Rental rates in the capital’s office centers have decreased by approximately 30% compared to pre–war levels, the decrease continues, UTG reported. “Unlike commercial real estate, office real estate developers seek to complete their facilities. Since the beginning of the war, the market has expanded by 140,000 square meters, and another 800,000 square meters are in various stages of construction. But we are faced with the problem of the outflow of personnel key tenants, IT companies. A long–term increase in vacancy will drag down the prospective rental rate,” Kostyantyn Oliynyk, head of UTG’s strategic consulting department, said at a press conference at the Interfax–Ukraine agency.

According to the UTG study, vacancies have increased in all grades compared to the end of 2021. Weighted average vacancy in business centers of Kyiv in 2023: class A – 27.4% (end of 2021 – 5.5%), B – 20.2% (12.3%, C – 14.5% (9, 9%).

“The highest vacancy is in A class, it has become very expensive for domestic companies. The main client is IT companies, they are relocating because they cannot fully perform their work due to a shortage of personnel and constant shelling,” stated Oliynyk.

As a result of the decrease in demand, the rates have decreased. In January 2022, rent of 1 sq.m cost in class A – $28.1, in class B – $17.9, in class C – $11.9 (excluding VAT, OPEX, KP, BOMA).

“For the fourth quarter of 2023, it is possible to state a decrease in rates by at least 30% (especially considering the changes in the exchange rate of the hryvnia to the US dollar): class A – $19.9/sq. m, class B – $11.8, class C – $9.7. We do not see positive trends. Considering the increase in the cost of energy carriers, the increase in the price of utility bills, and with them OPEX (in particular, due to the increase in vacancy and the distribution of operating payments to a smaller number of operators), the burden on tenants will continue to increase, and rental rates in will continue their further decline in the near term,” Oliynyk said.

The UTG company was established in 2001. Developed more than 1,300 concepts of real estate objects. During the years of work, 4.7 million square meters of commercial space in Ukraine were leased with the participation of the company.