Business news from Ukraine

FOUR SHOPPING CENTERS TO BE SCHEDULED IN LVIV BY LATE 2021

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).

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TWO SHOPPING CENTERS TO BE OPENED IN CHERNIVTSI

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.

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VACANCY OF SHOPPING CENTERS IN KYIV FALLS TO 2.8% IN Q1

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.

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SHARE OF VACANT SPACE IN KYIV’S SHOPPING CENTERS STABILIZED AT 3.7%

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.

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FOXTROT GROUP SEEKS TO EXPAND PORTFOLIO OF SHOPPING CENTERS IN UKRAINE

Depot Development Group from the Foxtrot Group (Kyiv), developing the Depo’t shopping centers chain in Ukraine, plans to expand the portfolio of retail property in Ukrainian regions via acquisition of finished facilities and building new ones, Foxtrot Group Head Valeriy Makovetsky has said.
“We have several construction projects and a number of projects for expanding/restyling existing facilities,” Makovetsky said in an exclusive interview with Interfax-Ukraine.
At the same time, he said that the group does not plan to build a shopping center in Kyiv, since this is a specific market “with a long and not very high return on invested capital.”
“We have another strategy: construction of commercial real estate in the regions of Ukraine. We are trying to acquire completed and, from our point of view, liquid, small facilities. Next year [2019] we have planned the construction of a good facility in the center of Chernihiv. We are currently developing a restyling project of our facility in Kryvy Rih. We are attaching a sports complex with a swimming pool for the Sportlife network. We are planning to reformat the shopping center in Zaporizhia, to expand our shopping center in the center of Kropyvnytsky. Maybe, we will take part as partners in one of the Kharkiv facilities,” Makovetsky said, describing the plans.
According to him, these will be small regional-scale shopping centers, the total area of each of them will be about 10,000-15,000 square meters.
As Makovetsky said, Depo’t shopping centers show good performance, so the issue of selling them is not on the agenda.
“This business demonstrates good efficiency. The facilities stably show profits. Rental rates this year have grown by about 30%. Therefore, we plan to develop this area of business and the issue of selling them is not on the agenda,” the head of the Foxtrot Group said.

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