dtz ukraine retail in the regions · parking 3 600 spaces anchors food hypermarket, ice rink,...

Established London, 1784Established Kyiv, 1994

DTZ Ukraine2013

DTZ UkraineRetail in the Regions

KyivPopulation 2 844 000 inhabitants

Major existing multi-tenant retail centres in Kyiv

Project Delivery Size (sq m)

1. Dream Town 2009 / 2011 (in phases) 90 860

2. Ocean Plaza* 2012 72 200

3. Sky Mall* 2007 / 2010(in phases)

66 000

4. Gulliver 2013 45 500

5. Marmelade 2013 40 000

6. Karavan Megastore 2004 / 2005/ 2008 (in phases)

37 700

7. Bilshovyk 2007 / 2008 36 200

8. Promenada Centre 2004 / 2007 30 000

9. RayON 2012 23 000

10. Domosfera* 2009 21 600

11. Magellan 2004 21 000

12. Ukrayina Department Store

2003 (reconstruction) 20 800

13. Globus 2002 / 2003 (in phases) 18 600

14. Manufaktura outlet village 2013 18 200

* extension planned

Major pipeline multi-tenant retail centres in Kyiv

Project Delivery Size (sq m)

15. Respublika 2014 139 000

16. Lavina Mall 2015 115 000

17. Retroville 2015 82 700

18. KyivMall 2015-2016 75 400

19. Kvadrat Vyrlytsa 2015-2016 75 000

20. Manhattan Mall 2015-2016 69 200

21. Blockbuster Mall 2014-2015 66 370

22. Petrivka Mall 2015-2016 61 800

23. Hartz 2015-2016 57 000

24. River Mall 2015 49 070

25. Retail and leisure centre on Zdolbunivska Str.

2015 / 2016(in phases)

48 000

26. Lukyanivka Mall 2015-2016 45 000

27. Happy Mall 2014-2015 42 500

28. Prospekt 2014 40 390

29. Art Mall 2013 36 750

30. Atmosphere 2014 30 000

31. TSUM 2015 (reconstruction) 22 500

Supply & Demand Total modern retail stock in the city amounted to around 1,280,000 sq m (GLA) in late October 2013, or 449 sq m (GLA) per 1,000 inhabitants.

In January-October 2013, approximately 134,500 sq m (GLA) of modern retail space was delivered in Kyiv. Major schemes delivered during the period included ‘Gulliver’ in the central area of the city, ‘Silver Breeze’ in the densely populated neighbourhood on the eastern bank of the Dnipro River and the secondary quality retail and leisure centre ‘Marmelade’.

October 2013 saw opening of ‘Manufactura outlet village’ in the Greater Kyiv area, which is located on the land plot adjacent to the operating retail and leisure centre ‘MegaMarket Khodosivka’.

During the remainder of the year, the retail and leisure centres ‘Art Mall’ and ‘Atmosphera’ are scheduled for delivery in the southern periphery of Kyiv. However, DTZ projects that opening of these schemes will be delayed through to 2014.

As of late October 2013, DTZ estimates that around 1,100,000 sq m (GLA) of new ‘modern’ retail space is in active stage of planning or construction in Kyiv. If these properties were commissioned in accordance with the announced plans, by end of 2016 current retail stock in the Ukrainian capital may double.

Majority of pipeline retail stock scheduled for opening in Kyiv by 2016 are regional and super-regional shopping malls. The formats of retail parks are yet to appear in Ukraine.

Rents During the period from October 2011 to October 2013 inclusive, average monthly rents in quality retail schemes in Kyiv remained generally stable at USD 70-90 per sq m for premises of 100-250 sq m, reaching highs of USD 160-200 per sq m per month in the most sought-after prime properties.

High street retail rents in Kyiv also remained generally stable during the period. As of late October 2013, average high street rents in the Ukrainian capital were registered at $110-230 per sq m per month, with asking monthly rents randomly reaching the highs of $250-300 per sq m.

Taking into account present dynamics of retailers on the Ukrainian market combined with significant pipeline supply of quality retail stock, DTZ anticipates that base rental rates during the remainder 2013-2015 will remain stable in relation to the best properties let at sustainable rents. At the same time, rental rates in poorly conceived retail schemes in Kyiv and across Ukraine will be subject to downward pressure. This is due to the lack of critical mass of actual new market entries combined with significant retail stock in pipeline, as well as economic uncertainty both globally and in Ukraine.

The longer term sustainability of current rental rates will depend on the actual commissioning and quality of new sizeable pipeline retail schemes scheduled for completion in 2013-2016 and beyond, as well as general macroeconomic conditions in Ukraine and globally.

RetrovilleShopping and Entertainment centre

Location and description Retroville Shopping and Entertainment centre will be located in Podilskyi district, on interception of two stratigically important arterial streets, Pravdy and Poryka avenues.

Developer STOLITSA GROUP

Architect UAB ‘GEDIMINO JUREVICIAUS STUDIJA’

Delivery 2015

GBA 104 496 sq m

GLA 82 761 sq m

Levels 2

Parking 3 600 spaces

Anchors Food hypermarket, ice rink, fitness club, electronics, entertainment zone, cinema

Kyiv

High Street RetailKhreshchatyk Street

Location and description

Retail premises, located in the heart of Kyiv, on 34 Khreschatyk Street. 2 façade entrances, 7 large show windows on the first level and 10 blocks with 2 show windows each on the second level.

Owner Legal entity

Intended use

Footwear and clothes stores, or restaurant

GLA 1446,4 sq m, which can be divided in two stores with separate entrances with areas of 700 sq m each.

Levels 3

Happy MallShopping and Entertainment centre


Happy Mall Shopping and Entertainment centre will be located in Golosiivskyi district on Trutenko Street, providing access to several city districts.

The shopping mall is planned for commissioning in 2014, becoming a major family shopping destination for daily visits from the densely populated neighbourhoods in Golosiivskyi and Solomianskyi administrative districts of Kyiv.

DTZ involvement

DTZ was appointed by Liko Holding to provide concept optimisation, tenant mix development and architectural concept optimisation services, as well as to become an exclusive leasing agent of this project.

Developer Liko Holding

Architect Chapman Taylor

Delivery 2014

GBA 92 000 sq m

GLA 42 000 sq m

Levels 3


Anchors Food supermarket, furniture, electronics, sport stores, entertainment zone, cinema

Kyiv

GlobusShopping and Entertainment centre


Home to over 140 stores of the world’s leading fashion and lifestyle brands, GLOBUS is located at the historical central square of Kyiv – Maydan Nezalezhnosti (in English – Independence Square). It started life, as a retail destination in the early 2001-2003, when the city decided to do a capital reconstruction of the square and Globus was built.

Located both under and over Independence Square, with immediate metro access, Globus Shopping and Entertainment centre is perfectly situated to attract visitors 12 hours per day, 7 days per week.

DTZ involvement

DTZ has been involved in the project as a leasing agent on behalf of the landlord.

Landlord London & Regional

Architect Local architect

Delivery 2002-2003

GBA 39 500 sq m

GLA 18 600 sq m

Levels 5

Anchors Billa, Brocard, New Look, Adidas, Walker, Oodji

OdesaPopulation 1 010 900 inhabitants

Major multi-tenant retail schemes Odessa: existing and in pipeline until 2016

Project Delivery Status Size (sq m) Developer Major brands / anchors

1. Riviera Shopping City 2009 Operating 65 000 Argo Real Estate

Opportunities Fund

Auchan, OBI, Comfy, 9-screen cinema with IMAX, Leopark kid’s play, Jysk, Inditex Group brands, LPP brands, others

2. Odessa City 2015 Planned 59 000 AmstorFood supermarket, DIY, electronic appliances store, furniture store, cinema, kid’s play

3. Zebra 2014-2015 Under construction 38 000 BUD HOUSE

GROUPFood supermarket, retail gallery, fitness centre Sport Life, cinema

4. City Centre I 2012 / 2014 Operating 33 000 (phase 1) / 20 000 (phase 2) local developer

Silpo, Foxtrot, Comfy, Brocard, Igroland, Piazza Italia, Detskiy Mir, Oodji, Intertop, Adidas, Planeta Kino, M&S, others

5. City Centre II 2014 Under construction 20 120 local developer Tavria-V, Planeta Kino, Gloria Jeans, Oodji,

others

6. Srednefontanskiy 2007 Operating 19 530 Local developerFurshet, Comfy, Antoshka, Monton, Adidas, Bomond, Cinema Citi, Igroland , others

Supply & Demand With a total population over 1 million inhabitants, Odessa is one of the largest cities of Ukraine located in its southern part. The city is an important trade sea port on the Black Sea and a popular tourist destination.

Total modern retail stock in Odessa was estimated at around 420,300 sq m in October 2013, or 411 sq m (GLA) of modern retail stock per 1,000 inhabitants.

The modern retail stock in Odessa has been dominated by multi-tenant retail centres and shopping malls, which presently account for approximately 65% of total stock in the sector. Big box retail developments account for the remaining 35% of total retail stock in the city. There are no retail parks or fashion outlets in Odessa, but several retail parks are scheduled for delivery in the city by 2017.

The 65,000 sq m (GLA) retail and leisure centre Riviera Shopping City is the largest and most notable retail scheme in Odessa, which was developed by the LSE-listed company Argo Real Estate Opportunities Fund during 2009. The scheme is anchored by Auchan and OBI, while its gallery benefits from the presence of majority of quality retail brands operating in the city. Furthermore, despite after-effects of economic crisis, the opening of Riviera Shopping City triggered many new market entries in Odessa, including (but not limited to) real,- and later Auchan, OBI, IMAX, Inditex Group, Marks&Spencer, New Yorker, LPP (House, Cropp Town, Reserved).

As of October 2013, there was over 270,000 sq m (GLA) retail space planned for delivery until late 2017.

Out of this pipeline stock in the sector, DTZ projects that during the period from November 2013 through to late 2015 new supply in the retail property sector in Odessa will amount to around 87,000 sq m (GLA) formed by City Centre II, Zebra, Atrium and Equator in northern Kotovskyi neighbourhood, as well as extension to City Centre I.

Other major schemes planned for delivery by end of 2017 in Odessa include the retail and leisure centre Odessa City on Generala Petrova Street developed by Amstor, Europort Retail Park by the Israeli company Europort, Odessa Mall by Arricano Development, as well as Retail Park Odessa Nord in the northern residential neighbourhood of the city.

High street retailing is well-developed in Odessa due to the urban structure of the city and its high popularity among the tourists.

Odessa, together with Donetsk, is considered to be the second after Kyiv most attractive destination to enter for majority of retailers in all pricing categories. Demand remains very strong for quality retail space both in high street locations and multi-tenant retail centres across the city.

Rents

In Odessa high street retail rents are higher than average rents in multi-tenant retail centres, mostly due to the urban structure of the city with many tourist attractions in its central part, developed nature of street retailing, shopping habits of local inhabitants and high tourist flows, as well as lack of quality retail schemes in the non-central areas of the city.

Prime high street retail rents in Odessa amount to $70-100 per sq m per month, with the highest rents typically achieved for quality retail premises with the frontage to Derybasivska, Rishelyevska and Yekaterynynska Streets.

In the prime multi-tenant retail centres in Odessa, net monthly retail rents vary in the range of $50-90 per sq m for standard units of area 100-250 sq m.

Riviera Shopping CityShopping and Entertainment centre


After four years of successful operations, Riviera Shopping City is not only considered the largest shopping and entertainment centre in the southern region of Ukraine, combining more than 250 popular Ukrainian and international brands, but also an integral part of social and cultural life in the region, seeking opportunities to support the development of modern culture and growth of the new generation.

DTZ involvement DTZ was involved from initial concept development, as exclusive leasing agents and, now as exclusive centre managers.

Developer Argo Real Estate Opportunities Fund

Delivery 2009

GBA 80 000 sq m

GLA 63 000 sq m

Levels 2


Brands Zara, Bershka, Stradivarius, Pull & Bear, Mango, Reserved, Marks & Spencer, Benetton, Intertop, Brocard, Monton, House, Adidas, Reebok ,Geox, New Yorker, OYSHO, Yamamay, U.S. Polo Ass., Lee/Wrangler etc

Anchors Auchan, OBI, Comfy, Leopark , Jysk, cinema

Odesa

Odessa CityShopping and Entertainment centre


The project is located on Generala Petrova Street in Malinovsky district of Odessa, close to one of the largest residential districts of Primorsky and Kievsky.

DTZ involvement DTZ was commissioned by the developer to provide development consultancy and exclusive leasing services for the development

Developer Amstor LLC

Delivery 2015

GBA 72 000 sq m

GLA 59 000 sq m

Levels 2


Anchors ‘Amstor’ supermarket, DIY, electronics, cinema, children entertainment center, furniture store

LvivPopulation 755 600 inhabitants

Major multi-tenant retail schemes in Lviv: existing and in pipeline until 2016

Name Delivery Status Size (sq m) Developer Major brands /anchors

1. King Cross Leopolis

2008 / 2010(in phases) Operating 52 700 King Cross

Group

Auchan, Praktiker, Foxtrot, Inditex Group brands, LPP brands, Antoshka, Mothercare, Planeta Kino with IMAX, Leopark (kid’s play), others

2. Leopolis 2014-2015 Under Construction 47 500 Phoenix Capital Food hypermarket, electronic appliances store,

cinema (7 screens), bowling, kid’s play, others

3. Forum Lviv 2015 Under Construction 36 000 Multi

Development

Amstor, Comfy, LPP brands, Inditex Group brands, MTI brands, Melon Fashion Group brands, Sportmaster, Mango, Planeta Kino, Igroland, others

Forum LvivShopping and Entertainment centre


Forum Lviv Shopping and Entertainment centre can be considered a significant success case for a whole complex of services by several DTZ departments.

The 69 000 sq m shopping and entertainment centre, located in central Lviv, is scheduled to open in early 2015. 115 Leading Ukrainian and international brands will lease retail space in this complex.

DTZ involvement

Following the brokering of a JV agreement on behalf of local developer Galereya Centre and Multi Development, an international developer with wide experience in development of shopping centres throughout Europe, DTZ are appointed as a co-exclusive leasing agent for this centrally located scheme. In early 2013 DTZ brokered the entry of a third partner into the J.V. – BudHouse Group.

Developer Multi Development Ukraine

Architect T + T Design

Delivery Q1 2015

Project Status Under construction

GBA 69 000 sq m

GLA 36 000 sq m

Levels 4 (including 1 underground parking level)

Parking 620 spaces

Anchors ‘Amstor’ supermarket, Comfy, Inditex brands, LPP brands, Teddy Group brands, Igroland, ‘Planeta Kino’ cinema

Supply & Demand Lviv is an important economic, cultural, academic and transportation centre of Ukraine with total official population of around 760 thousand inhabitants. It is the largest city in Western Ukraine and, its historic and architectural heritage makes it a popular tourist destination.

Lviv also hosted the matches of ‘EURO 2012’ Football Championship together with Kyiv, Donetsk and Kharkiv, as well as four Polish cities.

Total modern retail stock in Lviv was estimated at over 205,500 sq m in October 2013, or 272 sq m (GLA) of modern retail stock per 1,000 inhabitants.

The modern retail stock in Lviv has been dominated by multi-tenant retail centres and shopping malls, which account for almost 74% of total stock in the sector. Big box retail developments, comprised of the DIY-stores Epicentre and Nova Liniya, and two outlets Metro Cash&Carry, account for the remaining 26% of total retail stock in the city. There are no retail parks or fashion outlets in Lviv.

In addition, several small-format retail centres operate in city centre and other areas of Lviv. DTZ estimates that present lettable area of these properties amounts to approximately 33,600 sq m (GLA).

As of October 2013, there was over 137,000 sq m (GLA) modern retail space planned for delivery in Lviv during the period from November 2013 through until late 2017, an increase on current stock by around 53%. However, delivery of several sizeable pipeline schemes may be postponed to later periods.

High street retailing is well-developed in Lviv due to the urban structure of the city and high tourist flows in its central part.

DTZ believes that the highest potential for retailers in Lviv exists in low, lower middle and middle price segments. Occupiers’ demand remains considerable for quality retail space both in high street locations and quality retail centres in the city.

Rents

In Lviv high street retail rents were historically higher than average rents in multi-tenant retail centres, mostly due to the urban structure of the city with many tourist attractions in its central part, developed nature of street retailing, shopping habits of local inhabitants and high tourist flows, as well as lack of quality retail schemes in the non-central areas of the city.

However, after commencement of the leasing campaign in the retail and leisure centre ‘Forum Lviv’, which is presently under construction in the central area of Lviv, the correlation between prime high street rents and shopping mall rents in the city significantly converged.

As of October 2013, prime high street retail rents in Lviv amounted to $60-90 per sq m per month, with the highest rents typically achieved for quality retail premises located along Tarasa Shevchenka and Svobody Avenues, and on Rynok Square.

In the best multi-tenant retail centres in Lviv, such as ‘Forum Lviv’, net monthly retail rents vary in the range of $50-85 per sq m for standard units of 100-250 sq m.

Major multi-tenant retail schemes in Kharkiv: existing and in pipeline until 2016

Project Delivery Status Size (sq m) Developer Major brands /anchors

1. Forum Kharkiv 2015 / 2017(in phases) Planned 87 000 Multi

Development

Retail park, as well as shopping centre based on electronic appliances store, sports supermarket, retail gallery, leisure area and eateries

2. Cosmo Mall 2016 Planned 73 000 EASTGATE DEVELOPMENT

Food hypermarket, electronic appliances store, sports supermarket, retail gallery, leisure area, eateries

3. Magellan 2011/2012/2014(in phases)

Operating (phase 3 under construction)

62 000 Kray Property Hypermarket ‘Krayina’, Argo brands, LPP brands, Adidas / Reebok, Megasport, leisure area (planned)

4. Levada Mall 2015-2016 Planned 60 000 EASTGATE DEVELOPMENT

Food hypermarket, electronic appliances store, sports supermarket, retail gallery, leisure area, eateries

5. Karavan 2006/2007/2008(in phases) Operating 57 050

Karavan Group / CDA Real Estate

Hypermarket ‘Karavan’, furniture store ‘Karavan-Mebli’, MD Group brands, MTI brands, Brocard, Budynok Igrashok, Mothercare, M&S, SMYK, LPP brands, Igroland, ice-rink, others

6. Dafi 2008 Operating 56 070 DafiHypermakret ‘Fozzy’, OBI, Comfy, Inditex brands, Argo brands, MTI brands, L’Etoile, Kronverk Cinema, Ice Hall, kid’s play, others

7. Nikolskyi 2015 Under construction 42 000 BUD HOUSE

GROUP

Food supermarket, electronic appliances store, sports supermarket, retail gallery, fitness centre, cinema, kid’s play, eateries

8. French Boulevard 2006 / 2013(in phases) Operating 38 000 Aksioma Silpo, Comfy, Megasport, Milavitsa, Planeta Kino,

ice-rink, kid’s play, others

9. Forum Artem 2015 Planned 33 500 Multi Development

Food hypermarket, DIY-store, other big box retailers

KharkivPopulation 1 442 600 inhabitants

Supply & Demand Kharkiv is the second largest city in Ukraine with over 1.4 million total population plus thousands more commuting to the city due to many higher educational establishments located here. In terms of economic base, Kharkiv used to rely heavily on industrial sector, particularly machine building, and is presently in transition. The city hosted matches of EURO 2012 Football Championship.

Total modern retail stock in Kharkiv was estimated at around 407,150 sq m in October 2013, or over 282 sq m (GLA) of modern retail stock per 1,000 inhabitants, which reflects one of the lowest retail saturation levels compared to other major cities of Ukraine.

The modern retail stock in Kharkiv has been dominated by multi-tenant retail centres and shopping malls, which account for approximately 70% of total stock in the sector. Big box retail developments account for the remaining 30% of total retail stock in the city. There are no true retail parks or fashion outlets in the city.

As of October 2013, there was over 292,100 sq m (GLA) retail space planned for delivery during the period through to 2017. This new supply will increase current retail stock by almost 72%, and will bring differing dynamics to the local market, remaining generally static since 2008 (despite the significant number of large-scale development projects in pipeline).

Major schemes planned for delivery until 2017 in Kharkiv include the central retail and leisure centre ‘Nikolskyi’ by Bud House Group, as well as ‘Levada Mall’ and ‘Cosmo Mall’ by the Kharkiv-based development company Eastgate Development. The international firm Multi Development also plans to deliver two sizeable retail schemes in the city, i.e. ‘Forum Kharkiv’ and ‘Forum Artem’.

Though not being a priority destination for expansion, Kharkiv is considered a first-tier city to enter for majority of retailers in Ukraine.

Occupier demand remains significant for quality retail space both in high street locations and quality multi-tenant retail developments in Kharkiv.

DTZ believes that, due to the city’s economic base, the highest potential for retailers in Kharkiv exists in low, lower middle and middle price segments.

The retail market in Kharkiv is strongly influenced by the large-scale covered market ‘Barabashovo’, which extends to around 75 hectare and is a popular retail destination not only among local population, but also visitors from Kharkiv region and other regions of Ukraine.

Rents In Kharkiv high street retail rents currently tend to exceed average rents in multi-tenant retail centres, mostly due to the developed nature of street retailing in Sumska Street within the boundaries of the administrative centre, and lack of quality retail stock within shopping malls and retail centres in the city.

Prime high street monthly rents in Kharkiv presently vary in the range of $50-80 per sq m, with the highest rents achieved for properties located on Rozy Luxembourg and Konstytutsiyi Squares, and those having frontage toSumska Street.

In the prime multi-tenant retail centres in the city, net monthly retail rents vary in the range of $45-70 per sq m for standard units of area 100-250 sq m.

Cosmo MallShopping and Entertainment centre


Cosmo Mall Shopping and Leisure centre will be located in a densely populated and rapidly growing residential area in Kharkiv, having perfect transport and visual accessibility.

Developer EASTGATE DEVELOPMENT

Architect Chapman Taylor

Delivery Q2 2016

Project Status General Planning Stage

GBA 96 000 sq m (including Hypermarket)

GLA 73 000 sq m (including Hypermarket)

Levels 3

Parking 1 400 parking spaces

Anchors Food hypermarket, cinema, electronics, sport goods, entertainment centre

Kharkiv

Levada MallShopping and Entertainment centre

Location and description Levada Mall is located near the central part of Kharkiv - the second largest city of Ukraine.

Developer EASTGATE DEVELOPMENT

Architect Mir LLC

Delivery Q4 2015

Project Status General Planning Stage

GBA 85 000 sq m

GLA 60 000 sq m

Levels 3


Anchors Food hypermarket, cinema, bowling, skate ring, electronics, children entertainment center

DonetskPopulation 963 400 inhabitantsplus 390 700 inhabitants in the neighboring Makiivka

Major multi-tenant retail schemes in Donetsk: existing and in pipeline until 2016

Project Delivery Status Size (sq m) Developer Major brands /anchors

1. Rose Park 2008 / 2014(in phases)

Under construction (phase 1 operates) 48 000 Immochan

UkraineAuchan, Eldorado, Sportmaster, LPP brands, Planeta Kino with IMAX (9 screens)

2. Donetsk City 2006 / 2009 / 2011 (in phases) Operating 43 600 Domus

Varus, Inditex brands, Marks&Spencer, Bonjour, L’Etoile, Multiplex cinema (8 screens), kid’s play, others

3. NORD Mall 2016 Planned 30 000 local developer Food supermarket, electronic appliances store, cinema (6 screens), kid’s play, others

4. Makiivka Retail Park

2006/2007(in phases) Operating 27 300 Amstor Amstor, Praktiker, Comfy, BRW, Jysk

5. Décor Donbass 2008 Operating 23 500 Décor Service Velyka Kyshenya, Polyana, Mothercare, Brocard, bowling, amusement arcade, others

6. Belyi Lebed 2004 (1965)(reconstruction) Operating 20 000 local developer Boom, Foxtrot, Megasport, Mosaic, Monton,

Plastilin, kid’s play

NORD Mall Shopping and Entertainment Centre

Location Located in the southern part of Donetsk, in one of its most densely populated districts, the scheme is easily accessible from the city centre and well-serviced by public transport, providing convenient access to all areas of the city. The scheme benefits from excellent visibility from Leninskiy Avenue with a 149-metre frontage along it.

DTZ Involvement

DTZ has been involved in the project as consultant and exclusive leasing agent.

Developer Public joint-stock company ‘Nord’

Architect Chapman Taylor Ukraine

Planned delivery

2016

Project Status

Planning stage

GBA 67 700 sq m

GLA 30 000 sq m

No. of retail and leisure floors

3

Parking 500 car parking places

Anchors Food supermarket, electronic appliances store, sports supermarket, home interior and furniture store, entertainment area (cinema, kid’s play, bowling / billiards), eateries

Supply & Demand Donetsk with an official population around 1 million inhabitants is one of the major coal-mining and industrial centres of Ukraine, as well as the regional and administrative centre of the Donbas river basin, forming the heavy industrial heartland of the country.

Cumulative modern retail stock in Donetsk and its satellite city Makiivka was estimated at around 365,800 sq m (GLA) in October 2013, or 379 sq m of modern retail stock per 1,000 inhabitants. This figure accounts for all major retail developments in the city of or over 5,000 sq m(GLA), and includes approximately 157,300 sq m of ‘big box’ developments.

The modern retail stock in Donetsk has been dominated by multi-tenant retail centres and shopping malls, which account for around 57% of total stock, whilst big box retail developments for 36%. The remaining 7% of total modern retail stock is formed by a retail park in the city of Makiivka, which is anchored by the food supermarket Amstor and the DIY-store Praktiker.

In addition, over a dozen small-format retail centres operate in the city centre and other areas of Donetsk. DTZ estimates that present lettable area of these properties amounts to approximately 40,000 sq m (GLA)

As of October 2013, there was around 220,500 sq m (GLA) modern retail space planned for delivery in Donetsk until late 2017, an increase on current stock by over 52%. However, delivery of several sizeable schemes is likely to be postponed to later periods.

High street retailing is developed in Donetsk, with the major existing shopping mall ‘Donetsk-City’ located on the central Artema Street.

Donetsk, as one of the most affluent cities in Ukraine, is regarded to share with Odessa the position of the second after Kyiv most attractive destination to enter for a majority of retailers, operating in all pricing categories.

However, the deficit of quality retail properties in Donetsk remains one of major obstacles for retailers’ penetration of the market. Many quality retailers entered the local market together with the delivery of the retail and leisure centre ‘Donetsk-City’, and more will come with the planned opening of the shopping mall ‘Rose Park’ in Makiivka in 2014.

Rents

Out of 6 major cities covered by this research, Donetsk is the only city with average rents in prime multi-tenant retail centres exceeding high street retail rents. This trend has been attributed to ‘Donetsk-City’, which falls in the prime central high street location and is commanding the highest retail rents in the city.

Prime high street retail rents in Donetsk amount to $40-90 per sq m per month, with the highest rents typically achieved for quality retail premises located around Lenina Square and along Artema Street.

In the multi-tenant retail centres in Donetsk, prime net monthly retail rents vary in the range of $60-100 per sq m for standard units of area 100-250 sq m.

DnipropetrovskPopulation 992 900 inhabitants

Major multi-tenant retail schemes in Dnipropetrovsk: existing and in pipeline until 2016


1. Karavan 2008 / 2009(in 3 phases)

Operating(phase 3 to become fully operational in Q1 2014)

76 200 Karavan Group / CDA Real Estate

Hypermarket ‘Karavan’, furniture store ‘Karavan-Mebli’, Oldi, Eldorado, Brocard, Adidas, Intertop, Plato, Centro, Oodgi, O’stin, ice-rink, Multiplex

2. Most City Centre 2006 Operating 25 300 Alef Estate Varus, Comfy, Inditex brands, MTI brands, Argo

brands, cinema ‘Most-Kino’, Igroland, eateries

3. Apollo 2009 Operating 20 000 UMK Varus, Comfy, Antoshka, Plato, Centro, Oodji, fitness centre

4. Passage 2011 Operating 13 000 Akselrod Estate

GAP, MTI brands, MD Group brands, M&S, Centro, Plato, eateries

Rents In Dnipropetrovsk high street retail rents historically tended to exceed average rents in multi-tenant retail centres, mostly due to the developed nature of street retailing along Karl Marx Avenue within the boundaries of the administrative centre, shopping habits of local inhabitants and lack of quality retail schemes in the non-central areas of the city. However, delivery of the retail centre ‘Passage’ in 2011 altered this correlation, as prime high street and shopping mall rents in the city converged.

Prime high street monthly rents in Dnipropetrovsk presently vary in the range of $60-90 per sq m, with the highest rents achieved for properties along Karl Marx Avenue and Lenin Square.

Similar prime net monthly retail rents have registered in the retail centres in the city for standard units of area 100-250 sq m.

Supply & Demand Total modern retail stock in Dnipropetrovsk, the third largest city in Ukraine, was estimated at over 390,000 sq m in October 2013, or 393 sq m (GLA) of modern retail stock per 1,000 inhabitants.

The modern retail stock in Dnipropetrovsk has been dominated by multi-tenant retail centres and shopping malls, which account for approximately 72% of total stock in the sector. Big box retail developments account for the remaining 28% of total retail stock in the city. There are no retail parks or fashion outlets in the city.

There were no major retail schemes delivered in Dnipropetrovsk in 2013. Though none of the retail and leisure centres is scheduled for delivery in 2014, the company CDA Real Estate (part of DCH) plans to open for visitors the third phase of the retail and leisure centre ‘Karavan’, which was delivered in 2009.

As of October 2013, there was around 234,300 sq m (GLA) retail space planned for delivery in 2015-2017. This new supply will increase current retail stock by over 60%, and may bring some differing dynamics to the local market, which has been remaining generally unchanged since 2011.

Dnipropetrovsk is considered a first-tier city to enter for a majority of retailers, which are either present or considering expansion to Ukraine. Demand remains strong for quality retail space both in high street locations and multi-tenant retail centres of the city.

In DTZ’s opinion, the high attractiveness of Dnipropetrovsk is related to a combination of such factors as large population, relatively stable and diversified economic base, availability of critical mass of the retail schemes of decent quality in the city and developed high street retailing.

DTZ believes that the highest potential for retailers in Dnipropetrovsk exists in low, lower middle and premium price segments.

Ivano-FrankivskPopulation 243 700 inhabitants

Major multi-tenant retail schemes in Ivano-Frankivsk: existing and in pipeline until 2016


1. Veles 2012 Operating (expansion planned) 16 000 local developer

‘Kolibris’ food supermarket, ‘SHOK’ electronic appliances store, Tyhres, Watsons, CentrObuv, other local brands

2. Stanislav 2015 Under construction (45% completed) 15 500 local developer Food supermarket, electronic appliances store,

sports supermarket, cinema (5 screens), others

3. Arsen 2006 Operating 12 000 IntermarketArsen, Eldorado, Фокстрот, Intertop, Adidas, BRW,Top Secret, Kira Plastinina, Junker, Wojas, Luciano Carvari, Colin’s, others

4. Velmart 2010 / 2017 Operating (phase 2 planned) 7 800* VK Development Velmart, Adidas discount, others

5. Panorama Plaza 2004 Operating 7 100 local developer Silpo, Brocard, furniture shops arcade, bowling, billiards, night club, others

* Once extended, gross leasable area of shopping mall ‘Equator’ is planned to amount to around 32,600 sq m (including phase 1).

StanislavShopping and Entertainment centre

Location The scheme benefits from the unique core city centre location in Ivano-Frankivsk. It is situated on Andriy Melnyk Street in immediate proximity to the central pedestrian zone and Nezalezhnosti Street, which is major central street in the city and important commuting route. The property is surrounded by prime multi-family residential buildings and located in front of the Memorial Park.

DTZ’s involvement

DTZ has been involved in the project as consultant on its concept revision and optimisation, as well as exclusive leasing agent.

Developer OJSC ‘Energetychni Tekhnologii’

Planned delivery

2015

Project status

45% completed

GBA 20 100 sq m

GLA 15 500 sq m

No. of retail and leisure floors

2-4

Parking 150 car parking places

Anchors Food supermarket, electronic appliances store, sports supermarket, entertainment area (cinema, kid’s play, billiards), restaurants and food court

Supply & Demand Ivano-Frankivsk with an official population around 250,000 inhabitants is the regional and administrative centre of Ivano-Frankivsk oblast in Western Ukraine. The city is located close to the Carpathian mountains, in proximity to numerous resorts, including ‘Bukovel’, the major ski resort in the country.

According to DTZ, the retail property market in Ivano-Frankivsk is highly fragmented and immature compared to major cities of Ukraine. Markets and small-format retail centres, occupied by local retailers, remain popular shopping destinations among the city inhabitants.

Cumulative modern retail stock in Ivano-Frankivsk was estimated at around 81,400 sq m (GLA) in October 2013, or 333 sq m of modern retail stock per 1,000 inhabitants. This figure accounts for all major retail developments in the city of or over 5,000 sq m (GLA), and includes approximately 26,500 sq m of ‘big box’ developments.

In Ivano-Frankivsk there are no modern quality shopping malls with attractive tenant-mix and of gross leasable area over 10,000 sq m.

The ‘modern’ retail stock in Ivano-Frankivsk’ has been dominated by multi-tenant retail centres and shopping malls, which account for around 67% of total stock, whilst big box retail development, comprised of the DIY-store ‘Epicentre’ and Metro Cash&Carry, – for the remaining 33%.

In addition, many small-format retail centres operate in city centre and other areas of Ivano-Frankivsk. DTZ estimates that cumulative area of these properties, predominantly of very low quality, presently amounts to approximately 41,600 sq m (GLA).

As of October 2013, around 31,000 sq m (GLA) modern retail space was planned for delivery in Ivano-Frankivsk until late 2017, an increase on current stock by around 38%. There were only two retail schemes in pipeline, i.e. the centrally located retail and leisure centre ‘Stanislav’, and ‘Equator’ planned to be developed in the remote part of the city via extension of the existing ‘Velmart’. The likelihood of delivery of the latter scheme by 2017 remains very low.

DTZ noticed that quality chain retailers and leisure operators in Ukraine are generally interested to occupy space both in high street locations in Ivano-Frankivsk, as well as in quality and well-conceived multi-tenanted retail developments to appear in the city.

We believe that, due to low market saturation, poor quality of existing retail stock and weak current competition on the retail market in Ivano-Frankivsk, the city has considerable potential for retailers and developers, particularly in ‘low’, ‘middle minus’ and ‘middle’ price segments.

Rents

In Ivano-Frankivsk high street retail rents are higher than average rents in multi-tenant retail centres, due to the absence of quality modern retail schemes in the city, as well as urban structure of the city, shopping habits of local inhabitants and considerable tourist flows in the city centre.

Prime high street retail rents in Ivano-Frankivsk amount to $20-50 per sq m per month. In the small-format multi-tenant retail centres, which are located in the downtown, asking base monthly rents vary in the range of $15-25 per sq m.

In the few, mostly poor quality first-generation, multi-tenant retail centres in Ivano-Frankivsk, prime net monthly retail rents vary in the range of $15-30 per sq m for standard units of area 100-250 sq m.

Lease terms and conditions in the quality multi-tenant retail centres in Ukraine

Lease duration 3-5 years – for standard retail units of 50-250 sq m; 7-10 years – for semi-anchors (500-1,000 sq m) and 10-15 years – for anchor tenants plus a priority right to renew the lease.

Rent payment Usually pegged to the US dollar or Euro, but paid in the Ukrainian hryvnya. Indexation Annually, by change in CPI in the United States published by the US Department of Labour, by

change of Euro CPI published by Eurostat or by change in CPI in Ukraine published by the State Statistics Committee.

Rent Fixed, an additional turnover rent has now become a common practice applied in the new high-quality retail developments (e.g. Riviera Shopping City, Sky Mall, Forum Lviv, King Cross Leopolis, Happy Mall, and others).

Service charge USD 2-8 per sq m per month in addition to utility costs, depending on quality of a retail development.

Marketing charge USD 2-5 per sq m per month, depending on quality of a retail development.Fit-out of retail units

Shell & core. Cost contribution for partial fit-out or turn-key condition in sometimes provided to anchor tenants.

Guarantee The form of cash deposit or bank guarantee in the amount from 2 to 6 months of lease period has been common. Parent company guarantee is rarely applied.

DefinitionsRetail stock - Individual developments or stand-alone retail units with a gross lettable area exceeding 5,000 sq m.

Small retail format - retail scheme delivered to the market after 1990 or extensively upgraded, with a Gross Leasable Area (GLA) of less than 5,000 sqm, with 5 or more retail units.

Hypermarket - Store selling food or food plus non-food items having a gross lettable area (GLA) of at least 5,000 sq m. Stand-alone hypermarkets may include some kiosk or in-line units in front of the check-out areas.

Fashion (factory) outlet - Shop or group of shops, usually in an out-of-centre location, specialised in selling end-of-line and, occasionally, damaged goods at permanently discounted prices.

Retail park - An out of town retail development with multiple retailers operating typically from individual units in large area format.

High street - The most important shopping streets in town and city centres having the highest concentration of retailers.

Prime retail rent - The attainable average prime rent that could be expected for a retail unit of size in the range of 100-200 sq m located along the high street (i.e. prime high street rent) or in the prime retail scheme (i.e. prime shopping centre rent). The rent is given as a base rent, i.e. no service charge and tax is included. Frontage zoning is not adopted in Ukraine.

33V Horkoho Street,3rd floor, Maxim BC, 03150 Kyiv, Ukraine

Phone +38 044 220 30 60Fax +38 044 220 30 61Email [email protected]

Information contained in this brochure should not be relied upon as a basis for entering into transactions without seeking specific, qualified, professional advice. Whilst facts have been rigorously checked, DTZ can take no responsibility for any damage or loss suffered as a result of any inadvertent inaccuracy within this report. Information contained herein should not, in whole or part, be published, reproduced or referred to without prior approval. Any such reproduction should be credited to DTZ.

Nick Cotton FRICSManaging Director DTZ Ukraine

DTZTel.: +38 044 220 30 60Fax: +38 044 220 30 [email protected]

Nataliya Mykolaychuk DirectorRetail Agency and Consultancy

DTZTel.: +38 044 220 30 60Mobile: +38 095 283 2830Fax: +38 044 220 30 [email protected]

Marta Kostiuk MScRealEstDirector, Research and Development Consultancy

DTZTel.: +38 044 220 30 60Mobile: +38 050 371 27 05Fax: +38 044 220 30 [email protected]

dtz ukraine retail in the regions · parking 3 600 spaces anchors food hypermarket, ice rink,...

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