After a sharp demand growth in 2022, Lviv is now facing the opposite problem - an oversupply of office space and a decline in leasing activity. There is more office space than needed, and tenants have reduced their activity. IT companies, which used to form the bulk of demand, have switched to a hybrid format and started renting smaller premises. At the same time, new business centres built to meet high expectations remain partially empty. As a result, the level of vacant offices exceeds 30%, putting pressure on rental rates and forcing building owners to offer additional incentives.
"Demand from IT companies has dropped significantly, and today the level of vacancy in Lviv is even higher than in Kyiv. Large deals have virtually disappeared, while the market is held by small spaces of 100-300 m²." explains Roksolana Pyrtkois a commercial property expert, head of Roksolana shopping mall and Spartak shopping centre in Lviv.
Roksolana Pyrtko adds that the contrast is clearly visible on the example of her own objects: "At Spartak, about 20% of space remains vacant, and we had to suspend the second phase of construction until the end of martial law. At Roksolana, however, the vacancy rate is only 10%. We managed to maintain stability by investing in generators and autonomous systems.".
Despite some positive examples, the market remains volatile. "Occupancy rates are affected by cuts in the IT sector, mobilisation activity and a decline in foreign orders. This makes the market vulnerable, despite domestic investment."emphasises. Roksolana Pyrtko.
The expert predicts that in 2025 rental rates will remain relatively stable, but the main demand will continue to be in the small and medium-sized office segment. "The resumption of full-fledged business activity is possible only after the war ends and the economy stabilises"summarises Roksolana Pyrtko.
