Oversupply; aging facilities; low prices: Those are just three of many factors that make the warehouse segment perhaps the most inhospitable segment of Kyiv's real estate market.
All problems seem to result from the fact that Kyiv inherited vast amounts of low-quality warehouse space from the Soviet Union. But Ukraine no longer produces enough goods to come close to filling all that space.
'As local factories stand idle, demand for storage space has subsided significantly since Soviet times, when each factory or shop used to fill its own storage place,' said Serhy Terekhov, office manager at Key Realty.
The space glut has led to low prices. The low prices, in turn, have discouraged developers from investing in high-quality storage space. Not surprisingly, that has led to a severe lack of Western-standard warehouses, which typically contain amenities like refrigeration and high-capacity loading docks.
'Our clients, most of whom are foreign hi-fi producers, want Western-standard warehouses,' said Key Realty Director Nadiya Moiseyenko.
Unfortunately, investors have yet to come forward with ambitious Western-standard office projects to fill that potential demand.
One reason is the cost of such projects. Moiseyenko noted that it's difficult to modernize outdated warehouse complexes, meaning potential investors would have to start from scratch.
'Old warehouse premises cannot be re-built,' Moiseyenko said.
The low price of the competition certainly has discouraged investment in the sector, as well. And lingering effects of the financial crisis of 1998 – which set the Ukraine real estate market back three years by conservative estimates – are certainly not helping matters.
'Two years ago we could lease storage space at nearly $10 per square meter; now the price has dropped by more than 50 percent,' Moiseyenko said. 'We have some projects now, but not as many as we used to have.'
Basic warehouse space runs even cheaper, she notes – as low as $2 to $3 per square meter.
Despite such obstacles, a modern warehouse facility still might be a good investment. The few modern facilities that do exist have been successful. Key Realty works as a leasing agent for a modern warehouse on Sklyarenko street, near Petrivka market on the outskirts of Kyiv (Kurenivka district).
The facility boasts two load lifts with load capacities of 1,500 tons each. It can accommodate several large vehicles at once. And access to the building is controlled by 24-hour security.
The building has three floors and about 3,300 square meters of warehouse space. Roughly two-thirds of that space is occupied, leaving nearly 1,100 square meters available today.
The monthly rent price is $5 per square meter, which is about as expensive as it gets for warehouse space in Kyiv, according to Moiseyenko.
Anna Stepanenko can be reached at [email protected]
