The first half of 2025 was a period of challenges and adaptation for the office real estate market in Ukraine. Despite losses due to the war and reduced supply, some market segments showed positive dynamics, and rental rates stabilized. Property Times researched together with experts how demand has transformed, what factors have become key in choosing offices, and what prospects this segment has in the second half of the year.

Transformation of rental rates

Kostyantyn  Oliynyk, Head of the Strategic Consulting Department at UTG company, emphasizes an important trend: for the first time since the beginning of the war, rental rates have stopped declining. As of July 2025, rent per square meter (excluding VAT, OPEX, utility bills, and BOMA) was: in class A — $17.2, in class B — $11.9, in class C — $9.8.

The UTG company expert explains that the war, the coronavirus pandemic and quarantine have led to a decrease in the revenue side of most companies while maintaining liabilities to counterparties, payroll, and tax deductions. Taking into account the rising cost of energy, the rise in utility bills due to the need to use generators, the loss of electricity and working hours due to air raids, as well as the growth of OPEX due to the distribution of operating fees to a smaller number of operators, the burden on tenants has increased significantly.

The dynamics of rental rates in the first half of 2025 has become one of the most important indicators of the market’s adaptation to new realities. According to CBRE, the dynamics of rental rates largely depended on the specific object: high-quality business centers held stable positions, while less attractive objects remained under price pressure.

The effective prime bid for the best properties ranged from $19-$25 per sq.m per month, depending on the individual characteristics of the premises, such as the condition of the finish, the location of the facility, and the occupancy level. At the same time, the requested rental rates in class A properties fluctuated in the range of $16-27 per sq.m per month, and in class B facilities — in the range of $8-18 per sq.m per month.

Reduced supply

According to CBRE analysts, general market trends remained largely unchanged, but the market was significantly impacted due to direct damage to infrastructure as a result of hostilities.

As of the end of the first half of 2025, about 45,000 square meters of office space were damaged as a result of rocket attacks, which led to a decrease in the total volume of competitive supply in Kyiv to 2.11 million square meters, which is 3% less compared to the same period of the previous year. According to CBRE experts, this reduction was an unprecedented case of a decrease in supply, due not to market factors, but to direct losses of infrastructure.

Dynamics of demand and absorption of office space

Despite the difficult conditions, the market demonstrated positive dynamics in the field of absorption of office space. In the first half of 2025, the volume of office space absorption amounted to approximately 82,000 sq.m, which is 16% more compared to the same period of the previous year. However, as CBRE analysts emphasize, about 19% of this volume was associated with the forced relocation of tenants from damaged office buildings.

This force majeure demand was not organic, but forced, because tenants were forced to quickly look for new locations under the pressure of circumstances. Paradoxically, this situation allowed intact facilities to increase occupancy levels, which partially compensated for the overall reduction in supply in the market.

Transformation of the tenant structure

The structure of demand for office space in 2025 reflects the profound transformations of the Ukrainian economy under martial law. According to CBRE, IT and telecommunications companies became the main driver of demand with a share of 33%, which confirms the resilience and importance of the technology sector for the Ukrainian economy even in wartime.

A significant share of demand is formed by the public sector and NGOs (13%), which reflects the activation of government agencies and public organizations during the war period. Industrial and energy companies occupy 8% of the market, demonstrating the adaptation of the manufacturing sector to the new realities.

A particularly interesting trend that CBRE experts pay attention to is the emergence of demand from tenants in the military sector. However, these companies are not singled out in a separate category, since their activities can cover different market segments — from developers of software for military needs to manufacturers of military equipment, which are represented in the IT and telecommunications segments or industry and energy, respectively.

Features of the demand of the military sector

Given that it is not easy for companies in the military segment to find premises for rent, the market offers more complex mechanisms to meet their needs. According to CBRE, such companies are considering not only renting, but also buying premises, land plots, as well as potential own construction.

Kostyantyn Oliynyk, Head of the Strategic Consulting Department at UTG company, emphasizes that Ukraine today is becoming a real testing ground for know-how and advanced modern weapons systems. Global giant companies from the field of the military-industrial complex are launching or negotiating the opening of joint production facilities, factories, research centers and administrative and office offices in the country.

According to the UTG company expert, companies from Germany (Rheinmetall, KMW), Turkey (Baykar), Norway (Kongsberg), Latvia (Atlas Aerospace), Great Britain (BAE Systems), the USA (Northrop Grumman), as well as Denmark, France, Italy, Spain, Poland and many other countries are actively involved in this process, which are opening local offices and creating new jobs.

Dynamics of international representation

Kostyantyn Oliynyk draws attention to the fact that the number of international companies represented in Ukraine and their representative offices — the main consumers of professional office real estate — continues to decline in dynamics. Most of the international financial institutions that left Ukraine after the 2008 global economic crisis never returned.

Russia’s armed aggression in 2014-2015 led to the beginning of a massive outflow of Russian companies, their toxicity in cooperation and the final closure in 2022-2023, despite attempts to re-register as Ukrainian or European legal entities. Due to hostilities and physical threats to employees, most countries in the world have put Ukraine on pause in entering the market of new brands, and existing representative offices are reducing staff or relocating.

However, as the expert notes, the loyalty of the international community to Ukraine remains, and the possible accession to NATO and the EU is likely to lead to the emergence and development of new international organizations, enterprises, brands in the country, especially those that have closed and completely left the territory of Russia.

Vacancy rate

The vacancy situation in the Kyiv office real estate market demonstrates ambiguous trends. According to CBRE, the average vacancy rate in the Kyiv market decreased to 21%, which is 1.2 percentage points less since the beginning of the year. This decline is mainly due to rental activity on the part of small and medium-sized companies that continue to relocate and choose better office space.

It is important to note that the vacancy rate was calculated without taking into account the reduction in the volume of competitive supply due to damage caused by hostilities. This approach, as CBRE analysts explain, allows you to maintain the comparability of data in dynamics and avoid distortion of the real picture of the market.

According to UTG company, a more detailed distribution of vacancy by real estate class for mid-2025 is as follows: in class A the vacancy rate is 28.2%, in class B — 20.5%, and in class C — 14.2%. These indicators reflect the different attractiveness of objects for tenants in conditions of limited demand.

New trends in tenant behavior

CBRE analysts note an important trend — increased interest in ready-made or adapted office solutions. Rental activity is mainly concentrated in fit-out premises, as tenants prefer quick relocation and minimal initial investment. In most cases, landlords take over the finishing work, adapting commercial conditions in order to gradually return on investment.

An interesting trend is that in professional business centers, which were previously mostly focused on tenants with a larger area, the practice of dividing them into smaller premises is becoming widespread. This responds to the changed needs of the market, where companies seek to optimize costs and occupy smaller areas.

Kostyantyn  Oliynyk adds that the trend towards savings continues: tenants optimize the occupied space, consider offers in areas remote from the center, and transfer employees from rented premises to their own administrative real estate. The practice of teleworking, started during the coronavirus, has deepened and spread due to the threat of male mobilization.

Security criteria as a new factor of choice

One of the most important innovations in the criteria for choosing office space was attention to safety issues. According to CBRE, tenants continued to focus on high-quality and safe facilities with equipped shelters and autonomous energy sources for uninterrupted operation, analyzing office facilities in advance.

These requirements have radically changed approaches to the valuation of commercial real estate, adding to the traditional factors of location, area and cost new criteria related to the safety of personnel and ensuring uninterrupted operation in the face of possible power outages and other infrastructure problems.

Forecasts

As for the prospects for the development of the office real estate market for the second half of 2025, CBRE analysts express cautiously optimistic expectations. The cautious optimism seen at the beginning of 2025 is likely to continue for the rest of the year. In the absence of significant macroeconomic or geopolitical changes, tenant activity is likely to remain restrained and efficiency-oriented, and decisions will be made taking into account the balance between cost, quality and security of infrastructure.

Relocations are expected to continue, although they will often be accompanied by a reduction in space, especially in cases where reduced office attendance by employees has changed the company’s operational needs. Major tenants have adapted to the reality of a full-scale invasion, demonstrating their long-term focus on the physical use of office space.

In the second half of 2025, the vacancy rate may experience moderate fluctuations, which will largely depend on rental activity. Rental rates are expected to remain mostly stable, with slight fluctuations due to the individual characteristics of the facilities and the demand for premises with finished finishes.

Source: propertytimes