The full-scale war has dramatically changed the office property market in Ukraine. In 2021, Kyiv demonstrated steady growth, with vacancy rates in the range of 11-12% and rates in Class A business centres reaching $25-27/m². The capital remained the main focus of investment activity, with new projects being implemented in large volumes and demand driven by both Ukrainian and international companies.
As of 2024-2025, the situation is the opposite. Some space has been damaged or left without tenants, international players have reduced their presence, and large deals have virtually disappeared. Demand has shifted towards smaller and medium-sized offices, and regional centres, such as Lviv, have gained new opportunities due to business relocation. At the same time, they have not gained stability: the number of vacant premises in Western cities is growing, and the market is operating in an uncertain environment.
Kyiv: falling demand and new tenant profile
The capital remains the largest office property market, but the war has changed its structure. Many buildings have been damaged, some have been left without tenants, and international companies have closed representative offices or moved their offices abroad. If in 2021 Kyiv is confident of built up business centre volumes, empty offices amounted to only 11-12 %, and class A rents reached $25-27/m², the picture looks quite different in 2024-2025. As of mid-2025 the share of vacant space reached 28.2 % in class A, 20.5 % in class B and 14.2 % in class C.
Large transactions have become rare, while demand has shifted to small and medium-sized offices. This is logical - companies have optimised their staff, partially switched to remote work and are no longer ready to maintain tens of thousands of square metres.
Despite this, the market has not stopped. IT companies, telecoms operators, government agencies and international organisations remain active players. And recently, in Kyiv A new type of tenant has emerged - defence corporations and related manufacturers, and charitable foundations. Companies from Germany, the United Kingdom, the United States and Turkey are already opening representative offices or negotiating in Ukraine. This is not a massive segment, but it is becoming noticeable, especially for modern Class A office space.
Another feature is the change in selection criteria. Whereas previously prestige, architecture and proximity to the metro were decisive, these factors are now only part of the equation. The focus is on shelter, backup power supply, stable internet, and building autonomy. Business centres that do not provide these things are forced to either significantly reduce their rates or be left with empty space.
Back in 2021, Kyiv had about 2.4 million sq m of competitive office stock. Today, this figure is is 2.1 million m². In absolute terms, this is minus several hundred thousand metres, but it is important that the market lost not only due to destruction. Most new projects have stopped: in 2021, hundreds of thousands of sq m of new office space were commissioned, while in 2024 only the following were introduced 34 thousand m².
This means that new office developments have effectively stopped coming on to the market. Even if demand starts to recover, it will take years for modern business centres to appear.
Lviv: from relocation boom to high vacancy rates
At the beginning of the full-scale war, Lviv became the main "safe hub" for businesses from the central and eastern regions. Entire teams moved here, which created a wave of situational demand for office space. However, this trend proved to be short-lived. Already in 2023, demand declined, and the market returned to its traditional drivers - local companies and the IT sector.
However, it was the IT sector, which provided the lion's share of demand, that began to reduce the need for offices in 2022. The reasons are the transition to a hybrid work format and cost optimisation in wartime. As a result, small transactions of 100-300 sq m became the largest rental segment, which corresponds to the format of small and medium-sized businesses. Large transactions have virtually disappeared.
Pros. data CBRE, in Q3 2024:
- total office supply in Lviv amounted to 420,000 sq m (+3 % YTD);
- The new supply is only 12,000 sq m, which is 75 % less than in 2023;
- The average vacancy rate reached 34 % (+6 p.p. YTD);
- rental rates decreased by 21 % y/y and amounted to $7-16/m²/month (excluding VAT and operating expenses)
The high level of vacancy is primarily due to a decline in demand from IT companies and a general decline in leasing activity. New business centres built to meet the previous large-scale demand remain partially empty. And local companies are often looking for smaller and cheaper space, including non-professional office properties.
Thus, despite a strong start in 2022, the office market in Lviv came under serious pressure in 2024: the vacancy rate here is even higher than in Kyiv, and landlords are forced to cut rates and offer additional terms to retain existing tenants.
As the manager of Roksolana and Spartak shopping malls, I observe daily how general market trends are reflected in specific properties. In Spartak, about 20% of office space has not yet been commissioned, and the second phase of construction has been suspended until the end of martial law. At the same time, only about 10% of office space in Roksolana shopping centre remains unoccupied, while the average for Lviv is much higher. We have maintained stability through timely investments in generator sets, which allowed our tenants to operate without interruption even in difficult conditions.
However, even modern and well-equipped facilities are affected by external factors beyond their control. The occupancy rate is significantly affected by the mobilisation activity of the TCC, the reduction in the number of foreign orders from IT companies and problems with finding full-time employees. These factors limit the market's capacity and make it unstable, despite domestic investment and support measures.
Conclusions and outlook
The office market in Ukraine is in the process of adaptation. In Kyiv, vacancy remains high, with tenants predominantly focusing on small space and limited supply of new properties. Lviv continues to be the main regional hub, however, high vacancy rates and weak leasing activity are increasing pressure on the market and holding back rental recovery.
In the short term, rents will remain relatively stable in 2025, with possible fluctuations of a few percent depending on the class and location. Demand will be concentrated in the small and medium-sized office segment, which is in line with the format of operation of most companies in wartime. IT companies, government agencies, international organisations and defence companies will remain the key occupiers.
У medium-term n the long term, the course of the war will remain a decisive factor. The full recovery in demand will only be possible once the hostilities are over and Ukraine's security stabilises. Until then, the launch of new projects will remain limited, and the market will work with the existing stock. The hybrid work format has already been established as a standard, and even after Ukraine's victory, it will continue to define the parameters of demand for office space.
In general, the market is in in the correction phase: tenant activity remains, but a return to pre-war volumes is possible only after the war and under favourable economic conditions.
Author: Roksolana Pyrtko, a specialist with over 15 years of experience in the real estate market, manages over 100,000 sqm of commercial space in Lviv
