The opening of the new business center Liner

In 2021, a new business center Liner will open in Kyiv. There will be almost 25,000 sq. m of total area, a system of flexible offices, modern architecture, state-of-the-art technologies, two-level underground parking, well-developed infrastructure, and convenient traffic interchange.
Earlier in the year, the Ukrainian developer Really Building started constructing a new business center Liner in the partnership with the Israeli company Simpleinvest. The construction of a class-B business center in Novokonstantinovskaya Street is planned to be completed by the end of 2021. Retail & Development Advisor, a consultant and project broker, shared key details and competitive advantages of the future business center.
It should be noted that RDA performed several tasks simultaneously in this project. In particular, it had the following responsibilities:
  • Analysis of the state of the commercial real estate market, analysis of the building site, and all the other factors influencing the project’s decision-making process.
  • Pre-brokerage.
  • The preliminary financial evaluation of the project, maximization of cost-effectiveness through conceptual and architectural solutions.
“RDA is a professional company that provides deep, extended analysis, and discloses a wide range of information on market participants. Such cooperation has allowed receiving many useful recommendations, from design to implementation,” the Head of the real estate practice group of Really Building Anna Murashenko says.
According to her, the project participants approved the construction of a 12-story business center Liner with a total area of almost 25,000 sq. m through cooperative efforts. The rental area of the business center will be over 17,400 sq. m, where the office space will take 16,150 sq. m, and the commercial one will be set up on 1,270 sq. m. The construction will also include two-level underground parking for 125 vehicles. 
RDA office real estate manager Vladimir Kovalenko adds that the business center will be implemented in a modern architectural concept, using the latest engineering technologies. At the same time, Liner intends to introduce a system of “flexible offices” with a number of the following advantages for both a tenant and the lessor of office space: 
  • Functional environment and common consumption culture.
  • Minimization of business risks, optimization of costs, and flexibility to expand or reduce the space.
  • The “office-in-the-office” rent.
  • Office space rental costs optimization through the non-utilization of common areas.
“The office rental market is changing, so flexible solutions play an increasing role. The rapid development of the flexible office segment shows that operators are responding rapidly to market demands, as companies are increasingly giving preference to the environmental functionality and non-traditional leasing. It is more effective since it offers flexibility in the rental period and the sizes of the rental spaces and allows for a rapid change in the modern business environment,” Volodymyr Kovalenko says.
He said that, with global economic changes in the world, the commercial real estate market was now dictating new demand. Most companies have abandoned large offices (500-1,000 sq. m), resulting in a shortage of small premises. The BC Liner project implies the layouts from 50 sq. m to meet today’s market’s needs.
The project of the business center and its location will provide its tenants with a well-developed infrastructure. The BC will have two closed conference rooms, including an open terrace of over 400 sq. m. The complex will be also equipped with a restaurant with a 700-square-meter terrace on the ground floor of the building. Besides, a bank, courier, and other offices and service operators will work for the tenants.
At the same time, many professional commercial units (Gorodok Gallery, Retail Park Petrivka, Blockbuster, Plazma, and others), hypermarkets (Ashan, Epicenter, Metro), small retail shops, and restaurants are within walking distance from the business center.
The business center’s proximity to traffic interchanges is another important competitive advantage. Beside Pochaina Metro Station and many public transport stops (both urban and suburban), the Zenith city train station is also close to the business center. Thus, the tenants will be able to reach the BC from any point of the city or suburbs in just 30 minutes with no traffic.
Volodymyr Kovalenko also draws attention to the fact that some quality facilities work in the area of Pochain and Taras Shevchenko metro stations. Including the SOUTH Trade and Office Centre, Forum Park Plaza, business centers Kinetik, Rialto, Wave Tower, and others. Thus, this area features a high-level business activity that makes it attractive for both office space tenants and commercial real estate lessors and investors. Rental rates (including OPEX) in the specified business centers range from $14 to $22 per sq. m. The BC Liner’s planned rental rate will be averagely $20 per square meter. 
It is crucial to note that the partners of the project have already started selling the premises in the future business center. The average price under construction is $2,000 per square meter. So,  an office of 50 sq. m will cost about $100,000. “With an average planning rent of $20 per sq. m ($1,000 per 50 sq. m per month or $12,000 per year) investors can get 12% of annual revenue and even more when buying real estate during the construction phase,” Kovalenko specifies. 
At the same time, investors can expect a significant increase in returns in the future if the political and economic situation is stable. In 2018–2019, rental rates on the capital’s commercial real estate market showed a positive trend. Thus, in 2018, the maximum monthly rent in class A reached $29 per sq. m increased by $1 per sq. m, and it increased by as much as $6 per square meter in class B at the same period, having reached the pre-crisis level of $23 per sq. m.
“The reason for this growth is the high demand against the extremely limited new supply of quality office space on the Kyiv market. Even though several large business centers were put into operation in the capital in 2018, the net uptake of office space amounted was 139,000 sq. m, peaking at maximum value over the past 10 years. In 2019, this trend continued, and the volume of transactions reached 168,000 sq. m that allowed last year to become one of the best years of the commercial real estate market of the country in all its years. Of course, the COVID-19 epidemic made its adjustments. At the beginning of the quarantine, many companies froze development and optimized costs. That’s why the demand has shifted to small high-quality premises that are favorable for the investment attractiveness of Liner.”