The growth of shopping center vacancy is the influence of objective factors
On June 29, the UTG company held a zoom conference and presented an analysis of the situation on the commercial real estate market of Ukraine. According to the company’s experts, the Russian Federation invasion had a negative impact not only on the general turnover, which decreased by 25% in national currency and by more than 29% in international currency, but also on the vacancy rate of shopping malls. Thus, according to experts’ calculations, the weighted average vacancy in shopping centers in Kyiv was about 19%. At the same time, the largest increase in the indicator is observed in regional facilities, where the vacancy rate is 24%, in second place are district shopping centers which number of empty spaces is about 22%.
According to UTG experts, the main reason for the rapid appearance of vacant spaces in galleries is the change of consumer moods: with the beginning of the invasion, Ukrainians appeared an aversion to the goods of the aggressor. Therefore, Russian retailers are leaving the country and large vacant spots are formed in shopping malls, which can reach 20-25% of the area of the shopping gallery due to the fact that many Russian retailers occupied large-format stores. Where Russian operators leave shopping centers, large vacant spots are instantly formed, which can reach 20- 25% of the area of the shopping gallery, this is especially typical for large-format objects of regional and district formats. Thus, for regional facilities the vacancy rate is 24% that is almost a quarter of shopping centers remain empty, despite the fact that they were previously the best and most successful facilities. In second place, those who were affected by this are the district shopping centers which vacancy rate is about 22%, they were also actively interested in Russian chains. Accordingly, Ukrainian chains do not have such requests and department stores to absorb such spaces and thereby reduce the impact on vacancy. In addition, there is a tendency in the market that almost all international operators are still closed. Thus, they do not affect the growth of turnover and do not help other stores with synergy and do not perform an anchor function. Besides while previously the chains had unprofitable points but they were dragged and covered expenses at the expense of other more successful objects, now the chains are beginning to actively optimize: close low profitable and unprofitable points, and concentrate on successful stores. Also, the increase in vacancy is related to logistics problems, as it is now quite difficult to bring goods to Ukraine. Difficulties with withdrawing currency from Ukraine also contribute to the slowdown. This leads to an expansion slowdown up to the point of investment halting. All this leads to the fact that a limited inventory is kept here to keep the stores open.
Another problem related to anchor tenants is the post-COVID semi-unconsciousness of such anchors as fitness and children’s entertainment centers of cinemas and various entertainments. They did not have time to move away from the forced closure in the previous 2 years of coronavirus restrictions. After that, the war came and these operators again got into a new round of unpredictable activity. Accordingly, such anchor tenants will have quite difficult times in the near future.
Unfortunately, such a vacancy is unlikely to be filled in the near future. However, there are options that new brands will gradually come to Ukraine, which will help us fill the galleries like in 2014, when the first wave of Russian brands left and Turkish brands began to actively enter the country, Polish networks developed. Due to their expansion, popularity among the population and large formats, it was possible to fill shopping facilities, but today their reserves are limited and it is still extremely difficult to count on the fact that they will give a new round to fill new areas.