Commercial real estate project manager Retail&Development Advisor (RDA) told how the Ukrainian retail market is growing, which retail chains are opening more stores and the reason for the increase in rental rates in the western regions of the country.
During the VII International specialized exhibition of the retail and commercial real estate industry RAU EXPO 2024 , held in the capital on June 12-13, commercial real estate project manager Retail&Development Advisor Oleg Klopov made a presentation: “Analytics of the regional commercial real estate market of Ukraine.” RAU chose the main themes of the speech.
On opening stores during a full-scale war
At the end of the first quarter of 2024, the number of stores operating in Ukraine exceeded the pre-war figure. RDA presented the relevant data as part of a study of the Ukrainian retail market in 2023-24. This dynamic growth in the number of stores occurred from mid-2023 to early 2024. At the same time, one dollar store chains, grocery retailers, as well as the drogerie/pharmacy and fast-fashion segments were actively growing.
Of particular note is the opening of international chains: queues at Half Price, H&M and Zara. Almost all shopping centers waited for their favorite brands to return, after which they noticed an increase in traffic of up to 30%, especially in the first month after opening. And the leader of regional development in Ukraine during this period was the Polish brand Sinsay, which had already opened 35 stores outside of Kyiv.
On the increase in rates in regions where there is a high concentration of IDPs
Interestingly, the greatest activity among retail chains was observed in areas with a high concentration of internally displaced persons. Thus, retailers logically responded to the increase in the number of consumers in the regions, and developers were able to restore rental rates in some places to pre-war levels. In areas with a high number of migrants, rental rates in shopping centers increased to 10% over the year, and in street retail – to 20%.
Rates in shopping centers are increasing in small and medium formats with an area of up to 200 square meters. m. And large lots retain starting bids with an additional payment from turnover.
However, in the street retail segment there is even a slight shortage of locations, which is due to the high activity of local retail chains.
About the challenges of the present
At the same time, in 2024, a large number of operating stores and other enterprises in Ukraine began to face negative trends, which intensified due to changes in legislation and a deteriorating security situation. Among the main problems cited by entrepreneurs were: business security (40%), lack of personnel (48%), lack of energy resources (67%) and rising construction and operating costs (80%).
Each of these factors affects both developers and retailers. Without people you cannot open shops and build projects. Without electricity, it is impossible to maintain the desired performance. And with high tariffs, financial models reduce their profitability. Accordingly, without a stable income, the purchasing power of the population will fall. In addition, the threat of destruction slows down investment and keeps existing business owners on edge.
RDA believes that in the medium term, these challenges may lead to negative trends in the market, however, Ukrainian retail has more than once demonstrated an amazing ability to adapt even to unfavorable circumstances.
