Member updates

Office Market Overview H2 2021

40% annual growth in leased office space and increased demand for flexible space

In the third quarter of 2021, the first signs of a recovery of the office market in Sofia appeared, which lasted until the end of the year. The total take-up indicator showed 40% year-on-year increase, with 81,670 sqm for the second half of 2021 and 152,000 sqm for the year. The most active sectors were: IT & outsourcing (61%), financial services (25%), professional services (8%), industrial (2%), retail (2%) and other (2%).

The office market for class A, B and C in Sofia reached a total of 2,557,100 sqm and recorded a 2% growth in supply for the second half of 2021. On a year-on-year basis, this growth was 7% and was driven by significant volume of space completed in the first half of the year. The average vacancy of office space remained stable at 16%.

Average asking rental levels remained stable, namely for class A offices were EUR 14 per sqm - CBD, 12.5 euro per sqm – Broad centre and 12 euro per sqm - for Suburbs.
Approx. 258,000 sqm were under active construction and are scheduled for completion between 2022 and 2024 - the lowest volume since 2016.

In 2022, in addition to the capital, we predict an expansion of business interest and spread of corporate presence in regional cities.

Organisations are embracing hybrid working models, which will drive an increase in demand for flexible spaces, such as satellite offices remote from the headquarters. Confidence in this sector is returning and coworking / flex operators are looking for opportunities to expand. We expect an activation of smaller players and a wider range of concepts in this market segment. This also includes investors in office property who will develop their own flex spaces in response to what tenants are looking for as flexible solutions.

There is a surge in the interest of new entries from IT and outsourcing sector. Such activity has been unprecedent over the past 3-4 years. The successful attraction of these corporates will depend not only on the available property stock, but on labor market competitiveness and the predictability and stability in political and economic aspect.

Made on