Ukraine's commercial property market sees growth in compact formats

Retail: uneven recovery, small formats winning

The retail segment started 2026 weaker than expected, as security risks combined with an unusually cold winter to push consumers toward essential spending only. From May, however, turnover in shopping centres recovered sharply, rising 20–35% in local currency compared to January, driven by grocery, fashion, sporting goods and electronics, according to Arricano. Frontline-adjacent regional malls performed especially well: turnover at one Kryvyi Rih shopping centre rose more than 30% between January and May, and at a Zaporizhzhia mall by nearly 25%.

Structurally, the war has accelerated a shift toward small-format retail. Of roughly 70 new shopping centres opened or planned through 2027, 59 are small-format retail parks or convenience centres averaging around 9,000 sqm, and nearly 70% of new schemes for 2022–2027 are concentrated in western Ukraine, according to Budhouse Group. Of 20 shopping centres originally slated to open in 2026, only three had actually launched by mid-year are small-format in the west of Ukraine.

Vacancy across Ukrainian shopping centres stood at 3.3% in H1 2026 (Retail Well-Being Index, cited by Budhouse Group), though this reflects only signed leases, with a meaningful share of nominally occupied space is not actually in use due to war-related risk. By format, vacancy varies widely, from 6.5% in neighbourhood centres to around 15% in regional and district schemes. Rents for liquid vacant units of 50–250 sqm have been broadly flat at an average of $39/sqm/month, with landlords facing limited room to raise rates given retailers' cost pressures from utilities, generators and declining footfall.

For H2, around 15 more shopping centres (roughly 350,000 sqm) are expected to open, while EXPANDIA (CBRE's representative in Ukraine and Moldova) forecasts regional supply growth of about 13.5% year-on-year — the strongest since 2014 — concentrated in small district-format schemes and retail parks.

Offices: quality shortage, not demand growth

Kyiv's office market ended H1 2026 without dramatic movement, but the underlying story is a shortage of quality stock rather than a lack of tenants. Gross take-up in Q1 reached 46,000 sqm — almost double that of the same period in 2025 — but in absolute terms this matched typical quarterly volumes, signalling stabilisation rather than genuine growth, according to EXPANDIA. Some 40% of Q1 deals were relocations and space optimisation rather than organic expansion, as companies moved to safer, higher-class buildings — physical security, shelters and backup power have become close to mandatory criteria for tenants, per EXPANDIA. Medium-sized ready-to-move-in offices of 300–600 sqm were in highest demand, reflecting hybrid work patterns; IT and telecoms accounted for 40% of new deals.

New supply remains minimal — just 11,000 sqm delivered in Q1, taking Kyiv's total office stock to 2.12 million sqm (+0.5%). Combined with damage-driven withdrawals of existing stock, this has pushed rents up: Class A asking rents stood at $16–27/sqm/month and Class B at $8–18, according to EXPANDIA, excluding VAT, OPEX and service charges. Vacancy eased to 18% (EXPANDIA) — meaning even prime buildings still carry meaningful vacant space.

For H2, the standout event will be the launch of Capital Towers, bringing roughly 40,000 sqm to market, alongside several smaller business centres, according to SNP Partners Ukraine. EXPANDIA expects a year of "cautious stability," while SNP Partners Ukraine forecasts a further 5% rent increase, noting that fit-out works — taking 4 to 10 months amid labour shortages — mean new supply won't meaningfully affect the market before late 2026 or early 2027.

Industrial and logistics: the market's most stable segment

Warehousing remains the steadiest of Ukraine's commercial segments, though 2026 has shifted from last year's supply-side recovery to a story of scarcity, particularly for large units. Q1 gross take-up reached approximately 58,000 sqm, nearly double that of the same period in 2025, driven by wholesale/retail trade (70% of activity) and 3PL operators (30%), according to EXPANDIA. Alterra Group points to pharmaceutical companies seeking temperature-controlled, licensed facilities, alongside distributors of auto parts, food, pet products and consumer electronics, as key demand drivers. Bureau of Investment Programs notes that retailers and importers dominate tenant demand, reflecting Ukraine's growing reliance on imports relative to exports.

Rents continue to climb. Class A and B warehouses that cost around UAH 220/sqm two years ago (roughly $5.3 at current exchange rates) now command UAH 250–270/sqm (about $6–6.5), per the Bureau of Investment Programs, driven largely by inflation and constrained supply. On Kyiv's right bank — where large-format land is scarcest and demand for safer logistics routes is highest — rates have reached $6.44/sqm against $5.45/sqm on the left bank, according to Alterra Group, with right-bank Class A/B rents potentially settling at $6.5–7.0 by year-end. Prime effective rents citywide have held at $5.3/sqm/month, matching the pre-war 2019–2021 peak, per EXPANDIA, though most leases are still denominated in local currency.

Vacancy fell to 3% market-wide in Q1 (EXPANDIA) and stands at 5.5% across the Kyiv region (Alterra Group), even as new supply of about 33,000 sqm (+22% year-on-year) came online in Q1, bringing total competitive stock to 1.6 million sqm. EXPANDIA expects demand to stay resilient through 2026, supported by logistics operators, retailers and e-commerce, but warns that large-format requirements will be hard to satisfy given low vacancy — with around 90,000 sqm of additional competitive supply expected by year-end. Land demand for new logistics facilities is concentrated around Kyiv, Lviv and Odesa, according to the Bureau of Investment Programs.

The common denominator

Across all three segments, the same pattern recurs: Ukrainian commercial real estate is not short of tenants — it is short of the right kind of space. Retailers keep opening stores in small, well-located formats; office occupiers keep chasing the few secure, high-class buildings available; and warehouse tenants keep competing for a shrinking pool of large, well-located lots. New development remains constrained by security risk, financing limits and labour shortages, which means the supply-demand imbalance — and the resulting upward pressure on rents — is likely to persist through the second half of 2026.

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