The total supply of office space in Kiev increased by 34 thousand square meters, or 4%, to 2.26 million square meters in 2024, the press service of CBRE Ukraine told Interfax-Ukraine. According to the latest research of Kyiv office real estate market by CBRE Ukraine, business centers Tw12ve (16 thousand sq. m.), Heritage (13.3 thousand sq. m.) and Stoic (4 5 thousand sq. m.) were commissioned in 2024.
The rate of commissioning of new office space last year was the lowest since 2017. Among the key factors limiting developer activity, CBRE Ukraine highlighted security risks and uncertainty, rising construction costs, limited access to financing and a shortage of skilled labor.
At the same time, rental market activity increased: the volume of annual gross absorption amounted to about 129 thousand sqm (+42% y/y).
“It is noteworthy that the volume of absorption in 2024 corresponds to the level of 2020 and remains only 4% lower than in 2021, reflecting almost a return to pre-war market conditions,” said Anna Silvestrova, Senior Director of Office Real Estate and Tenant Relations at CBRE Ukraine.
The structure of gross absorption was dominated by small transactions of 200-500 sqm, while large transactions of over 4-5 thousand sqm were sporadic, although several significant transactions supported the market. The structure by business sector was dominated by IT and telecom companies with a 25% share (-26% YoY), followed by the public sector (government or non-profit organizations) with a 15% share (-8% YoY).
Moves continued to lead by deal type with 38% (-20pc y/y), rising to 25% (+15pc y/y) of exit deals.
“While in the pre-war period relocations were mainly driven by lease expirations or staff expansions/downsizing, current market conditions have led to a structural shift, allowing companies that were previously non-users of professional office space to move into Class A and B properties. This trend has attracted new tenants to areas previously dominated by large corporate companies, emphasizing the growing availability of quality office space,” says Silvestrova.
The average vacancy rate on the office real estate market decreased by 2.7 p.p. since the beginning of the year to 22% y/y. This was the first significant year-on-year increase in occupancy since pre-war 2021 (when vacancy was at 14.1%).
The bulk of vacancy was concentrated in new developments, some of which are almost entirely vacant, as well as in lower quality buildings typically located outside the DDR. Notably, Class B vacancy fell significantly to 22.1% (-5pc YTD), mainly due to tenants moving out of non-professional properties. At the same time, vacancy in Class A office space remained stable at 22.7% at the end of the year.
The effective prime rate remained stable at $19/sqm/month. Asking rental rates in Class A and B facilities fluctuated within $16-22/sq.m/month and $8-15/sq.m/month respectively.
The gap between declared and effective rates in the best properties continues to narrow, indicating that landlords have shifted to a more realistic approach to pricing. The market has predominantly returned to standard 3-5 year leases with more flexible terms, including early exit options. However, in some cases there is still a practice of locking in favorable lease terms until the end of martial law or for a term mutually agreed upon by the parties.
“We expect that rental activity should maintain positive momentum in 2025, contributing to further growth in office occupancy. Tenants will continue to focus on quality office buildings with safety shelters in sought-after locations, while properties that do not meet these requirements will continue to face occupancy issues,” says Silvestrova.
In the absence of significant security or economic shocks, she says, the market is poised for a gradual but steady recovery, especially with the widely anticipated end of hostilities in 2025.
Headquartered in Dallas (USA), CBRE is the world’s largest commercial real estate consulting and investment company with revenues of $35.8 billion in 2024. CBRE Group Inc. shares are traded on the New York Stock Exchange.
CBRE’s Ukrainian office was opened in January 2008 and is part of the company’s affiliate network. In 2023, the Ukrainian office expanded its presence in Moldova under the CBRE Moldova brand.
CBRE Ukraine, new offices in Kiev
