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.
The losses of Ukrainian shopping and shopping and entertainment centers (malls) due to the government’s imposition of weekend quarantine during Black Friday ranged from 30% to 40% of turnover, the Ukrainian Council of Shopping Centers and the Epicenter K trading network reported to Interfax-Ukraine.
“Due to the introduction of weekend quarantine, the Epicenter network was visited by 750,000 buyers less than last year, and the losses amounted to about UAH 1 billion. The company planned to use this amount of funds to invest in the Ukrainian economy,” the press service of the Epicenter K told the agency.
The drop in turnover in Ukrainian shopping and entertainment centers during the weekend quarantine period amounted to 30-40%, the Ukrainian Council of Shopping Centers reported.
“We expected that the losses would amount to at least 12 billion per month, but in fact, the weekend flows were partially offset by the growth of flows on Friday, Monday and Tuesday. These days, the flow increased by 10-20%, and the quarantine itself lasted three weeks. As a result, according to our calculations, losses amounted to UAH 6-7 billion in three weeks,” the Council noted.
The Epicenter company stressed that the biggest blow to retail was the ban on trade at weekends after Black Friday, when consumers traditionally plan to buy gifts for the New Year. In particular, this year, due to the weekend quarantine, online sales during the Black Friday period decreased by 30% compared to the same period in 2019.
“The stoppage of trade during the period of the greatest consumer demand has significantly reduced the purchasing power of the population, hit domestic producers and will lead to a decrease in tax payments to the budget,” Deputy Director General, Director of Retail Trade of Epicenter K LLC Volodymyr Honcharov is quoted in the comment.
He added that the network cooperates with 5,000 suppliers, most of which are Ukrainian producers.
“Some of them have already announced the forced reduction or even curtailment of production due to financial problems associated with the lack of sources of sale of goods. In addition, the reduction of tax payments to the budgets of all levels will deal a significant blow to the financial support of local communities, especially in small settlements,” he beleives.
Average vacancy of shopping centers in Lviv by the middle of 2019 was 2.9%, and by late 2021 it is planned that total supply of retail space would expand by 34,600 square meters thanks to the launch of four new shopping centers, UTG consulting company (Kyiv) has reported. “As of the end of the first half of 2019, there is a shortage of commercial premises in the amount of about 24,700 square meters. In the case of the implementation and commissioning of the announced promising projects in the market, there may be a surplus that will inevitably entail overflow of tenants from obsolete facilities that are losing popularity, as well as will have an impact on the growth of vacancy and the correction of rental rates downwards,” UTG analyst Oksana Havrylevych told Interfax-Ukraine.
According to her, in 2019-2021, shopping centers with a total leasable area of 35,600 square meters are declared to open, in particular: on July 25, 2019, the opening of Vernissage shopping center (1, Shevska Street, GLA is 1,000 sq. m), the Arsen shopping and entertainment center (60, Chervonoi Kalyny Avenue, GLA is 24,800 sq. m.), the Kinescope shopping center (Heroyiv UPA Street, GLA is 8,600 sq. m.), as well as a shopping and office center 11, Hospitalna Street (GLA is 1,300 sq. m.).
According to UTG estimates, by the end of the first half of 2019, two regional, six district, 16 microdistrict, 11 specialized shopping centers and 11 detached supermarkets and hypermarkets were operating in Lviv.
According to the ICSC classification, the total area of the city’s retail facilities is 390,200 square meters., which corresponds to 528,400 square meters per 1,000 inhabitants or 2,200 0 square meters per square kilometer of the total area of the city (excluding small shops, street retail, city markets, detached super- and hypermarkets).
Average vacancy of shopping centers in Chernivtsi is growing, and in May it reached 11.2%. By the end of 2022, it is planned that total supply of retail space would expand by 47,500 square meters thanks to the opening of two new shopping and entertainment centers, UTG consulting company (Kyiv) has reported.
“In 2021-2022, the opening of the Maidan-2 shopping center (12, Independence Avenue, gross lettable area (GLA) is 38,500 square meters) and another shopping and entertainment center in Heroyiv Maidanu Street (GLA – 9,100 square meters) is planned. In general, most of the existing and leading shopping centers opened in 2004-2014 are now morally and physically outdated. Despite the high level of supply of retail space, the main urban shopping center has not yet appeared in Chernivtsi,” UTG analyst Oksana Gavrilevich told Interfax-Ukraine.
At the same time, according to UTG, the deadlines for opening the Riazan shopping center (56, Heroyiv Maidanu Street, GLA is 3,500 square meters), the Furshet shopping and entertainment center located at 11, Galytsky Shiakh Street (GLA – 18,900 square meters) are postponed for an unlimited period of time.
“By the beginning of May in Chernivtsi there is a surplus of retail premises in the amount of 2,800 0 square meters. In case of enhancing construction activity and timely commissioning of the declared facilities, the surplus will increase to 50,500 square meters, which will inevitably lead to overflow of visitors and tenants to more successful and modern shopping centers, an increase in vacancy and a review of rentals downwards, especially in morally and technically obsolete non-professional facilities,” Gavrilevich said.
According to UTG estimates, at the beginning of May 2019, five district, two residential district and nine specialized shopping centers and three detached supermarkets and a hypermarket were operating in Chernivtsi.
According to the ICSC classification, the total area of the city’s retail facilities is 122,900 square meters, which corresponds to 464.2 square meters per 1,000 inhabitants or 808.3 square meters per square km of total area of Chernivtsi.
The maximum rental rates are typical for shopping centers in the suburban districts of the city and are $11-26 per square meter a month. Minimum rental rates are fixed in the shopping center, remote from the city center or specialized ones and they are $8-12 per square meter a month, the expert said.
The share of vacant space on the shopping centers market in Kyiv in January-March 2019 fell by 0.2 percentage points, to 2.8%, according to a study of CBRE Ukraine (Kyiv). “Despite the commissioning of new facilities, the average vacancy rate decreased by 0.2 percentage points from the beginning of the year and amounted to 2.8% of vacant premises,” the company said in the study.
According to the company, in January-March this year, rents for the best retail premises increased 7-16% and ranged from $80-110 per sq. m. a month. At the same time for other retail premises, the rates remained unchanged, at around $42-60 per sq. m. a month.
The volume of retail turnover in Kyiv in January-February 2019 (the latest available data) increased 6.9%, with a slowdown in consumer price index growth from 8.8% in February to 8.6% in March.
During this period new brands entered the retail real estate market, including Decathlon in Retail Park Petrivka, Claudie Pierlot and Weill in the shopping center Gulliver and Missha in the shopping center Lavina Mall. A new supply of shopping centers was presented by the Oasis shopping center and the Smart Plaza Obolon shopping center, which led to an increase in the total supply by 2.1%, to 1.13 million sq.m.
The share of vacant space in the market of shopping centers in Kyiv in the fourth quarter of 2018 for the first time in the last two years has stabilized at 3.7%, the press service of Jones Lang LaSalle (JLL) consulting company in Ukraine has said.
“The cessation of decline in the vacancy rate is due to the achievement of a temporary equilibrium in the market of shopping centers in Kyiv. After a significant increase in the first half of the year (by 20%) to almost the pre-crisis level of $1,140 per sq m a year, rental rates have also stabilized,” Yekateryna Vesna, the head of the retail space department at JLL (Ukraine), said.
According to the company, over the year the vacancy rate in the capital market decreased by 1.9 percentage points and amounted to 3.7%.
“At the same time, in comparison with other European capitals, rental rates in Kyiv remain relatively low: for example, the maximum rental rate in Warsaw is higher by 55%, in Prague by 80%. The relatively low cost of premises together with the growth of public purchasing power contributed to sustainable demand from international retailers in the Ukrainian market. This was also supported by the desire of lessors to increase the presence of well-known global brands in their facilities,” the expert said.
