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the 30 damaged objects throughout Ukraine, only 12 (with a total area of 150,000 square meters) could be rebuilt and put back on the market. At the same time, 17 objects (350,000 square meters) were totally destroyed. With no new supply and a loss of 25% in 2022, tenants are snapping up space considered illiquid before the invasion.
The return of foreign brands to Ukraine has provoked an increase in rental rates for retail space by 8-10%. According to CBRE Ukraine, in 2023, four new retailers entered the Kyiv market - the Italian premium clothing brand EA7, American household electronics brand KitchenAid, Polish clothing brand HalfPrice, and American premium clothing brand DKNY. In addition, Swedish fashion retailer H&M resumed its Ukrainian operations last year. The share of Ukrainian brands among tenants in shopping centers grew due to consumer loyalty and the temporary closure of international fashion retailers. The average vacancy rate in the Kyiv market was 15% at the end of 2023, and rental rates in shopping centers have strengthened. Landlords are returning to fixed rental prices, and rates based on a percentage of turnover are becoming less common. Last year, rental rates for the best properties increased by 8% to $40-65 per square meter monthly. Meanwhile, rental rates for other properties increased by an average of 10%, up to $15–33.
Rents on the warehouse real estate market are becoming more expensive in Ukraine: Rates have increased by 10%, and this trend will continue. Renting commercial warehouses in Ukraine is becoming more costly due to a lack of space. The shortage in the logistics market is because, during the war, the construction of new complexes has stopped, while about 30 objects have been damaged by shelling. These losses are significant because construction costs have increased by 30-35%. For 2023, rental prices have increased by 10%, say Colliers Ukraine analysts. Class A rental rates are declared in the range of $4.5-$5.3 per square meter per month, and in class B they are $2.9-$3.5. According to CBRE Ukraine, rates increased by 15% to $4.9. The vacancy rate in the warehouse market decreased from 4.5% at the beginning of 2023 to 2.5% at the end of the year. Experts predict that despite the appearance of new warehouse buildings on the market, rental rates will continue to rise in the coming years, and annual growth of 5-10% is expected.
9.1.5 Retail sector news
While foreign brands plan to enter the Ukrainian market, retailers are focused on domestic manufacturers. Despite the ongoing war, new global brands are entering the Ukrainian market. In April, Inditex brand stores (Zara, Stradivarius, Bershka, etc.) reopened, and Sinsay has been operating since the end of last year. Also, head of the Association of Retailers of Ukraine, Andriy Zhuk, said that the Polish company Greenpoint, a clothing and footwear retailer, is planning to enter the Ukrainian market. However, brands returning to the Ukrainian market, such as H&M and the Inditex family, have not yet fully recovered. For example, the H&M chain only opened its stores in Lviv and Kyiv last fall but has not yet returned to Odesa and Kharkiv, where it operated in 2021. Zhuk also noted that the blocked Polish border creates several risks for Ukrainian companies. The biggest among them is the unpredictability of delivery times. This forces retailers to focus on domestic manufacturers. "This is a very cool chance for local producers to get on the shelves of our
76 UKRAINE Country Report April 2024 www.intellinews.com