Commercial facilities

Office real estate segment – a predictable and stable market

сегмент офисной недвижимости

The segment of office real estate in Kiev is experiencing an acute shortage of premises

The Kyiv office market can be called predictable and stable. Such conclusions were made by experts, based on the analysis of market trends. 2018 turned out to be passive in terms of the withdrawal of new objects. As a result, vacancy rates have decreased and rental rates have increased.

At the moment, in the office real estate sector in Kiev, there is a demand for the offers of classes “A”, “B”, “C”. The first group includes premises located in business centers and office complexes in the city center. The main condition is to have a convenient traffic interchange and a sufficient number of parking spaces. Most often, offices of class “A” use reasonable ventilation, heating and security systems. Class “A” also includes multi-profile (combined) business centers with housing stock. These are usually high-rise buildings with underground parking.

Class B premises are often not equipped with modern centralized ventilation systems. The range of services offered is much lower: there may be no recreation areas, cafes, restaurants on the territory, and parking is located outdoors. “B” usually includes former premises of class “A” after 5-7 years of operation without repair and significant innovations. A striking example of buildings of class “B” or “B +” is the case of the UNIT.City Innovation Park. Smart infrastructure, fully renovated and constructed buildings are combined with a dubious traffic intersection and remoteness from the nearest metro station.

Class “C” offices are usually rented from former research institutes and similar organizations. The only advantages of such premises are telecommunications and proximity to metro stations.

Office real estate segment: stable international corporations and capricious IT specialists

In general, the office segment is more predictable than commercial and warehouse real estate. International companies usually enter into long-term contracts, as they forecast their presence for 3-5 years ahead. At the same time, domestic high-tech firms are notable for their mobility and unpredictability: the reputation of this or that business campus as another “silicon valley” leads to the leaching of IT people from previous offices. And rumors of cataclysms or market collapses contribute to the relocation of entire organizations to other cities and countries.

At the same time, international firms are resilient to crises: when deciding on a presence, they evaluate regions and neighboring states. Individual markets the size of a whole country may not affect the financial position of global companies. The constant consumption of office space in Kiev by transnational corporations may not indicate the prospects of Ukrainian markets, but that Kiev, for example, has reasonable prices for office real estate.

Most development companies believe that in the next 10 years, the main growth in the consumption of office real estate will be observed among young IT companies. This means that management companies need to be ready for new challenges and provide an adequate level of service. In 2018, the sphere of information technologies of Ukraine came in second place in the export of services and foreign exchange earnings.