Insights into Sofia's Office Sector: Trends and Outlook

In the initial quarter of the year, the office market in Sofia maintains a relatively subdued pace. Occupancy rates linger around 15-16%, with finalized transactions declining by 10-15% compared to the same periods in the preceding years.

From January to March, office rental agreements only covered 37,200 sq.m. Most of these transactions stemmed from lease renewals or relocations from non-competitive or Class B premises, as reported by commercial real estate consultancy Cushman&Wakefield Forton.

Insights into the data suggest that IT firms in the outsourcing sector are tapering their expansion, continuing to embrace hybrid work models. "This trend underscores the ongoing optimization of office spaces," notes Yoanna Dimitrova, Office Areas Manager. She underscores that the IT sector remains the primary force driving the rental market this year.

Despite lingering vacancies in the premium segment, new office spaces are scarce, further accentuating the dichotomy within the market. Premium modern projects continue to allure tenants, while older buildings struggle to maintain competitiveness, per the company's analysis.

The proliferation of co-working spaces persists, with their footprint surpassing 67,000 square meters in early 2024. A significant portion of this new space is integrated into office buildings, reflecting the trend towards synergy between flexible and traditional workspaces.

"Having flexible workspaces within an office project facilitates the attraction of small or burgeoning businesses with growth potential," Dimitrova highlights.

There have been no new developments, and rental rates are on the rise. The aggregate volume of Class A and B offices in the first quarter of 2024 remained steady at 2...