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 will host matches of EURO 2012 Football Championship. Total modern retail stock in Kharkiv was estimated at around 310,650 sq m in November 2011, or 215 sq m of modern retail stock per 1,000 inhabitants, which reflects the lowest retail saturation 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 61% of total stock in the sector. Big box retail developments account for the remaining 39% of total retail stock in the city. There are no true retail parks or fashion outlets in the city.
Only around 5,000 sq m (GLA) of new retail stock was delivered in Kharkiv in 2011, comprised of the neighborhood retail centre ‘Joker’. The fourth quarter of 2011 may also see delivery of ‘Ave Plaza’ and ‘Magellan’ (phase 1) with cumulative area amounting to around 23,130 sq m (GLA). As of November 2011, there was over 104,500 sq m (GLA) retail space planned for delivery during the period from December 2011 to late 2012. This new supply will increase current retail stock by almost 34%, and will bring some 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 in 2012 in Kharkiv include the extensions of ‘Magellan’ and ‘Francuzskyi Boulevard’. 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.
In Kharkiv high street retail rents currently tend to exceed average rents in multi-tenant retail centres in the city, mostly due to the developed nature of street retailing in Sumska Street within the boundaries of the administrative centre, and lack of quality retail supply in the densely-populated peripheral neighbourhoods of the city. Prime high street monthly rents in Kharkiv presently vary in the range of $60-75 per sq m, with the highest rents achieved for properties located on Rozy Luxembourg and Konstytutsiyi Squares, and those having frontage to Sumska Street.
In the prime multi-tenant retail centres in the city, net monthly retail rents vary in the range of $45-65 per sq m for standard units of area 100-300 sq m.