In 2024, 8 buildings were put into operation, bringing the class A and B office space in Sofia to over 2,466,300 square meters, according to a study by the consulting company Colliers. This is an increase of over 3% year-on-year. Projects under active construction are expected to add another 280,200 square meters to the market. Some of them are for own use, and over 20% have already signed preliminary lease agreements.
Market activity increased in 2024. Gross occupied areas for the second half of the year are 116,800 square meters, and for the whole year - they exceed 192,000 square meters. These are higher values compared to the previous year 2023, which is a signal of a recovery in demand in the context of the prevailing hybrid work model. About 42% of the gross occupied areas during the year are a result of relocation to a better quality space or consolidation of the company's activities in one place. About 38% of the demand is due to renewal and renegotiation of leases, 14% is for the purpose of expanding the occupied areas, and the remaining 6% is due to new companies on the market. Net occupied areas in the second half of 2024 are over 42,300 sq. m., for the whole year - 74,800 sq. m., and for 2023 - 76,000 sq. m.
In 2024, companies from the IT sector occupy the largest share of the occupied areas - 28%, followed by companies operating in the energy sector (13%) and those offering professional services (11%). The rest of the demand is from companies offering financial services, retail, online entertainment, manufacturing, pharmaceuticals and others. Colliers registered a slight decrease to 12.6% of vacant Class A offices and 14.0% - of Class B. Over 40% of the vacant Class A spaces are concentrated in 5 projects.
The offered rental levels have remained stable over the past year. For Class A offices they are between EUR 14 and EUR 16, and for Class B - between EUR 9 and EUR 11/sq m. per month excluding VAT. Colliers expects offers to increase in higher quality projects, especially for buildings that are under active construction. This pressure for growth will persist until the end of the year, mainly due to the limited supply of such space and the increased interest. This applies to the highest degree to the first-class projects under construction, which attract tenants with modern technologies, flexible working solutions and various amenities. In Central and Eastern Europe, there is already evidence that sustainable buildings with a green certificate have higher rents and occupancy than others.
Requirements for ESG components of office space users’ projects will increase, with this trend being mainly strengthened by international companies. A clear segmentation of the market is emerging between modern and high-quality projects that meet sustainability standards and outdated buildings that fail to offer the sought-after characteristics. In Europe, the office segment is actively adapting to the requirements of the Paris Agreement, aimed at reducing energy consumption and achieving zero carbon emissions. Although this process is in its initial stages at the local level, it is expected to become increasingly tangible. The growing importance of ESG criteria is already having a significant impact on market participants, motivating landlords to invest in modernization or repositioning of their projects in order to remain competitive.
The hybrid work model remains predominant for most office users and according to Colliers' forecast this will remain the same this year. The main emphasis continues to be on the quality of the leased spaces and the creation of a favorable working environment for employees. There is an emerging trend of returning an increasing number of employees to working from the office.
Shared workspaces (flex offices and coworking) continue to develop, with the growth rate expected to accelerate in 2025, due to increased corporate demand for such areas as a complement to traditional office solutions. Investors in larger projects are increasingly integrating shared workspaces directly into their buildings, without the involvement of external operators, to meet the requirements of tenants.
Detailed statistics on average property prices in Bulgaria by city and neighborhood can be found HERE