Companies refuse to renew their contracts for offices ᐉ News from Fakti.bg – Properties

The office market in Sofia registered a slight decrease in free space in the second quarter of the year – it reached 15.3% (50 basis points), despite the growth in supply with new rental projects. The period saw moderate activity among entrants and growth companies looking for office space, while contract renewals reduced their share of total transaction volume, according to data from commercial real estate consultancy Cushman & Wakefield Forton.

During the period April – 37,088 square meters of office space was leased in Sofia in June, which is comparable to the volumes of the market for the second quarter in the last five years. Net occupied areas, which reflect the difference between leased and vacant offices, are at a relatively good level – 23,106 sq.m. The main reason is the increasing share of new contracts and extensions at the expense of the declining share of renewals, which fell to 22% of the total volume in the second quarter from over 40% of the market in previous periods. The statistics for the half-year also show rental activity within the current trend with a total of 74,352 sq m of offices leased.

“After the calm first quarter, we observe a relative activation of the rental market in the spring months. There is interest both from companies new to the Bulgarian market and from operators in trade and logistics who are looking for space in higher class office buildings. This partially compensates for the restructuring in the IT sector and contributes to the improved performance of the office market in recent months,” commented Yoanna Dimitrova, manager of “Office Spaces” at Cushman&Wakefield Forton.

The total volume of class A and B offices in the second quarter of 2024 remained stable at levels of 2,259 million sq. m. During the period, two office buildings with a total area of ​​just over 8,000 sq. m., located on main boulevards. Projects under construction remain below 200,000 sq m as a result of the still slow take-up of vacant office space.

Interest in shared offices continues to grow, mainly as part of existing office buildings. By mid-2024, they reached 68,900 sq. m in Sofia with nearly 8,000 sq. m of areas under development. For many new companies, these spaces are a convenient platform to enter the market, and building owners value them as an incubator for attracting tenants with growth potential.

Rental levels on the office market for the moment remain stable, with the asking prices for prime areas in the center of Sofia being within 17.5-18 euros/sq.mm On the big boulevards, the levels vary between 15 and 17 euros/sq. m. m for class A offices.

“The trend continues to open the gap between sought-after high-end projects and lower-end buildings. This is observed both in terms of price levels and in terms of occupancy of both types of buildings, Dimitrova summarized.

And in the second quarter, the share of free space in class A projects remained lower than that in the lower class of office buildings – 14.6% compared to nearly 17%. Traditionally, the least vacant areas are registered in the center of Sofia – just over 12%, while due to the greater supply in certain areas in the periphery and on the major boulevards, their share approaches 16% on average

You can see detailed statistics on average property prices in Bulgaria by cities and neighborhoods HERE