The Kyiv commercial real estate market is still constrained but shows signs of recovery.

The Kyiv office space market remained constrained in 2022 due to war, resulting in a decline of economic indicators and a dramatic slowing of commercial activity. According to market analysis by CBRE Ukraine, in the second half of 2022, leasing activity remained subdued and driven mostly by renewals, renegotiations, and the contraction of existing office space. As of December 2022, full-year leasing activity reached 40,000 sqm, which is only 22% of 2021 (185,000 sqm). As of December 2022, the average market vacancy grew to 26% (+11.9% YOY). Space reductions and the entry of significant new supply in the fourth quarter combined with increasing vacancy. Analyzing vacancy by classes, the vacancy rate in Class A grew by 13.5% YTD to 22.3% and in Class B by 11.6% YTD to 29.2%. Prime effective rent declined by 16% on average from $25 to $21 per sqm/month YTD. Asking rents for A Class varied from $18 to $26, and B Class asking rents were quoted in the $7 -$17 range.