Business activity in Ukraine is showing signs of recovery as the war continues. According to recent research by CBRE Ukraine, the office rental market in Kyiv has nearly rebounded to pre-war levels, demonstrating resilience and adaptability among businesses and entrepreneurs alike.
Despite the devastating consequences of the war, the average vacancy rate for business centers has decreased by 2.7% since the start of the year, now standing at approximately 22%, as reported by CBRE Ukraine. This improvement reflects the growing demand for quality office buildings, especially those equipped for safety.
Interestingly, the overall absorption of office space has reached 129,000 square meters, representing a 42% increase year-on-year. While smaller transactions of 200-500 square meters dominate, several significant deals have supported the market's recovery.
Analysts have found heightened interest from the IT and telecommunications sectors, which account for about 25% of the total absorbed office space. Public sector organizations follow suit, comprising approximately 15%. Recent trends also indicate shifts in demand; companies are moving from less professional spaces to higher-quality A and B-class properties, signifying structural changes as the market adjusts to the post-war economic environment.
New office centers have emerged, such as Tw12ve and Heritage, increasing the competitive offer of office space to 2.26 million square meters. Interestingly, between 2023 and 2024, the pace of new developments declined significantly, pressured by safety risks and financial uncertainties.
Rental rates have stabilized, with prime rates remaining around $19 per square meter, and requests for space fluctuated between $16-$22 for Class A and $8-$15 for Class B properties. This realistic approach to pricing is seen as landlords adapt to the new market conditions, shifting back to standard lease agreements.
Meanwhile, outside of Ukraine, business activity is rapidly increasing as nearly 90,000 companies were founded by Ukrainians across Poland since the onset of the Russian invasion. Aleksandra Veit-Knizewska from the Polish Economic Institute noted the growing independence for immigrants pushing them toward entrepreneurship due to limited opportunities available at traditional jobs.
Notably, the majority of new registrations, approximately 33,200, occurred just this year, doubling from 2022. This spike indicates not just resilience but adaptability among the Ukrainian population, as many seek to leverage their skills rather than settle for low-paid roles.
The construction sector has seen significant entrepreneurial activity, comprising about 23% of the new businesses, closely followed by information and communication at 18%, and services at 13%. Gender dynamics reveal women's considerable presence, with 87% of businesses founded by Ukrainian women focusing on services like beauty salons, whereas men predominantly lead sectors requiring physical skills, like construction.
Ukrainians have also launched over 11,300 companies with Ukrainian capital, emphasizing their vibrant integration within the Polish economy, contributing approximately 31% of all foreign enterprises established there. These companies have created jobs and helped to spur innovation.
According to the Responsible Development Forum analysis, the impact of Ukrainian labor migration is substantial, significantly boosting Poland’s GDP since 2014. By 2023, the GDP could have been 2.3% lower without this demographic shift, and projections suggest even greater economic contributions by 2050.
Ukrainians are not merely participating as workers; they are stepping increasingly toward entrepreneurship, adapting to local markets, and addressing needs within their communities. This dual trend of recovering business activity at home and thriving abroad highlights not only resilience but the tenacity of the Ukrainian spirit and adaptability.
The insights from both CBRE's office market report and the comprehensive overview of the burgeoning Ukrainian entrepreneurship ecosystem paint an optimistic picture for Ukraine’s economic future following the war, indicating gradual but significant recovery and adaptation.