grew most of all – by 39.6%, to $342.7 per square meter, and rental rates grew by 10.5%, to $4.2 per square meter.
In Kyiv, warehouse real estate grew in price by 30.8%, to $552.7 per square meter, rental rates increased by 8.3%, to $5.2 per square meter, in Dnipro – an increase of 29.5%, to $186.8 per square meter, rent increased by 26.9%, to $3.3 per square meter.
“In Kharkiv, the growth in prices for warehouses was more moderate and in the first six months of this year amounted to only 6.7%, to $204.9 per square meter. Rent increased by 24.1%, to $3.6 per square meter. In Odesa, the cost of this property remained unchanged at $229.6 per square meter, and the rent increased by 8.8%, to $3.7 per square meter,” the expert said.
The maximum rental rates in shopping centers in Kyiv in the second quarter of 2018 grew by 12% and exceeded $95 per square meter a month, which is comparable to the rent rates in the pre-crisis period of 2010-2013, the press service of Jones Lang LaSalle consulting company (JLL) in Ukraine has said. “The maximum rental rates have almost reached the pre-crisis level of 2010-2013. The significant increase is due to a limited supply. New brands are trying to open their stores in the most successful facilities, however, it is not easy to find necessary space in such shopping centers,” JLL Retail Space Department Manager Yekateryna Vesna said.
According to JLL, four new international brands (Turkish Koton and DeFacto, Spanish Zara Home, Swedish Livly) entered the Kyiv market during this period, while a number of operators expanded their network (Under Armor, Lush, L’Occitane, Reserved). At the same time, with such an increase in demand, the new supply amounted to only 15,000 square meters (the Smart Plaza Polytech shopping center).
The share of vacant space in the second quarter decreased by 0.3 percentage points in comparison with the first quarter, to 4.2%. According to the forecast of JLL analysts, in the second half of the year the vacancy will continue to decrease and by the end of the year will reach 3.5%. Jones Lang LaSalle provides financial and comprehensive professional services in the field of real estate.
