Office Space, Kyiv
In Q1 2020, new supply on the office property market in Kyiv amounted to around 7,500 sq m GLA, which is only 15% of the figure for Q1 2019 and around 50% of the figure of Q1 2018. The office building ‘Nyvky City’ developed via reconstruction was the only property delivered in Q1 2020. As of early April 2020 over 200,000 sq m GLA of new office space was scheduled for completion by the year-end, however the evolving economic slowdown, in Ukraine and globally, is likely to result in a downward correction of the actual new supply in the sector during the following 9 months.
In Q1 2020, occupier demand was very low with take-up estimated at approximately 7,900 sq m, being around 80% less than the figures in the respective quarter in 2019 and 2018, while net absorption reached only around 3,000 sq m. During first quarter of the year transactional dynamics on the office property market in Kyiv is traditionally lower compared to other three quarters, but in 2020 amid the spread of COVID-19 many deals planned for March were temporarily put on hold and postponed till after the quarantine.
Industrial Property, Kyiv
Following the trend of the previous several years, overall development activity in the warehousing and logistics property sector in the Greater Kyiv area remained low with no new deliveries in Q1 2020. As of early April 2020, Cushman & Wakefield projects that two warehousing and logistics properties of cumulative area around 60,000 sq m are scheduled for commissioning during the following three quarters of the year.
Take-up in the warehousing and logistics property sector in the Greater Kyiv area reached around 28,800 sq m in Q1 2020, which exceeded by around 15% the figure for Q1 2019 and doubled compared to Q1 2017, but it was by 35% less than take-up in Q1 2018. Significantly, pre-leases formed around 85% of all lease transactions signed in Q1 2020.
Cushman & Wakefield estimates that net absorption in the sector was negative and amounted to around (-40,800) sq m, being attributable to a change in leasing strategy of the landlords of several properties and partial vacation of a previously owner-occupied warehousing facility prior to the spread COVID-19. Though in March 2020 several lease transactions were postponed till after the quarantine, occupier dynamics in the Greater Kyiv area remained generally stable during the most of Q1 2020.