WR Group plans to open five shopping centers in Drogobych, Truskavets and Lviv in 2023, company founder Petr Punyak said.
“We are developing the format of shopping centers in small towns. We plan to build five shopping centers this year, including in cities with a population of 100 thousand people. People travel less to regional centers because of expensive gasoline and roadblocks, so the flow of visitors to shopping centers in small towns has increased significantly,” he said at the workshop “The Retail Real Estate Market at War”.
So, in June 2023 the company intends to open two shopping centers in Drogobych and Truskavets.
The area of the Park Shopping Center in Drogobych will be 11.8 thousand square meters (10 thousand square meters of retail space), the tenants include Silpo, Jysk, Luxoptika, Master Zoo, Allo and Prostor. The vacancy rate of retail premises today is about 20%.
The area of SC “Vector” in Truskavets is 8,4 thousand square meters (7 thousand square meters of retail area), among tenants are “Silpo”, “Allo”, Rozetka, MOYO and others.
The other three complexes will be opened in Lviv, now there is an active work, said Punyak.
In 2022, WR Group has opened shopping centers Fabrik (26 thousand square meters), Maidan (22 thousand square meters) and LAZ-695 (12 thousand square meters) in Lviv.
“About $ 60 million we have invested in three shopping centers in 2022. If we talk about this year, we also invested about $50-60 million in three shopping centers,” – Punyak told Interfax-Ukraine, specifying that his company is working with a group of investors and real estate management.
Next year the company is planning to focus on opening 3-5 thousand sq.m. shopping malls in small towns with up to 30 thousand people.
WR Group is a diversified real estate company. The company’s portfolio has eight completed projects, 107.3 thousand square meters of commercial and 57.6 thousand square meters of office space. Seven more complexes with a total area of 131.5 thousand square meters are under development and construction.
The retail real estate market has not halted its development under war conditions, the opening of seven shopping centers in 2023 has been announced, as Director of Ukrainian Trade Guild (UTG) Eugenia Loktionova said to the Interfax-Ukraine news agency.
The expert noted that after February 24, 2022 all operators of commercial real estate market have revised their business plans.
At the beginning of 2022, about 20 shopping centers announced their imminent opening. For example, three malls were planned to be opened in Kyiv, Odesa and Khmelnytskyi, and one in Kharkiv, Ivano-Frankivsk, Lviv, Ternopil, Rivne, Uzhgorod and Zhytomyr.
In fact, only nine shopping centers were opened in 2022. The largest in Lviv and the region: Fabrik, Epicenter, Laz-695, Maidan, and Dom Interieri. Also opened MFC Lake Plaza in Kiev, MFC Pannonia in Uzhgorod, Happy Mall in Rivne and MFC Prut in Kolomyia, Ivano-Frankivsk region.
“The others, even those already ready for launch, postponed the opening date. Among the risks of launching the mall in today’s conditions, first of all, is the possibility of missile attacks and destruction due to military action. Then we need to consider the work with virtually minimal rental income, because almost all the shopping centers, except for those that are located in the western part of the country, due to migration of the population, most of the visitors were missed” – said Ms. Loktionova.
But at the same time, according to the head of UTG, even in conditions of military operations in areas where there is no hot phase and no risk to life of visitors and employees, it is necessary to open the shopping mall.
The expert notes that in the near future, due to the activity of military operations, launches of new shopping malls should not be expected in the eastern and northeastern regions of the country.
“It is clear that developers have no possibility to plan anything, if every day cities can be under shelling and the threat of rocket attacks. That’s why development in the retail real estate sector correlates with the map of military operations. But after the end of hostilities our country should quickly revive and become even better,” she explained.
At the same time, she said, has retained, and sometimes even increased the activity of retail real estate developers in western Ukraine, especially in cities such as Lutsk, Ivano-Frankivsk, Lviv, Chernivtsi, as well as in the border town of Izmail.
According to Loktionova, shopping center “Odis” is planned to be launched in Ismail in April this year, its leasable area (GLA) is 2 thousand square meters, total (GBA) is 2,5 thousand square meters.
At the end of 2023 REC “Pokrovsky” in Izmail (GLA 4,5 thousand sq.m., GBA 5,3 thousand sq.m.) and a large-scale project of Planeta Mall in Kharkov (GLA 70 thousand sq.m., GBA 110 thousand sq.m.) are expected to be launched.
The opening of Aquarelle and Mercury shopping centers, the second phase of Veles shopping center in Ivano-Frankivsk, Temp shopping center in Khmelnitsky, Vector shopping center in Truskavets and Park shopping center in Drohobych, Lviv region is also announced for 2023.
At the same time the opening of shopping and entertainment center White Lines in Kiev (GLA 27 thousand sq. m, GBA 40 thousand sq. m) is postponed for the next year 2024. The opening of Proskyrov Plaza Shopping and Entertainment Centre (Khmelnitsky) and Brigantina Shopping and Entertainment Centre (Vinnitsa) is announced for the end of 2024.
“Now, as we forecasted earlier, the most popular formats are small shopping centers of regional format with the area of 10-15 thousand square meters. Exactly such objects showed themselves to be the most stable at the moment. As for the chances of realization of the previously announced large-scale projects in the capital, there will be no changes before the end of the war”, – Ms. Loktionova said.
As for tenants, the ratio of system and local players depends on the region and the size of the project, she said.
“If the mall is located in a city with a large number of potential visitors, has a substantial area that meets the requirements of the system players, then in such objects their share will be higher than in smaller shopping centers (where local players used to prevail). However, now the issue of security (as much as possible in the current environment) of the location has come to the forefront.
Therefore, many system players have begun to consider proposals to locate in shopping centers in Western areas, which are smaller in scale in comparison with those built in cities with a population of millions”, – said Ms. Loktionova.
UTG was founded in 2001. Has developed more than 1300 concepts of real estate. Over the years, with the participation of the company leased 4.7 million square meters of commercial space in Ukraine.
227 out of 320 shopping centers in Ukraine have resumed their work, the press service of the Ukrainian Council of Shopping Centers (USTC) told Interfax-Ukraine.
According to a study by the USTTS conducted in early June, in general, work has been resumed on 4.12 million square meters of leased space. m, which is 72% of all retail space, including shopping centers located in the temporarily occupied territory.
14% of retail space (804,000 sq. m.) remains idle, a significant part of which is damaged. At the same time, some damaged shopping centers have already partially or completely resumed work, for example, Lavina Mall (Kyiv), Retail Park (Kyiv region), Nikolsky (Kharkiv) and others.
According to the USTTS, the largest part of non-working shopping centers is recorded in the east of the country. Here, only 12% of retail space receives visitors, 42% do not work and 46% are located in the occupied territory.
Less than half of the retail space operates in the south (45%). In the capital, 11% of retail space in the shopping center remains closed. Almost all shopping centers operate in the north, west and center of Ukraine.
Established in 2020, the USTC is a non-profit organization that unites key participants in the retail real estate market: owners and developers of shopping centers, as well as companies involved in the construction and maintenance of shopping malls.
Budhouse Group’s shopping centers were visited by 28.6 million people in 2021, which is 50% more than in 2020, the developer’s press service reported.
Such a significant increase is explained, first of all, by the opening of Kharkiv shopping center Nikolsky in May 2021. If we compare the attendance of other operating shopping centers, then there is also a gradual recovery of traffic after a fall in 2020 – a 13.1% increase. But none of the company’s shopping centers has yet reached the level of 2019, which is explained by quarantine restrictions, which also took place in 2021.
On average, as reported by the press service, there were 552 visitors per 1,000 square meters of the mall area. According to the company’s research, on average, visitors visit Budhouse Group’s shopping centers seven times a month and spend 73 minutes in them per visit. This is about the same as in 2020, and 16% less than in 2019, due to the restriction of the entertainment and catering sector.
The total turnover of Budhouse Group’s shopping centers in 2021, taking into account the new Nikolsky shopping and entertainment center, amounted to about UAH 10.4 billion. The turnover of Budhouse Group’s shopping centers in hryvnia equivalent in 2021 increased by 22% compared to 2020 and by 13% compared to 2019. In euros/dollars, the turnover of the company’s facilities reached the level of 2019 and even slightly exceeded it. The largest growth in turnover was observed in the Forum Lviv shopping center (27%).
The average vacancy in Budhouse Group’s shopping centers in 2021 was about 0.8% (0.6% in 2020). The minimum vacancy was recorded in the Forum Lviv shopping center and the Lubava shopping center (0.4-0.5%).
The rotation of tenants has decreased compared to 2020. In just a year, 19 new lease agreements with a total area of 3,600 square meters were signed in the existing shopping centers. For comparison: in 2020, some 30 new contracts were signed for a total area of more than 6,500 square meters.
Budhouse Group is a full cycle company engaged in investment, development and management of sustainable real estate assets. Since 2009, the company has opened four shopping centers: Fabrika shopping center (Kherson), Lubava shopping center (Cherkasy), Forum shopping center (Lviv), Nikolsky shopping center (Kharkiv) and Khortitsa Palace hotel (Zaporizhia). There are two projects at the implementation stage – Yessa shopping center (Odesa) and Khortitsa Mall shopping center (Zaporizhia).
The attendance of shopping centers is recovering, and although it has not yet reached the pre-quarantine level of 2019, it is higher than 2020 in the periods that are relevant to compare, CEO of the development company Arricano Anna Chubotina said at the Current Real Estate Trends forum on Wednesday.
“There are objects in our portfolio that showed an increase in attendance last year. We are talking about district centers. At the same time, the conversion is growing, which indicates that our visitors come for a targeted purchase,” Chubotina said.
The expert also noted the growth trend of certain categories. “It is about sports goods, household goods and clothing brands,” she said.
Talking about the situation during the first and subsequent lockdowns, the expert noted that the market quickly developed new rules for interaction between players, consumers and authorities. “As a result, all stakeholders of the shopping centers were able to come to an agreement, taking into account the interests of different parties. During this period, the primary task for our company was to ensure financial stability,” the expert said.
According to her, thanks to the measures taken to optimize costs, Arricano has reduced this figure by 17% year-over-year. The drop in revenues was 13% in U.S. dollars. At the same time, the expert noted that the result was mainly influenced by the discounts provided to tenants during the periods of restricting the operation of the shopping and entertainment centers.
The CEO added that the company was looking for an individual approach to each tenant. “We discussed its market stability, model and drivers, long-term cooperation and the dynamics of category development in retail,” Chubotina said.
Arricano Real Estate Plc specializes in the construction of shopping and entertainment centers. It is one of the leading developers on the Ukrainian real estate market.
Budhouse Group investment and development group of companies (BHG, Kyiv) in 2020 reduced the turnover in its shopping and entertainment centers Fabrika (Kherson), Liubava (Cherkasy) and Forum Lviv (Lviv) by 11%, while in 2019 the increase was 12.8%, the company’s press service said on Thursday.
“Compared to 2020, the turnover of shopping centers in hryvnias has significantly decreased. If in 2018 the average growth was 23.3%, and in 2019 it amounted to 12.8%, then in 2020, for obvious reasons, this figure decreased by 11%. The total turnover of Budhouse Group shopping centers in 2020 amounted to about UAH 6.8 billion,” the developer’s press service said.
According to it, the smallest drop in trade turnover (by 2.6%) was recorded in the Liubava shopping and entertainment center.
According to the group, traffic to shopping centers in 2020 decreased by 28% compared to the previous year, to 19.4 million people. In addition, visitors spent 16% less time in the malls due to restrictions on the operation of entertainment zones.
The average vacancy rate for the group’s malls was 0.6% over the year, with the lowest rate (0.3%) recorded in the Forum Lviv mall. The company also signed 30 new lease agreements for premises with a total area of 6,500 square meters versus 40 contracts for 3,100 square meters in 2019.
The rotation of tenants decreased compared to 2019 and was mainly due to the difficult economic situation. The largest transactions were concluded with LC Waikiki and Budynok Ihrashok in the Liubava shopping and entertainment center.
Budhouse Group LLC was established in 2006. It is the owner and developer of commercial, office, hotel and residential real estate in Kyiv, Lviv, Cherkasy, Kherson, Odesa, Kharkiv, and Zaporizhia.
The charter capital is UAH 95.1 million.
