The industrial property market in Sofia registered an active first half of the year, in terms of leasing and development activity. Take-up volume in the second quarter reached almost 54,000 sqm, which is in line with the pre-pandemic period, according to data from the regular market review of the Cushman & Wakefield Forton consulting company. Most of the completions during the period are for own occupation, except for Phase 2 of Logistics Park RGS in Bozhurishte.
The properties under construction remain around 330,000 sqm, with almost 70% built-to-suit and owner-occupied schemes. The prevailing part of the new developments are warehousing and logistics projects of companies in the FMCG, home improvement, and food processing sectors. Prime rents in the logistics segment in Sofia remain stable in the range of 4.2-4.4 euro/sqm for mid-sized units, and 3.8-4 euro/sqm for premises above 10,000 sqm. The market reports increasing investor interest and is expected to remain stable in the short term.
The second quarter of 2021 brought a visible increase in the Sofia office market, with 53,592 sqm leased space. Thus, the total volume outpaced the 5-year average by 33%. According to Cushman & Wakefield Forton, however, it is still too early to say whether this is due to catching up after the slow search during the pandemic or the trend means the beginning of a stable recovery. Relocations and renewals remained the prevailing part of the transactions in the quarter, with many companies aiming to consolidate or improve their office positions. With 98,545 sqm obtaining use permits, total Class A and B stock in Sofia reached almost 2.190 mln sqm. The more significant new projects in the second quarter include Park Lane Office Center, NV Tower, and Garitage Park – Building 4. Rental prices remain stable at levels of 15 euros per square meter in business areas in the central part of the city and from 12-14 euro per square meter for the periphery near major boulevards.
The shopping center segment experienced a sluggish performance in terms of recovery. Most mall managers registered launches of new concepts and expansions of existing brands, rather than new tenant entries. Despite the series of lockdowns, the shopping centers in Sofia saw relatively stable vacancy rates, hovering around 6-7% in the last quarter. In general, the retail market remains driven by FMCG, sports goods, drugstores, and discount stores. The slight decline of shopping center rents continued in the second quarter of 2021, with prime asking levels in Sofia reaching 34 euro/sqm and up to 8-10 euro/sqm for retail parks.
More data from the second quarter on the industrial, commercial, and office space market in Sofia is available on the Cushman & Wakefield Forton website here.