Kyiv. The 2nd of December. INTERFAX-UKRAINE – Rent rates in the capital’s business centers have decreased by 30% since the beginning of the year, Kostyantyn Oliynyk, head of the UTG strategic consulting department, told Interfax-Ukraine.

“If in January 2022 the rent in class A was $28.1/sq.m/month, in class B – $17.9, in class C – $11.9/sq.m/month (excluding VAT, OPEX, utility bills and BOMA coefficients), then at the beginning of December 2022, we can state a reduction in rates by at least 30%, especially given the change in the exchange rate of the national currency against the US dollar,” Oliynyk said.

The expert explained this drop by a rapid decline in demand for office space, primarily from international companies and the IT segment. In particular, 41.28% of the personnel of surveyed IT companies were either evacuated abroad or moved to the west of Ukraine. Specialists most often left such cities as: Kyiv (reduction from 45% to 29%), Kharkiv (from 13% to 2%), Odessa (from 5% to 3%). At the same time, they moved to the Lviv region (growth from 13% to 18%), or Ivano-Frankivsk and Zakarpattia regions.

The expert also drew attention to the fact that a number of Ukrainian IT companies completely stopped servicing Russian clients or closed their offices in the aggressor country, which leads to a reduction in their income. “Sadly, it is most likely that the lion’s share of IT employees will not return to Ukrainian offices in the near future,” Oliynyk said. As for international companies, according to Oliynyk, their number will decrease by 78% by the end of the year.

In general, according to the forecasts of UTG analysts, before the end of hostilities in Ukraine in the office segment of commercial real estate, against the backdrop of low operating performance for most tenant companies and significant savings in resources with the rationalization of expenditures, there will be a further reduction in business activity. “Companies will continue to move to more affordable office centers or optimize tenants’ expenses in the direction of reducing the occupied space,” the expert noted.

In addition, some of the largest Ukrainian corporations will begin to transfer their employees from rented premises to their own administrative real estate, closing unclaimed representative office space. In general, the expert predicts further rate cuts. “Given the additional negative factors of October/November (occupants’ shelling of Ukraine’s energy infrastructure, unpredictability of planned/emergency power outages, rising energy costs, higher utility bills, and with them OPEX, office/heating maintenance costs), it can be assumed that the burden on tenants will continue increase, and rental rates in the foreseeable future will continue their further decline,” Oliynyk said.