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The average vacancy rate in the shopping malls began to decline for the first time since the start of the pandemic: the results of the 1st half of 2021

The commercial real estate market continues to recover, responding to improving purchasing power and public sentiment. Compared to the last year, with the lifting of strict quarantine measures, more activity from visitors to the mall, latent and overdue demand from consumers and a fairly rapid stabilization of turnover among tenants can be observed.

Vacancy

  • During the first half of 2021, the vacancy rate excluding Blockbuster Mall and SEC Retroville decreased slightly from 5% to 4.6%, compared to 2020.

Kyiv Retail market overview_eng1

  • At the time of commissioning (at the end of 2019), Blockbuster Mall had a fairly low occupancy rate, which increased the overall vacancy rate from 4.4% to 11.9%.
  • During the year, the mall actively expanded its pool of tenants, as of the end of the first half of 2021, the occupancy rate of Blockbuster Mall is 72%.
  • As a result, the total vacancy rate on the retail real estate market, including the Blockbuster Mall, is 7.2

Development activity

  • During the first half of 2021, no significant events took place. In May, the opening of the 2nd stage of the Piramida shopping center (GLA 7,500 sq m) as part of the renovation was announced.
  • Such long-awaited objects as Respublika Park (GLA 135,000 sq m) and Blockbuster Mall 3rd stage (GLA 50,000 sq m) received certificates of commissioning.
  • As of the beginning of June, the total retail real estate stock is 1,586,500 sq m.

Consumer Sentiment Index

  • Despite the quarantine restrictions, compared to last year, consumer sentiment remains positive. As of June 2021, the indicator was 72.9, which is 7.8 points higher than in June 2020.
  • The reduction in the incidence rate and the start of vaccination against COVID-19 in Ukraine allowed people to visit shopping centers more confidently and actively.

Retailers

  • Despite the spring lockdown of 2021, in general, retailers more easily endured strict restrictions compared to last year. It is important to emphasize that this was influenced by the non-simultaneous closure of all regions for the quarantine period this year.
  • Both in times of crisis or economic growth, there are always operators who do not develop or close locations, and there are always those who are ready to enter projects.
  • In early 2021, Silpo food retailer acquired Furshet grocery chain. While in February this year, the anticipated city store IKEA opened in SEC Blockbuster Mall, and in May, the first store of the Italian brand KiKo Milano opened in SEC Ocean Plaza.

Commercial terms

  • Taking into account previous experience, decisions on further cooperation between tenants and landlords were made faster. Now retailers have individual agreements, depending on the segment and their performance in existing objects.
  • There is an increase in rental rates in high-quality shopping centers in Kyiv by an average of 5-10%. The highest rental rates in the leading shopping centers in Kyiv for shop areas of 100-200 sq m have stopped at ~$65/sq m/month. At the end of 2020, the indicator was at the level of ~$60/sq m/month. During the first half of 2021, rental rates on the main shopping streets were $70/sq m/month. In 2020 - $65/sq m/month.

Kyiv Retail market overview_eng