| 2016-01-21 | Kyiv office tenant activity doubles
UKRAINE Office take-up in Kyiv in 2015 amounted to app. 174,000 sqm gla, twice as high as the figure for 2014, according to research by DTZ Ukraine.
At the same time net absorption, which reflects the real change in the amount of space occupied, reached around 88,000 sqm gla in 2015, which is more than four times higher compared to the figure in 2014. “Over the last year the dynamics of the Ukrainian office property market improved significantly. Company’s expansion needs resulted in many relocations. This trend reflects the improvement in business confidence in Ukraine. In terms of relocations, we noticed an increased interest from office occupiers in class ‘B’ properties, triggered by affordable rent levels rates and the high quality of such available space. As for class ‘A’ properties, major deals tended to be closed when their owners were able to demonstrate flexibility during the negotiations with key occupiers. In 2015, office demand in Kyiv was driven by companies operating in IT sector. However, diplomatic missions and FMCG companies also exhibited increased activity,” commented Levon Papoyan, the head of the office brokerage and consultancy at DTZ Ukraine.
Primary office vacancy in Kyiv varied between 23 pct and 24 pct during Q1-Q3 2015, decreasing to around 21.5 pct by the year-end. According to DTZ, the total office stock in Kyiv has now reached around 1.8 mln sqm with app. 70,000 sqm gla of offices delivered during 2015 – but only 45 pct of the new supply in 2014. This situation is unlikely to change in 2016, as only around 31,000 sqm gla of new office space is currently under construction in Kyiv and scheduled for delivery during 2016. “From H2 2016 and into 2017, the economic performance of Ukraine is generally expected to start improving with a resulting strengthening of occupier demand for offices in Kyiv and some upward pressure on rents,” states the report.