The volume of supply of A & B class warehouse properties in Kiev continued to grow despite all the turmoil, and by the end of July it was about 950,000 sq.m.
Since the end of last year 2 warehouse properties were commissioned: 100, 000 sq.m. in Brovary for one of the biggest Ukrainian retailer and 7, 000 sq.m. in Borshchagivka – for the open market.
The vacancy rate on the market during 2013 fell from 15% to 8% by the end of the year. After more than 100 000 sq.m. of new warehouse space entered the market, the redistribution of space has taken place among tenants in the segment of Ukrainian retail:
- One of them vacated 50, 000 sq.m. in 2 warehouse complexes, having moved into new warehouse in Brovary
- Another one expanded its warehouse space in Kalynivka, having occupied additional 30 000 sq.m.
- The third one vacated 18 000 sq.m. in Boryspil region and consolidated its supplies in Krasylivka
- Retail chain of shops for children and large confectionary company made a decision to move to premises of higher class
Logistic operators also showed activity:
- One of them has already increased its existing warehouse space to about 20, 000 sq.m.
- Another one finishes the construction of a property of similar size
Due to the events in the country, the interest to Kiev warehouse market notably increased from the companies from Crimea and east of Ukraine. However, these companies are rarely prepared to pay the market rental rate for premises of class A and B in Kiev.
Certain rotation of warehouse space can be observed in the pharmaceutical market.
As a result of all the above-mentioned moves the vacancy rate on the market stabilized at the level of about 10%. About 65 000 sq.m. in the premises of class A and 30 000 sq.m. in the premises of class B. Also, the vacancy rate on the left bank is higher than on the right.
As any commissioning of large warehouse complexes is not expected in the nearest future, the vacancy level has a tendency to decrease.
Rental rates in professional warehouse premises are at the level of $5 -$7 per sq.m. net of VAT. Rental rates in USD currency did not change compared to last year. But as some owners are ready to agree on the rental rates fixed in UAH at the exchange rate which is below market, the factual rates fell slightly.
The substantial increase of rental rates next year can hardly be expected, as the main players have signed the contracts for longer periods than one year. Therefore the increase in rates is possible in case of reduction of vacancy level can affect primarily vacant or soon to be vacant premises. In this case the contracts which have been signed earlier will restrain the possible growth of rental rates.