The office market in Sofia registered moderate rental activity in the first quarter of 2024. By 10-15%, the number of concluded transactions has decreased compared to the same periods in the last two years, reaching a volume of only 37,200 sq. m. Most of this volume is the result of renewals of existing contracts and relocations from non-competitive buildings or objects class B.
„IT and BPO companies are slowing their growth and continue to rely heavily on hybrid work – this is also the reason why space optimization remains a sustainable trend. However, companies from the IT sector continue to be the main driver of the office rental market at the beginning of 2024. – we owe almost half of the volume to this sector," summarized Yoanna Dimitrova, manager of "Office Spaces" at Cushman&Wakefield Forton.
According to the company's data, the percentage of unoccupied office space in Sofia continues to vary around 15-16%, and in the highest segment of the market the buildings are almost fully occupied. This reinforces the trend towards a two-speed market, with premium modern projects remaining the focus of tenants, while older buildings are also emerging as less competitive.
Co-working space continues to grow, already exceeding 67,000 sq m at the beginning of 2024. The main part of the new space is opening in office buildings, which is also part of the trend for synergy between flexible and standard offices.< /p>
„The presence of flexible workplaces in an office project allows to attract small or emerging businesses with growth potential, which at a certain stage of their growth are transferred as independent tenants in the building”, Yoanna Dimitrova pointed out.
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The total volume of class A and B offices in the first quarter of 2024 remains stable at levels of 2.245 million sq m. Projects under construction remain below 200,000 sq m due to the lack of new construction started during the period. The latest trends are the result of the slow uptake of vacant office space as well as the uncertain business environment.
The growth in rental levels, which began to be noticeably noticed in 2023, continues at the beginning of this year. Offered rents for prime office space in the center of Sofia rise to 17.5 euros/sq.m. m. Class A projects along the major boulevards also demonstrate an increase in rents to 15-16.5 euros/ sq. m.
Yield levels for prime offices reached 8% and are expected to remain at that level in the coming quarters, the company predicts.
You can see detailed statistics on average property prices in Bulgaria by cities and neighborhoods HERE