Impact of IT development on commercial real estate
The largest share of office space in Ukraine is occupied by IT companies — about 50% of the area, so the development of office real estate will depend on this segment. Due to the booming IT sector in Ukraine, many firms have occupied excess space to facilitate the continued expansion of their businesses, where the average growth rate is up to 20% per year.
Impact of COVID-19 on the office real estate market
Some new business center landlords are offering large tenant discounts or special terms and conditions, according to CBRE (commercial real estate services). Because of the situation with COVID-19, implementing some of the planned office projects will be postponed. This, to a greater extent, applies to construction projects with minimum readiness.
Best office locations in Kyiv
The choice of premises in the most popular places among the executives is limited — this is the historical center of Kyiv (Khreshchatyk str, Independence square, Prorizna, Hrushevsky, and Sofiyska square areas, etc.). Also, these are premises in the most popular residential complexes in Shevchenko, Goloseevsky, Solomensky and Darnitsky districts.
Four categories of office
Renting an office in the center of Kyiv can be affordable even for a novice businessman. To do this, it is enough to understand the classification of the premises. There are four categories of offices: A, B, C, and D.
- Most expensive
These are class A premises. Such offices in the center of Kyiv are rented by well-known and large corporations, representatives of foreign capital. The buildings have the author's design, modern equipment, high ceilings, security and underground parking.
- Workers offices
These include class B offices. Usually, they are not considered prestigious, but they are also representative. There are no underground parking lots and design renovation of premises in such buildings.
- Middle class
These are C-class premises. Usually, these offices are in buildings that were not built for offices. The downside is the lack of modern infrastructure. For example, air conditioning systems and the lack of good repairs, only cosmetic.
- The cheapest class
These are class D category premises. They are mainly located in buildings built during the Soviet era. The main disadvantages are that offices need to be adapted to workspaces. Major repairs are required, with the replacement of utilities and redevelopment.
The rental rate in prime properties in 2020 remained stable at $25/sq m/month. Rental rate in class A varied within the range of $25-30/sq m/month. A rate in B class has not changed in 4 sq. 2020 and amounted to $13-25/sq m/month.
In 2021 the rental rates may decrease slightly but are likely to stabilize given the gradual economic recovery.