The office market in Sofia is still recovering, although the leasing activity in the first half of 2022 was above the average for the last five years and reached 85,444 sq.m. The hybrid work model is now firmly adopted by many companies. It allows them to grow and hire staff without office expansions. Data is according to Q2 2002 office market analysis by the Bulgarian unit of the consulting company Cushman & Wakefield Forton.
Renewals and relocations dominate the office market, with more than 70% of the take-up. Tenants’ desire for a better office environment remains the main driver, so most transactions are for Class A offices and new buildings.
IT and BPO companies keep the largest market share, with more than half of the total transaction volume in the first half of the year. More and more companies are looking for flexible office space, thus providing their businesses with a solution for rapid expansion. Currently, the total supply in the segment in Sofia is about 50,000 sq.m.
The pace of supply is slowing down. Unoccupied office space in Sofia in Q2 2022 reaches 16.7% compared to 16.4% for the first quarter. A significant change in the vacancy rates is not expected due to the lack of projects under construction.
Prices remain stable. The high-end rents are at levels of 15 euros/sq.m in the city’s central areas and 12-14 euros/sq.m alongside main roads. Rising operating costs are putting service charges under pressure, ranging from 2.75 to 4 euros/sq.m. Prime yields also remain stable – 7.5% for Sofia.