What is happening in the office property market in Sofia?

With 58,000 sq m of newly built space, the office property market in Sofia showed relatively weak supply growth in 2024. This trend has been observed over the last three years as a response to limited demand for rental offices.

Meanwhile, supply in another segment of the market – that of flexible offices – continues to grow at a steady pace, up 18% year-on-year, according to 2024 data from commercial real estate consultancy Cushman&Wakefield Forton.

The office rental market shows a good balance between supply and demand during the year. This is confirmed by the data on net absorption (the difference between leased and vacated areas), which is at a level of 66,500 sq m - close to that of newly built offices.

In 2024, most IT and BPO companies, which remain the main drivers of office space demand, continued to rely on a hybrid operating model and optimization of their space. This is also the reason for the relatively weak net absorption during the period," commented Yoanna Dimitrova, Head of Office Space at Cushman&Wakefield Forton.

Total rental activity

The total rented office space for the period under review is slightly over 185,000 sq m, which is in line with the average for the last 5 years. However, the market volume is mainly formed by relocations and renewals of existing contracts, which most often have a zero or even negative net effect in cases where tenants vacate space. The share of vacant Class A and B offices is moving steadily and is 15.81%.

In this context, the share of flexible office space in Sofia continued to grow at a steady pace and by the end of 2024 reached 76,050 sq m. Last year, just over 11,600 sq m of shared offices were completed - all of them in office buildings. The trend clearly shows the consolidation of the model of weaving offices into larger business centers. Thus, flexible and shared offices play a role in attracting new tenants and at the same time they are a center of various activities for the respective buildings.

What's next?

Forton expects the office space market to remain moderately active in both demand and supply in 2025. Although new projects have been launched, mainly in the area of ​​Paradise Center Mall and N.Y. Vaptsarov Blvd., the total area of offices under construction remains just over 200,000 sq m, and developers are being cautious.

The market is becoming increasingly segmented in terms of quality, as evidenced by the growth in rents in the prime segment – ​​in the center of Sofia prices reached 19 euros/sq m at the end of the year. Offers for Class A spaces along the main thoroughfares vary between 14 and 17 euros/sq m, depending on demand and the share of vacant spaces in the respective area.

Translated by Tzvetozar Vincent Iolov