Commercial real estate in Ukraine faces war-related risks.

In the retail sector, all activity indicators are improving with consumer activity and shopping center attendance rising. Trade turnover is growing, increasing income for shopping center landlords. Additionally, the fixed component of rental rates is climbing, responding to high demand for retail space, according to an NBU report.

“However, not all shopping centers are equally successful. In particular, some shopping centers in the capital have high vacancy rates, but this is due to issues with their business models. Despite a lively market, developers have almost no plans to build and open new shopping centers,” the NBU noted.

Vacancy in the office market remains high, though it has decreased slightly over the year, mainly in higher-class office centers. Due to low rental rates, tenants often move to higher-class offices with ready-made renovations. New office construction has not started, with only a few nearly completed buildings that were put into operation last year.

The warehouse segment shows the best demand and construction plans, but there are supply issues. “Demand for warehouse leases and logistics infrastructure is high. As a result, warehouse vacancy rates are low, and rental rates have stabilized,” the NBU report states.