Less than 1% warehouse vacancy: where retailers will store goods this winter
Due to constant Russian strikes on warehouses and logistics infrastructure, retailers are being forced to alter their operational strategies. However, there is no rush to relocate businesses en masse from the Kyiv region to the west of the country.
Companies are splitting inventory across multiple sites, opening backup hubs, and adjusting delivery routes. Available space in the west is being snapped up instantly, leading to a shortage of warehouse real estate.
We examine the current state of the warehouse market in the Kyiv and Lviv regions, the cost of “secure” square footage, and how retailers are adapting their supply chains to wartime risks.
Scarcity of available warehouses in both Kyiv and Lviv regions
In the Kyiv region, the supply of high-quality warehouse space has shrunk significantly following damage to or the destruction of certain facilities. According to EXPANDIA, the vacancy rate there stood at less than 1% as of the end of August 2026.
UTG estimates the vacancy rate for high-quality warehouses in the Kyiv region slightly higher, at 1.5%. At the same time, there is virtually no large-scale available space; finding units ranging from 5,000 to 10,000 square meters is difficult.
The situation in the Lviv region is similar, although the share of available space is slightly higher. EXPANDIA estimates vacancy at 2–3%, while UTG places it in the 3.5–5% range.
According to EXPANDIA, the low vacancy rate in the Lviv region is not solely due to increased demand caused by the war. Historically, there has been less high-quality, professional warehouse real estate there compared to other major Ukrainian cities. Active development of modern facilities effectively began only in 2020.
Over the past five years, approximately 280,000 sq. m of new warehouse space has been commissioned in the region. However, a significant portion of this supply was quickly absorbed by the market; demand is driven by logistics operators, retailers, manufacturing companies, and businesses expanding their presence in the west of the country.
Warehouses in the West are more expensive than those in the capital region
The shortage of space also impacts rental costs. According to UTG estimates, the prime effective rate for Class A warehouses in the Kyiv region is $5–5.5 per sq. m per month, excluding VAT and OPEX. For specific deals involving the most sought-after or secure facilities, the rate reaches $6.
Rates in the Lviv region are higher — around $6–7 per sq. m per month.
Thus, the western region — which became a key destination for relocation and logistics development following the start of the full-scale war — is now itself facing a limited supply of warehouse space.
Businesses are creating backup warehouses rather than relocating them from Kyiv
Despite high demand for warehouses in the western regions, there is no mass relocation of logistics infrastructure away from the Kyiv region.
Companies generally do not abandon their warehouses in the capital; instead, they supplement them with backup facilities in other regions. This model allows them to distribute inventory and avoid reliance on a single warehouse, route, or region. “We are not observing a mass physical relocation of warehouse facilities from the Kyiv region to the western regions. Today, businesses are focusing on diversifying their logistics infrastructure. Companies are establishing or expanding backup sites and additional stock reserves in other regions to reduce reliance on a single logistics hub and maintain the ability to rapidly redistribute goods flows,” note analysts at EXPANDIA.
UTG describes this model as the creation of a distributed network featuring redundant hubs:
“There is no wholesale relocation of warehouses from Central to Western Ukraine within the logistics market. Instead, businesses are widely opting for a model that involves creating redundant, backup hubs and building a distributed (diversified) network,” says Evgenia Loktionova, Director at UTG.
In other words, companies are not so much relocating existing infrastructure as adding new points to their existing networks.
New warehouses are being built, but demand is outstripping supply
The market is attempting to address the shortage through new construction. According to EXPANDIA, approximately 70,000 sq. m of new warehouse space is scheduled to come online in the Lviv region by 2027.
However, given current vacancy rates, some of this space could be leased out even before construction is completed.
“With vacancy rates currently low, the market may continue to experience a shortage of high-quality space despite new development, as the volume of new supply could be absorbed while still under construction,” note EXPANDIA analysts.
UTG estimates the scale of future supply more broadly. According to the firm, over 200,000–250,000 sq. m of industrial, warehouse, and logistics space in the Lviv region is currently in the active construction or design phase.
These figures cover different categories of future supply and various stages of development, so they should not be compared directly. Nevertheless, both estimates indicate that new construction is currently insufficient to fully resolve the shortage of high-quality warehouse space.
How retailers distribute inventory across regions
For retail chains, diversifying warehouse infrastructure has become part of daily operations.
COMFY states that it began changing its system at the very start of the full-scale invasion.
“Diversifying warehouse infrastructure is a key strategic decision COMFY implemented early in the full-scale invasion. It is important for us not to concentrate large volumes of goods in a single location but to distribute inventory across various regions and sites. This brings products closer to the customer while simultaneously reducing the business’s reliance on any single facility or route,” COMFY commented.
The company notes that it optimizes delivery routes and frequency — and utilizes various transport options — depending on the situation.
This is particularly crucial for imported goods, as companies need alternatives in case issues arise with a specific route.
Security risks can also affect product assortment
Decentralization helps reduce a retailer’s dependence on a single logistics hub, yet it does not eliminate all risks. According to COMFY, local shortages of specific products can still occur due to damage to or the destruction of manufacturers’ and distributors’ warehouses. In such situations, the retailer cannot always quickly replace the supply source. “There remains a risk of localized shortages of certain goods due to damage to or the destruction of warehouses belonging to some manufacturers and distributors — and quick solutions here are unlikely to be found. At the same time, we are striving to identify additional ways to maintain the necessary product range,” COMFY concluded.
Another challenging winter lies ahead. Russian attacks are driving a shift toward safety, pushing the market to embrace deep decentralization, new hubs in western regions, and even underground warehouses. It will soon become clear how this adaptation helps withstand future strikes.