Roksolana Pyrtko shares analysis of Ukraine’s office market during wartime and business adaptation

 

 

Author: Roksolana Pyrtko, a real estate professional with over 15 years of experience, managing more than 100,000 m² of commercial space in Lviv

The full-scale war has drastically changed Ukraine’s office real estate market. In 2021, Kyiv demonstrated steady growth: vacancy was only about 11–12%, and Class A business center rents reached $25–27/m². The capital remained the main point of investment activity, with new projects being launched in large volumes, and demand coming from both Ukrainian and international companies.

By 2024–2025, the situation is the opposite. Part of the stock was damaged or left without tenants, international players reduced their presence, and major transactions nearly disappeared. Demand shifted toward small and medium-sized offices, while regional centers — particularly Lviv — gained new opportunities thanks to business relocations. At the same time, stability has not been achieved: in western cities, vacancy is growing, and the market operates under uncertainty.

Kyiv: falling demand and a new tenant profile

The capital remains the largest office real estate market, but the war has changed its structure. Many buildings were damaged, some left tenantless, and international companies closed offices or moved them abroad. In 2021, Kyiv was steadily expanding its business center stock, with vacancy at only 11–12% and Class A rents reaching $25–27/m². In 2024–2025, the picture looks very different: by mid-2025, vacancy reached 28.2% in Class A, 20.5% in Class B, and 14.2% in Class C.

Large transactions became rare, while demand shifted toward small and medium offices. This is logical — companies optimized staff, partially switched to remote work, and no longer want to hold tens of thousands of square meters.

Still, the market has not stopped. IT companies, telecom operators, government institutions, and international organizations remain active. Recently, a new type of tenant has emerged in Kyiv — defense corporations and related manufacturers, as well as charitable foundations. Companies from Germany, the UK, the US, and Turkey are already opening offices or negotiating. This is not yet a mass segment, but it is becoming notable, especially for modern Class A office spaces.

Another shift is in selection criteria. Prestige, architecture, and metro proximity are no longer decisive. Now the focus is on shelters, backup power supply, stable internet, and building autonomy. Business centers that cannot provide this are forced either to cut rents substantially or leave spaces vacant.

Back in 2021, Kyiv had about 2.4 million m² of competitive office stock. Today, this figure stands at 2.1 million m². In absolute terms, this is a loss of several hundred thousand meters, but the market shrank not only due to destruction. Most new projects have stopped: in 2021, hundreds of thousands of square meters of new office space were commissioned, whereas in 2024 — only 34,000 m².

This means the introduction of new office centers has virtually stopped. Even if demand starts to recover, new modern business centers will take years to appear.

Lviv: from relocation boom to high vacancy

At the start of the full-scale war, Lviv became the main “safe hub” for businesses from central and eastern regions. Entire teams relocated here, creating a wave of situational demand for office space. But the trend proved short-term. From 2023, demand declined, and the market returned to its traditional drivers — local companies and the IT sector.

However, the IT sector, which provided the “lion’s share” of demand, began reducing its office needs from 2022 due to hybrid work formats and wartime cost optimization. As a result, the largest rental segment became small deals of 100–300 m², typical for small and medium-sized businesses. Large deals nearly disappeared.

According to CBRE, in Q3 2024:

• total office supply in Lviv amounted to 420,000 m² (+3% since the start of the year);
• new supply was only 12,000 m², 75% less than in 2023;
• the average vacancy rate reached 34% (+6 p.p. since the start of the year);
• rental rates fell by 21% y/y to $7–16/m²/month (excluding VAT and operating costs).

The high vacancy is mainly explained by falling demand from IT companies and lower leasing activity overall. New business centers built for the previous scale of demand remain partly empty. Local firms often prefer smaller, cheaper premises, including non-professional office spaces.

Thus, despite the strong start in 2022, Lviv’s office market came under serious pressure in 2024: vacancy is even higher than in Kyiv, and landlords are forced to cut rents and offer extra terms to retain tenants.

As CEO of Roksolana Mall and Spartak Shopping & Entertainment Center, I see daily how overall market trends reflect in specific assets. At Spartak, about 20% of office space is currently vacant, and the second construction phase has been frozen until the end of martial law. At Roksolana Mall, however, only about 10% of office space remains unleased, while the city average is much higher. We maintained stability thanks to timely investments in generators, which allowed tenants to work without interruptions even in difficult conditions.

Still, even modern and well-equipped properties feel the impact of external factors beyond owners’ control. Occupancy is strongly affected by military mobilization activity, reduced foreign IT orders, and staffing challenges. These factors limit market potential and keep it unstable despite internal investments and support measures.

Conclusions and outlook

Ukraine’s office market is in a stage of adaptation. In Kyiv, vacancy remains high, tenants prefer smaller spaces, and new supply is limited. Lviv continues to act as the main regional hub, but high vacancy and weak leasing activity add pressure and restrain rent recovery.

In the short term (2025), rental rates will remain relatively stable, with possible fluctuations of a few percent depending on class and location. Demand will concentrate in small and medium-sized offices, aligning with most companies’ wartime work formats. Key tenants will remain IT companies, government bodies, international organizations, and defense-sector firms.

In the medium term, the course of the war will be decisive. Full demand recovery is possible only after the end of hostilities and the stabilization of Ukraine’s security. Until then, new project launches will remain limited, and the market will rely on existing stock. Hybrid work formats are already established as a standard, and even after Ukraine’s victory, they will continue shaping office demand.

Overall, the market is in a correction phase: tenant activity persists, but a return to pre-war volumes is possible only after the war ends and under favorable economic conditions.

 

Author: Roksolana Pyrtko, a real estate professional with over 15 years of experience, managing more than 100,000 m² of commercial space in Lviv