Evgenia Loktionova, director of the UTG company

In the USA, in response to the housing crisis, underperforming shopping centers are being converted into mixed-use housing complexes. One example of such a successful redevelopment is the transformation of the Woburn Shopping Center in Massachusetts into the 350-unit Woburn Village residential complex.

Is such a situation possible in Ukraine? I’m sure not. If you look at America, there are many abandoned shopping centers. Have you seen these here? Of course not. Accordingly, we do not have the prerequisites for transferring the American experience of reconceptualizing shopping centers into residential complexes. Let’s just compare the statistics. According to the global business intelligence platform Statista, there are currently about 3.54 billion sq.m of retail real estate in the United States, of which about 1.92 billion sq.m are located in shopping centers. For comparison, now in Ukraine shopping centers account for only about 6 million sq.m. Even taking into account the difference in population and size of our countries, today we have not yet reached such saturation of retail real estate as in the United States. In addition, if you look at Massachusetts and other American cities, SECs were built there right next to each other. As a result, unhealthy competition and cannibalism began, when objects “eat” each other.

In Ukraine the situation is completely different. Yes, objectively, during the war our vacancy rate increased. Today it is approximately 20% on the Kyiv market. But this is the “average temperature in the ward”; in high-quality shopping centers, the volume of free places is no more than 5-7% of the area. In fact, we do not have ineffective shopping centers that urgently need to be rebuilt into residential real estate because they have exhausted their trading function.

On the other hand, in my opinion, we also have shopping centers that can be optimized and transformed into multifunctional facilities. For example, effective space on one or two floors can be left for retail, and the rest can be used for offices or various social areas: dance schools, English language schools, etc. A good example is the Silver Breeze shopping center, which from a shopping center has become a shopping and office center.

In addition, an interesting situation may arise in Ukraine when some shopping center can be given over to an educational institution that was damaged due to the war. In this case, it is important not to forget that when changing the functionality of an object to meet social needs, you need to use purely legal approaches. But these are isolated cases.

If we evaluate real estate with the prospect of post-war reconstruction, then a year after the end of the war there will be zero vacancy almost everywhere. A massive rotation of tenants will begin in Ukrainian SECs; new operators will be installed in place of old and unsuccessful retailers. Negotiations are already underway with several large-format department stores. And there will be many such new tenants, remember this.

Moreover, based on the experience of several crises that have already been experienced, I can say with confidence that in Ukraine, retail real estate is always the first to be restored. Yes, it has already almost recovered, despite the fact that the country is still in the active phase of hostilities. Therefore, I am sure that after the end of the war, trade will begin to develop first, housing will come second, then warehouses, and only in last place will offices. Why such a sequence? It’s simple. To develop office real estate, companies need to return to the country. Here everything will depend on economic policy – preferential taxation, a good investment environment and the absence of corruption. Trade will be able to restore itself, because all brands need a market for development, and there is a demand for large premises from large Western retailers. Therefore, I am sure that when large operators appear tomorrow after the end of the war, real competition will begin, everyone will understand that the Ukrainian market is still very “raw” and even a shortage of retail space will begin to be felt.