Third of transactions in Kyiv office market related to moving from buildings damaged by military actions
As a result of rocket attacks in January-June 2025, 45,000 sq m of office space was damaged or destroyed in Kyiv, a third of lease agreements are related to moving from damaged premises, CBRE Ukraine reported.
"In the first half of the year, no new business centers entered the market. At the same time, about 45,000 sq m of office space was damaged or destroyed as a result of rocket attacks, which led to a decrease in the total volume of competitive supply to 2.11 million sq m (-3% year-on-year). This reduction was an unprecedented case of a reduction in supply due to direct losses of infrastructure, which only emphasized the vulnerability of real estate objects in the conditions of ongoing military operations," said Anna Silvestrova, Senior Director of the Office Real Estate and Corporate Clients Department of CBRE Ukraine.
According to a study by CBRE Ukraine, about 73,000 sq m of office space is expected to be commissioned in five business centers by the end of 2025. However, the timing of the projects remains uncertain due to ongoing risks related to the security situation, financing and the level of pre-engagement of tenants.
Overall, demand remained robust, with gross office take-up at 82,000 sq m (+16% y/y). The study notes that around 30% of this was due to forced relocations of tenants from damaged office buildings because of military operations, indicating a destabilizing nature of activity rather than organic growth. Overall, relocations accounted for 40% (+7 p.p. y/y), while expansions increased their share to 16% (+5 p.p. y/y).
As the market is dominated by a hybrid work format, where around 30-40% of employees come to the office at the same time, some companies have reduced their office space to around 50% of their pre-war volume. This approach has allowed tenants to relocate and move into higher-end office buildings, while keeping their overall rental budget unchanged.
The main driver of demand was IT and telecommunications companies with a share of 25% and the largest number of transactions (23), as well as the public sector and NGOs (14%), industrial and energy companies (10%).
The average vacancy rate decreased to 21% (-1.1 p.p. since the beginning of the year), which is largely due to leasing activity from small and medium-sized companies that continue to move to better quality office space against the background of attractive rental rates.
Most of the vacant space is concentrated in new facilities, some of which still remain almost completely vacant, as well as in lower quality facilities.
The effective prime rate for the best facilities fluctuated within $19-25/sq m/month, depending on the characteristics of the premises (repairs, location, level of security risks and occupancy of the building).