KYIV. Feb 8 (Interfax-Ukraine) – Rental rates in the capital’s office centers have decreased by approximately 30% compared to pre-war levels, and the decline continues, the UTG company reported.

“Unlike retail, office real estate developers are striving to complete their projects. Since the beginning of the war, the market has expanded by 140,000 sq m and about 800,000 sq m at various stages of construction. However, we face the problem of outflow of key tenants, IT companies. The continuing increase in vacancy will drag down the prospective rental rate,” said Kostiantyn Oliynyk, head of the strategic consulting department of UTG, at a press conference at the Interfax-Ukraine agency on Thursday.

According to the UTG study, vacancy rates have increased in all classes compared to the end of 2021. The weighted average vacancy rate in Kyiv business centers in 2023 is as follows: class A - 27.4% (late 2021 - 5.5%), B - 20.2% (12.3%), C - 14.5% (9.9%).

“The highest vacancy is in class A, it has become very expensive for domestic companies. The main client is IT companies, they are relocating because they cannot fully carry out their work due to a shortage of personnel and constant shelling,” stated the expert.

“For the fourth quarter of 2023, we can state a reduction in rates by at least 30% (especially taking into account changes in the hryvnia exchange rate against the US dollar): class A - $19.9/sq m, class B - $11.8, class C - $9.7. We do not see positive trends. Given the rising cost of energy, rising utility bills, and with them OPEX (including due to increased vacancy and the distribution of operating payments among fewer operators), the load on tenants will continue to increase, and rental rates in the near future will continue their further decline,” he said.