In 2023, the development was as ready as possible to work in conditions of frequent alarms, when it was necessary to close shopping centers even for 4-6 hours. He learned how to quickly restore work after a missile hit, was ready for possible power outages and, despite everything, reached almost pre-war indicators.

You can continue to remember 2018 with nostalgia – the last year before cataclysms, such as the coronavirus epidemic and a full-scale war in Ukraine. But, as experience shows, difficulties only harden Ukrainian business and motivate to look for non-standard solutions. RAU asked the leading market experts what results they ended 2023 with.

About quantitative indicators of attendance

In 2020, during the coronavirus pandemic, development was particularly affected. According to the director of UTG Evgenia Loktionova, during the period of 2020-21, approximately 44% of the population of Ukraine began to visit shopping facilities less often, and the average market rate of attendance by the beginning of 2022 decreased from 687 to 506 people per 1000 square meters. m GLA.

Later, when it seemed that the pandemic was coming to an end, a great war broke out in Ukraine. “During the first months of hostilities, shopping centers were closed, and attendance in mid-2022 dropped to an all-time low – 291 visitors per 1,000 square meters. m GLA. The expulsion of enemy troops from the territory of the Kyiv region brought the population back to the capital, commercial real estate gradually resumed its work and attendance gradually began to recover. And as of December 2023, this indicator was 367 people per 1,000 square meters. m GLA,” adds Loktionova.

Andrii Lototsky, CEO of the Retail&Development Advisor consulting company, also confirms that the traffic of many shopping centers has returned to the pre-war period and even increased. First of all, this concerns the western regions and Kyiv.

For example, 15.1 million people visited the Respublika Park shopping center in 2023, 56 new stores were opened, and a constant increase in turnover, attendance and, most importantly, conversions was recorded from month to month. On the shopping center’s birthday, November 12, 2023, the largest number was recorded – 124,351 visitors. Neopolis amusement park was visited by 746,256 guests during the year. This was reported by Olena Yatsenko, commercial director of the Respublika Park shopping center.

But there is an interesting feature of customer behavior. As the co-owner and CEO of Usupso and O!Some Marianna Samsonova says, shop windows no longer work – they do not attract customers, because they make a choice even before entering the shopping center. This is probably explained by the fact that customers do not know whether they will have time to buy everything they need before the alarm, so they come to the shopping center with a specific task and purposefully go to fulfill it.

About rental rates and contractual obligations

In the first months of the war, there was a real mutually beneficial partnership: developers provided discounts on rental rates, and retailers continued to work despite great danger. Gradually, the traffic in shopping centers was restored, accordingly, contracts with a slat of rental rates began to be returned in full. But in 2023, individual discounts still continued to apply.

“In most shopping centers, the discounts provided in 2022 have been canceled. New agreements for similar lots are signed in most cases with an increase of mainly 10% until 2021,” comments Lototskyi.

And the CEO of Nhood Ukraine, Hanna Koryagina, says that in the Rive Gauche shopping center, 20% of tenants pay rent in full according to the contracts, 80% have individual discounts (on average, it is 25-30%) and 100% of tenants do not have a fixed exchange rate.

About the vacancy

Since the start of the war, mostly only grocery retailers and pharmacies were open to meet people’s basic needs. But already in the first months, other stores began to resume work little by little. “At the beginning of 2023, there were approximately 19.7% of actually closed stores in shopping centers, especially regional (27.2%) and district (18.8%) formats. Vacancy in some facilities exceeded 60%. The recovery of popular operators continues. H&M was added to LPP, Caliope, Mango, and McDonald’s,” Loktionova comments.

It is quite logical that in safer places the vacancy is also minimal. This is confirmed by Lototsky: “In the western regions, vacancy is at the level of 10% (not including the stores of the Inditex group, which are not yet operational). The same can be said about Kyiv. For example, the Respublika Park shopping center has had a record number of people since the beginning of its operation.”

And the most telling example, which confirms the decrease in vacancy, is the case of the relaunch of Blockbuster Mall, the management company of which was able to ensure the opening of commercial spaces in greater quantities than in pre-war times, taking into account the absence of certain chains at the current time. “The most successful projects have already returned and sometimes even exceeded pre-war indicators. Constant work is being done to reduce the vacant space in our commercial projects, and there is a periodic rotation of tenants. On average, for the period of 2023, we managed to increase the occupancy level by several percent,” comments Koryagina.

About the trends of 2023

In particular, Hanna Koryagina singles out the following trends of the year:

Consumer trends:

• Preference is given to formats that meet price expectations and are close to the consumer. Proof of this can be the rapid development of the Aurora network, which during the war opens a new store every 14 hours and increases sales;
• Such categories of goods as medicine and sweets remain among the sales leaders;
• Perception of shopping centers as an opportunity to relax and change the focus of attention from everyday events;
• Taking into account the stabilization of exchange rate expectations, it is possible to note the tendency of the population to make more substantial purchases;
• Demand for nationally produced goods.

Trends among tenants and retailers:

• The opening of the first offline stores for many players in the Instagram space, while the desire of even no-name brands to work in the best shopping malls in the country is obvious;
• Social responsibility – most retail chains have their own projects, which in one way or another are aimed at helping victims of war or contribute to meeting the needs of the AFU and the NGU;
• Inclusiveness: the number of people who require special architectural and planning solutions in Ukraine is growing, so ensuring the accessibility of buildings and structures in which every person, regardless of age, gender, disability, functional impairment, level of communication capabilities or circumstances, can feel safe becomes as never relevant;
• The trend of using national and historical motifs in design continues, but many brands reach a fundamentally new quality level in their approach to processing national heritage, for example, Gunia, Kobzart.brand, Pupcha Kylym, Gushka and others;
• Omnichannel and attention to artificial intelligence;
• Large investments in the system of logistics organization, workforce and perfection of the ecosystem as a whole;
• Non-standard use of the space of the trading hall. A vivid example is Ponchyk Boy from Techno Hedgehogs in TSUM;
• Opening of branches and outlets abroad: Dnipro-M, Nova Poshta, Katsurina, One Price, Chornomorka and others.

Trends among landlords and SECs:

• Active growth of the share of Ukrainian brands. And not always the basis of such decisions is the fact that international retail has certain restrictions on development in Ukraine;
• National retail enjoys a high level of loyalty from the modern consumer, which also contributes to qualitative changes in the tenant mix;
• Most landlords prepared their facilities for blackouts at the beginning of the year;
• Omnichannel, namely, the development of the trend of creating a digital twin for shopping malls that was established several years ago. A new project from River Mall – the Get by River application – can be called a pilot project on the Ukrainian market;
• The scale of marketing events, because malls well understand the importance of changing the focus for their consumers, so most malls in the capital and regions delighted visitors with large-scale concerts;
• Support and assistance in meeting the needs of NGU and AFU.

About the issue of security, which was acute in 2023

On June 27, 2022, Russian missiles hit the Amstor shopping center in the city of Kremenchuk. This terrorist attack became an impetus for all business, and not only development, to take rocket attacks more seriously. Therefore, in 2023, a lot of attention was paid to the issue of security.

First of all, it is the evacuation of people during air alarms. Therefore, a siren sounded in every shopping center and people were asked to go to the nearest shelter. Staff in the same number. Some SCs have parking lots or ground floors, which are actually shelters. Others spoke into the loudspeaker the addresses of the nearest shelters.

About expectations for 2024

Development representatives have only positive forecasts for 2024.

“Now we always have to be ready for negative development scenarios, but looking at the speed with which commercial real estate is developing in the west of Ukraine, the level of occupancy in high-quality malls in the capital is increasing, communicating with brands that are not present in Ukraine, which are still just studying the possibility of exiting, as well as with those who are already recording activity indicators that have exceeded all expectations, want to make exclusively positive forecasts, the proof of which is a whole series of statements regarding the opening of new projects. At the same time, it is precisely such external factors that contribute to unrestrained development in the direction of omnichannel, the use of AI, and the improvement of the quality of operational excellence (from order delivery time to the assortment model),” says Koryagina.

Also, as Loktionova emphasizes, there are many tasks for the new year, in particular, the further increase in attendance at shopping centers, the opening of closed stores of popular international chains, the emergence of new international retailers and, of course, the gradual recovery of the population’s income.

And the Respublika Park SEC and the Neopolis entertainment park will continue to introduce new standards in the field of commerce and leisure in 2024. Plans for the first quarter of 2024 include even more stores, the launch of new formats and relevant services for shopping center visitors.