MBL

A VERY STRONG YEAR FOR THE OFFICE SPACE MARKET IN SOFIA

A record high annual net absorption resulted in the lowest vacancy in more than 10 years in the last quarter of the year, the office space market in Sofia remained very active, preserving the high  demand levels observed throughout the year. The net absorption of 41,500 sq. m is the highest quarterly level in 3 years. The new lease acquisitions remained above the average for the past 10 years, with a high percentage of leased space in new buildings under construction – 31% of the total amount in the last quarter, and 44% for the entire 2018.

Office space stock rose to 1.96 million square meters after 31,000 sq. m of newly developed space received use permit during the last quarter. The total stock is set to increase rapidly further – office space under construction has increased to 440,000 sq. m of which 320,000 sq. m are scheduled for completion by the end of 2020. Additional 250,000 sq. m are planned, but have not yet obtained construction permit.

Demand remained strong – new deals for over 43,000 sq. m were signed in the last quarter of the year, while the net absorption for the period was 41,500 sq. m. In 2018 new  lease acquisitions reached a total of over 140,000 sq. m. while net absorption amounted to 113,000 sq. m – a record high level for the past 10 years. Tenants from the IT and BPO sectors remained most active in the market throughout the year with a total share of more than 60% of the newly leased space. By the end of 2018 vacant office space in Class A and B buildings decreased by 13% compared to last year, reaching 164,000 sq. m, or 8.3% of the total stock, compared to 10% in December 2017.

Average asking rents recorded a slight increase – in Class A office space the headline rent varies between EUR 12 – EUR 15. Meanwhile in Class B office buildings the rent is between EUR 8 and EUR 11 per sq. m. In general rental levels are expected to remain stable in 2019.

 


For MBL

MBL is the leading company specialized in commercial real estate, providing consulting and brokerage services. The company has built a solid reputation in the real estate market in Bulgaria and offers complex solutions to local and international clients – building contractors, investors, financial institutions, tenants and others. The company’s expert team has solid experience in property management, financial services, investment and project management.