The office market is expected a shortage of high-quality facilities and reduction of the flexibility of landlords. Developers are advised to intensify their activities.
Unlike 2016, which on the office market, the experts noted only the positive signals of improvement, 2017 demonstrated more solid indicators of recovery in demand for office space. "An important trend is the desire of the tenants to not only move to new offices but also to expand the footprint. This speaks to the fundamental recovery in demand due to employment growth", - said Radomir Turcan, managing partner of CBRE Ukraine.
Another indicator of activity in the segment, and the restoration of investor interest in office properties. The previous year was characterized by a number of transactions for the purchase of office buildings both investors and end users. Growing investor interest in the best assets and the possibility of creating an additional value of the object, such as redevelopment (reconstruction) and improve the efficiency of management. This trend in Ukraine CBRE attributed to the fact that the capital value of office properties has stabilized, and the gap between the price a potential buyer and seller began to decline.
Investment transactions in the office sector dominated total investment volume in 2017 and amounted to about 75% of the total volume of investment transactions. Among the large transactions, it is worth noting the acquisition of business centers Prime (gross leasable area or GLA - 9 m) and Eurasia (30 m) of the company Dragon Capital Investments Limited.
"And yet developers are reticent towards new projects. In the last three years, the input volume of class A space continues to decline. Therefore, the selection of the most quality premises, particularly for large tenants, it is becoming less", - said Radomir Turcan.
Last year the amount of new office space amounted to about 31.5 thousand sq. m. Lion's share of new deals amounted to the class A - BC Organic Astarta Business Centre (GLA - 28,8 thousand sqm), the class was expanded BTS Forum Westside (2.8 thousand sqm), opened the new buildings of the business Park City Unit (4 thousand sqm). As a result, the total supply of office premises amounted to 1.7 million sqm, an increase of only 2% compared to the previous year.
Demand growth in combination with a low volume of new supply had a positive effect on the absorption of vacant space. During the year, the vacancy rate in the market has significantly decreased from 23% in January 2017 up to 16.5% in December. At the same time reducing the vacancy rate in business centers of classes A and b, leading to stabilization of rents is a prerequisite to its further growth. The loyalty of the landlords at the conclusion of transactions will decrease. "Already in office buildings with little vacancy is observed fewer flexibility landlords considerable concessions on the commercial terms, including free rental period, investment in finishing facilities, etc., in relation to the first half of 2017," - said Eugene Prudent, Director office property Department Colliers International (Ukraine).
According to CBRE Ukraine in 2017 rents for office space remained relatively stable. The highest possible effective rents remained at $23/sqm / month (excluding VAT and operating expenses). At the same time, the declared rate for class A premises increased by 10-20 and ranged from $16 to $35 per sqm per month.
First announced rates for class B facilities also were 10-40% higher compared to the end of 2016 and remained in the range of $10 to $24 per sqm per month. The effective rates, which have completed deals has remained at the same level - from $8 to $20 per sq m per month.
In the opinion of management of IFC Gulliver Lily Rsvo in Kiev as before will be enough of the limited new supply of quality office space. Because the construction of new space directly depends on the economic situation in the country and the lack of debt financing. CBRE Ukraine do not exclude that at preservation of the low volume of new construction and the lack of large-scale projects in the next year or two, you may experience lack of high-quality premises.
As in previous years, the most active consumers of high-quality office premises there are companies in the sphere of information technologies and telecommunications, a major Ukrainian financial and industrial group, foreign service and consulting company, agribusiness. The demand for high-quality coworking (approach to the organization of work of people with different employment in the common space) will continue to grow, the market will try to respond more quickly to the growing demand for flexible office solutions, actively introduce energy efficiency and green standards.
"Multinational companies will continue to make a decision about moving to better space at comparable or more favorable commercial terms," says Lily RSV. As before use the popularity of multifunctional complexes. "The business center can no longer lease the premises. Business center - this is a much more complex concept. It's the atmosphere, it's a lifestyle, it's the activity inside, ' she says. - That is, except for height, width and length, is its content. And the quality of the content and level of service provided by the company, BTS, depends on which company will be its tenants, will it stay, will feel comfortable and will be happy employees of the lessee. So, now we're talking about happiness as the criteria for the success of the business center".
"Now is still favorable for tenants and buyers, since you can still find high-quality spaces/facilities at reasonable rates/prices," - said Eugene Reasonable. Further, she said, the vacancy rate will decline, given that the number of construction projects remains relatively low, and cycle construction is on average two years. "In such circumstances, for developers it would be advisable to intensify their activities", - the expert believes.
According to Yulia Happy, Director of TEK Energoinvest, developer and management company ASTARTA Organic Business Centre in 2017 the office market has recovered momentum, according to our forecasts, will continue in 2018. the Company is not only looking toward relocation of offices, but expand new offices. This applies to the IT, agro and pharmaceutical sectors that are currently most active in Ukraine.
Competition among business centers is high. But at the same time, there is the interest of tenants to new high - quality properties with developed infrastructure, energy efficient technologies. Proof of this is filling 80% of the first and second BTS ASTARTA Organic Business Centre immediately after the opening and the interest of tenants to the third phase which is planned to open in autumn 2018
In 2018 will continue the trend of moving companies in office buildings with the widest range of additional services. It refers to the engineering systems of the building infrastructure. For example, are popular BC ASTARTA, built on the principle "city within a city". They have everything a modern office employee who is in the business district: dining room, restaurant, Bank branch, flower shop, insurance company, notary public office, area services and a beauty salon, a fitness club, a courtyard, a special area. Our tenants appreciate the availability of additional services".
Another trend is the growing popularity of coworking. For example, in our business center open Creative Quarter and Travel Hub. Young start-UPS, which are numerous, especially in the field of IT, not interested to seek the office. Focus on your business, they want to immediately get down to business and have this READY, convenient and comfortable office that, in fact, offers a format of co-working. Thus, when the company fully back on my feet, she obviously will need full personal office space and it may become a tenant at the business centre.
Obvious lack of office space large format and interests of the tenants in these encourage the growth of rental rates. Growth is still insignificant, but the trend is clear.
Current socio-economic situation is still not very favourable for investments, but developers in 2017, have become safer to look towards new projects. This confirms the continuation of the construction of some long-awaited shopping center in Kiev, active search for a buyer for the project "Republic", as well as the intensification of construction in the regions, for example, construction of shopping Mall of 100 thousand sq m in Zaporozhye, several major transactions for the purchase of real estate, Dragon Capital implemented in 2017 as for the BC Organic ASTARTA Busines Centre, we continue the construction of the third stage according to the plan and planned its opening in October 2018.
Source: dsnews.ua
Unlike 2016, which on the office market, the experts noted only the positive signals of improvement, 2017 demonstrated more solid indicators of recovery in demand for office space. "An important trend is the desire of the tenants to not only move to new offices but also to expand the footprint. This speaks to the fundamental recovery in demand due to employment growth", - said Radomir Turcan, managing partner of CBRE Ukraine.
Another indicator of activity in the segment, and the restoration of investor interest in office properties. The previous year was characterized by a number of transactions for the purchase of office buildings both investors and end users. Growing investor interest in the best assets and the possibility of creating an additional value of the object, such as redevelopment (reconstruction) and improve the efficiency of management. This trend in Ukraine CBRE attributed to the fact that the capital value of office properties has stabilized, and the gap between the price a potential buyer and seller began to decline.
Investment transactions in the office sector dominated total investment volume in 2017 and amounted to about 75% of the total volume of investment transactions. Among the large transactions, it is worth noting the acquisition of business centers Prime (gross leasable area or GLA - 9 m) and Eurasia (30 m) of the company Dragon Capital Investments Limited.
"And yet developers are reticent towards new projects. In the last three years, the input volume of class A space continues to decline. Therefore, the selection of the most quality premises, particularly for large tenants, it is becoming less", - said Radomir Turcan.
Last year the amount of new office space amounted to about 31.5 thousand sq. m. Lion's share of new deals amounted to the class A - BC Organic Astarta Business Centre (GLA - 28,8 thousand sqm), the class was expanded BTS Forum Westside (2.8 thousand sqm), opened the new buildings of the business Park City Unit (4 thousand sqm). As a result, the total supply of office premises amounted to 1.7 million sqm, an increase of only 2% compared to the previous year.
Demand growth in combination with a low volume of new supply had a positive effect on the absorption of vacant space. During the year, the vacancy rate in the market has significantly decreased from 23% in January 2017 up to 16.5% in December. At the same time reducing the vacancy rate in business centers of classes A and b, leading to stabilization of rents is a prerequisite to its further growth. The loyalty of the landlords at the conclusion of transactions will decrease. "Already in office buildings with little vacancy is observed fewer flexibility landlords considerable concessions on the commercial terms, including free rental period, investment in finishing facilities, etc., in relation to the first half of 2017," - said Eugene Prudent, Director office property Department Colliers International (Ukraine).
According to CBRE Ukraine in 2017 rents for office space remained relatively stable. The highest possible effective rents remained at $23/sqm / month (excluding VAT and operating expenses). At the same time, the declared rate for class A premises increased by 10-20 and ranged from $16 to $35 per sqm per month.
First announced rates for class B facilities also were 10-40% higher compared to the end of 2016 and remained in the range of $10 to $24 per sqm per month. The effective rates, which have completed deals has remained at the same level - from $8 to $20 per sq m per month.
In the opinion of management of IFC Gulliver Lily Rsvo in Kiev as before will be enough of the limited new supply of quality office space. Because the construction of new space directly depends on the economic situation in the country and the lack of debt financing. CBRE Ukraine do not exclude that at preservation of the low volume of new construction and the lack of large-scale projects in the next year or two, you may experience lack of high-quality premises.
As in previous years, the most active consumers of high-quality office premises there are companies in the sphere of information technologies and telecommunications, a major Ukrainian financial and industrial group, foreign service and consulting company, agribusiness. The demand for high-quality coworking (approach to the organization of work of people with different employment in the common space) will continue to grow, the market will try to respond more quickly to the growing demand for flexible office solutions, actively introduce energy efficiency and green standards.
"Multinational companies will continue to make a decision about moving to better space at comparable or more favorable commercial terms," says Lily RSV. As before use the popularity of multifunctional complexes. "The business center can no longer lease the premises. Business center - this is a much more complex concept. It's the atmosphere, it's a lifestyle, it's the activity inside, ' she says. - That is, except for height, width and length, is its content. And the quality of the content and level of service provided by the company, BTS, depends on which company will be its tenants, will it stay, will feel comfortable and will be happy employees of the lessee. So, now we're talking about happiness as the criteria for the success of the business center".
"Now is still favorable for tenants and buyers, since you can still find high-quality spaces/facilities at reasonable rates/prices," - said Eugene Reasonable. Further, she said, the vacancy rate will decline, given that the number of construction projects remains relatively low, and cycle construction is on average two years. "In such circumstances, for developers it would be advisable to intensify their activities", - the expert believes.
According to Yulia Happy, Director of TEK Energoinvest, developer and management company ASTARTA Organic Business Centre in 2017 the office market has recovered momentum, according to our forecasts, will continue in 2018. the Company is not only looking toward relocation of offices, but expand new offices. This applies to the IT, agro and pharmaceutical sectors that are currently most active in Ukraine.
Competition among business centers is high. But at the same time, there is the interest of tenants to new high - quality properties with developed infrastructure, energy efficient technologies. Proof of this is filling 80% of the first and second BTS ASTARTA Organic Business Centre immediately after the opening and the interest of tenants to the third phase which is planned to open in autumn 2018
In 2018 will continue the trend of moving companies in office buildings with the widest range of additional services. It refers to the engineering systems of the building infrastructure. For example, are popular BC ASTARTA, built on the principle "city within a city". They have everything a modern office employee who is in the business district: dining room, restaurant, Bank branch, flower shop, insurance company, notary public office, area services and a beauty salon, a fitness club, a courtyard, a special area. Our tenants appreciate the availability of additional services".
Another trend is the growing popularity of coworking. For example, in our business center open Creative Quarter and Travel Hub. Young start-UPS, which are numerous, especially in the field of IT, not interested to seek the office. Focus on your business, they want to immediately get down to business and have this READY, convenient and comfortable office that, in fact, offers a format of co-working. Thus, when the company fully back on my feet, she obviously will need full personal office space and it may become a tenant at the business centre.
Obvious lack of office space large format and interests of the tenants in these encourage the growth of rental rates. Growth is still insignificant, but the trend is clear.
Current socio-economic situation is still not very favourable for investments, but developers in 2017, have become safer to look towards new projects. This confirms the continuation of the construction of some long-awaited shopping center in Kiev, active search for a buyer for the project "Republic", as well as the intensification of construction in the regions, for example, construction of shopping Mall of 100 thousand sq m in Zaporozhye, several major transactions for the purchase of real estate, Dragon Capital implemented in 2017 as for the BC Organic ASTARTA Busines Centre, we continue the construction of the third stage according to the plan and planned its opening in October 2018.
Source: dsnews.ua