Forton International found that rents for office space in Bulgaria’s capital city have declined by two per cent in the first quarter of this year.
Currently, offices in the main commercial area of the city are renting for just EUR 12 per square metre, according to the report. In areas on the outskirts of the city, rent is as low as EUR 8 per square metre.
Rent for offices in other major Eastern European cities such as Riga, Tallinn, Belgrade and Zagreb are on average five Euros higher.
Currently, Sofia boasts approximately 1,364,000 square meters of office space, with 40,000 square meters having been added in the first quarter of this year alone.
“The top-class office space that [is] entering the market now [is] practically introducing new standards in office space. The opportunities they present as well as the good price-quality balance lead many companies to move to new offices.
“The relocations, which are the major share of the deals on the office space market right now, combined with the high level of supply of new space, explain the growing amount of unoccupied office space,” said Forton International Office Space Manager Vladislav Kayzerov.
The Forton report also stated that currently there is 560,000 square metres of office space under construction in the city.
Sofia is currently the 12th largest city by population in the EU with 1.2 million people. The city is the economic centre of Bulgaria and is home to the headquarters of most of the country’s major domestic and international companies.
In 2008, apartment prices in the city rose by 30 per cent.
Editor’s notes: In Q1 2023, it was reported that Sofia had registered a net absorption of 70,000 square metres in 2022, reflecting the strongest year for its office space market since the pandemic.
The total office leasing volume for 2022 was 123,500 square metres which meant that the vacancy rate for Sofia was 16.1%.
In the first quarter of 2023, there was 246,000 square metres of office space under construction with the largest proportion in Tzarigradsko shose and Hladilnika.
During that period, it was expected that the rate of new construction starts due to 20-year inflation rates that were affecting construction costs and the price of debt, therefore reducing supply.
Additionally, many office leases in Sofia are attached to indexation so it was expected that office rental levels would increase significantly in 2023.
At the beginning of the year, Class A office space commanded in the range of EUR 12.5 – EUR 15.5 per square metre, while Class B rental levels were between EUR 8.0 and EUR 10.5 per square metre.