Office leasing activity stayed 31 per cent lower than in 2023 in the first quarter of 2024, according to research by commercial real estate consulting company CBRE. The level of warehouse leasing didn’t recover either, with take-up showing a fall of 21 per cent year-on-year.
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Enterprises signed only two office leasing deals in the beginning of 2024: a national agricultural company leased 4,200 square meters in the Eurasia Business Centre and Platforma Coworking leased 1,700 sqm in the Platforma Business Centre; both premises are located in Kyiv’s city center.
Leaders in leasing activity are cooperatives, public sector and agricultural enterprises, CBRE research showed. “After February 2022, non-profit organizations are slowly becoming more active in searching for office premises – this is a trend that was unknown before Russia’s full-scale invasion”, Director of Capital Markets at CBRE Ukraine Yaroslav Horbushko told Kyiv Post.
The effective prime rent level continued to show a downward trend in 2024, motivating companies to explore opportunities of relocating to more luxurious offices. Unable to lease some properties before the war, companies are asking real estate agents to find new office buildings constructed between 2020-2022, according to CBRE’s observations.
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The totals of available office stock in Kyiv were unchanged and amounted to 2,22 million square meters. Still, CBRE forecasts enterprises will slowly increase the demand for leasing closer to the end of the year, depending on the security situation. “A mass market war insurance product will also make companies feel more confident to sign deals,” Horbushko told Kyiv Post.
Wholesale & Retail Sectors Dominate Warehouse Leasing
The Warehousing segment recorded no new deals and no new construction projects completed in Q1 2024, according to CBRE research. Renters represented the wholesale, retail, healthcare and pharmaceuticals sectors.
The total competitive stock remained unchanged at 1.41 million square meters by the end of March 2024. The same can be said about the prime rent dynamics, which stayed around $4,9 a month per square meter – lower than in pre-war years.
CBRE forecasts a slow rise in optimism with the warehouse segment ever more dependent on Ukraine’s air-defense capability.
Russia often targets warehouses and has already destroyed a production facility and warehouses belonging to the Ukrainian tactical clothing manufacturer M-TAC, private mail delivery company Nova Poshta’s mail depot in Kharkiv and its warehouse in Odesa, production facilities of the Factor Druk Printing House, and a warehouse of Ukraine biggest e-commerce platform Rozetka.
Entrepreneurs are now looking for solutions on how to make the warehouses less vulnerable to Russian missile attacks, splitting gigantic warehouses into smaller ones and building shelters for its employees.
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