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To Khreschatyk showed interest: tenants return to the main street of Kiev

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30.08.2017

The main shopping street of Kiev has gone through a difficult period: two revolutions and the subsequent crisis. Many operators had to close their shops. However, over the past year, interest in the Khreshchatyk from the tenants began to recover, so on this street significantly decreased the proportion of vacant space

UPS and downs

Before the crisis of 2008-2009 to find the free space on Khreshchatyk was almost impossible. When entering to Ukraine, the opening of the first store on the main street of Kiev was considered a must-have for every big Western fashion retailer. The interest of companies to downtown was more of a marketing character than commercial (including as a result of undue rents), noted market participants. According to them, at that time to rent a space in this location at a cost of $400/sqm per month.

With the onset of the global economic crisis of the tenants closed their stores. Including for this reason, rental rates for Khreschatyk fell to $70-100 per sq m per month. "In the period from 2010 through early 2013 the street has restored the reputation and growing demand among leading retailers," notes managing Director of Colliers International in Ukraine Oleksandr Nosachenko.

In result, rents began to recover gradually, reaching a peak in 2011 to $300 per 1 sq m, but pre-crisis levels have not returned (see graph). Started in late 2013 the confrontation on the Maidan and the subsequent crisis led to the mass closure of shops on Khreshchatyk and reduced pedestrian flow. As a result, the share of vacant premises at the end of the first half of 2014 reached 12%, and in August, 2015 and 19%. Regarding rental rates, over the same period, they decreased to the level of rates in shopping centers in Kiev (up to $70 per sq m per month), which was not even in the crisis 2008-2009.

However, over the past year the situation with the lease of the premises on Khreshchatyk began to level off. "People gradually began to return to the main street of the city. On the background of conditionally stable economic and political situation in the country on the main street of the city there is a tendency to recovery," says Alexander Nosachenko. Maximum rents for quality space of the capital with 150 sqm reached $83 per sq m per month.

The highest rents on the main shopping streets

 

The vacancy rate for the near date is approximately 10-12%, said the head of the retail space Department at JLL in Ukraine Ekaterina Spring. Often remain empty premises over 500 sq m with high rental rates.

"We can say that until 2014, the tenants were ready to lay higher rental costs for Khreschatyk street, which was about 25-30% of turnover and above. To date, the rent payment must meet the cost-effective a fraction of the cost," says Catherine Spring.

The accent is on fun

According to the company RealtyStory, the proportion of stores in the fashion segment on Khreshchatyk annually reduced, significantly increasing the proportion of cafés, restaurants, coffee shops. "Now fashion retail is 20% of the total area on Khreshchatyk", — said in a recent interview with news Agency "Interfax-Ukraine" General Director of "ESTA holding" (which owns the capital's Central Department store), Maxim Gromadtsov.

So, in 2016, closed 16 stores clothes, and opened only eight. At the same time, new cafes and restaurants opened 47 vs 38 closed. Banks today take about 20-30% of the premises of street retail, 15-20% more shops of clothes, shoes etc.

On Khreshchatyk return operators, which in 2014 had to close their shops. For example, the network of "Hello" last year opened a trading point with an area of 120 square meters and is considering expanding the store.

"The decision to open the store was made in the beginning of last year. Before the revolution, on the Khreshchatyk, the company successfully conducted its activities in two stores, "Hello." After the dramatic events we immediately decided to go again on the main street of the country. However, when it became clear that Khreshchatyk is alive, there are people and there is a demand for our products, has decided to return," says development Director and managing network Hello Nikolay Astapov. According to him, the conversion of the store is almost comparable to other stores "Hello" in Kiev. But the average bill is 20% higher than average in Kiev, and among street-shops — at 40%.

In standby mode

According to Ekaterina Spring, operators of the fashion segment continues to be viewed primarily Khreshchatyk to host their flagship stores.

So, in March of this year the company Arber Fashion Group opened a fourth store on the main street. It became the flagship and the largest in the network.

"It was a strategic decision. First, we opened a small shop of 60 sq. m. near the metro. He has shown a good momentum, we are pleased with the results of his work. Then we had the opportunity to open a two-storey store in the tradition of the key fashion retailers worldwide," says CEO Arber Fashion Group Vadim zolotarevskiy. According to him, Arber shops on Khreshchatyk capture the biggest in Kiev tourist traffic. This audience is not associated with the audience customers of other stores.

However, the main problem downtown, according to Vadim Zolotarevsky, is that the primary audience of low-end, with low average check. "Of course, center is a crucial place for shopping, as, for example, the Central streets in other countries of Europe. The major European capitals such as London, Vienna, Rome, always on the main shopping street indices of the operators is very high. Khreshchatyk can regain his glory, but they should open the stores with a critical set of formats, which will promote the street as a place for shopping a large audience", — says Vadim zolotarevskiy.

Today Zara, Mango, "VSI.Svoï", Argo, cum began to form a critical mass of high-quality formats that will contribute to the establishment of Khreshchatyk as a place for shopping. Most operators do not hide their hopes for the parish on Khreshchatyk famous brand H&M.

Author: Tatiana Hamster

 

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