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      Tag: Office Space

      Research
      Research

      Office trends Q3 2023 by C&W Forton

      ECONOMY: In Good Shape

      Nine months into the year, Bulgaria’ economy was in good shape. After a hiccup in July, inflation returned to its downward trajectory, decelerating to 6.4% y/y by the end of September, one of the lowest in the CEE region. Consumer confidence continued to improve, reaching its highest in two years and the business climate index was near a 3-year peak. The latest GDP data showed slight deceleration of growth from 2.2% in Q1 to 1.9% in Q2, which was still the 8th highest in the EU. The situation on the labor market remained essentially unchanged.

      SUPPLY AND DEMAND: Anemic Supply

      Sofia office market showed moderate activity during the third quarter, with a total of 38,690 sqm leased. This is slightly above the average rates for this period over the past 5 years and 54% higher than the third quarter of 2022. Despite the improved results, landlords continue to report that leases are closing relatively slowly and with a high number of property viewings from potential tenants. The office market remains driven by relocations and renewals, while the share of expansions is relatively small – below 20% of the total leasing volume. This reflects the ongoing trend of hybrid work, especially in the IT and BPO industries, which has a direct impact on the occupiers’ needs of office space.

      On the supply side, there was no significant movement on the office market in Q3, with only one small project being completed. The lack of new significant projects and the positive net absorption of office space (15,576 sqm for Q3), led to a minor decrease in vacancy rate in Sofia. However, the levels remain above 16%, which is a relatively high value for CEE. If demand remains muted, the upward pressure on vacancy will persist due to the planned office deliveries in the next couple of years.


      Read the full report here.

      Research
      Research

      Office trends Q2 2023 by C&W Forton

      ECONOMY: On positive trajectory

      All things considered, halfway through 2023, Bulgaria’s economy is doing quite well. Inflation, a huge problem for most CEE countries, has receded back to single digits (7.5% in June) and was just above the average for the Eurozone (5.5% in June). The main economic indicators for the first quarter were all positive. The number of unemployed dropped 6% y/y and the employed edged up slightly both nationally and in the capital Sofia. GDP grew by 2.3% y/y, or more than twice as fast as the EU average.

      SUPPLY AND DEMAND: Increasing vacancy rate

      The office market in Sofia posted visible slowdown in the first half of 2023, with leasing volume decreasing by 11.5% y/y. Transactions for the period amounted at 75,598 sqm. Lease renewals retained the lion’s share of the total volume, followed by relocations. Since hybrid work remains a strong trend, many occupiers continue to optimize their office spaces when renewing their contracts. These trends resulted in extremely weak organic growth, with net absorption dropping down to 457 sqm in the second quarter of 2023.

      The slowdown of leasing activity resulted in sluggish office construction over the last year and low volume of new completions. In the second quarter of 2023, the pipeline in Sofia remained below 200,000 sqm, with the delivery of a small office building in CBD and an office part of a mixed-use project. The increasing supply, together with the tight occupier market resulted in increase in the vacancy rate to 16.58% as at mid-2023.

      A positive trend is the evolution of the shared offices segment. An increasing number of office projects incorporate coworking spaces in their mix, in order to attract growing businesses and to offer more flexible solutions to the existing occupiers. By mid-year, the supply of coworking space and serviced offices in Sofia reached approximately 63,000 sqm, with another 10,000 sqm in the pipeline.


      Read the full report here.

      Research
      Research

      Office trends Q1 2023 by C&W Forton

      ECONOMY: GDP growth is slowing down

      Softening domestic demand will undermine GDP growth in 2023 as inflation continues to erode purchasing power. Nonetheless analysts forecast a higher economic increase than the EU average after keeping pace with it at 3.4% in the previous year. The strength of the labor market will underpin consumption as employment and the unemployment rate posted their second-best year on record, in 2022. Meantime, inflation at the end of 2022 was among the lowest in the CEE region and is likely to come down at a slightly faster rate than in other peers.

      SUPPLY AND DEMAND: Low pipeline and stable vacancy rate

      The Sofia office market is moving at two speeds, with projects in prime segment performing distinctly better than the rest of the market. Leasing activity reached almost 42,000 sqm in the first quarter of 2023, surpassing the 5-year average for this period of the year. Even with the hybrid work model, some companies are increasing their spaces and this is driving up the share of expansions and preleases in overall demand. Despite this positive trend, renewals and relocations still form the prevailing part of leasing activity, which results in moderate net absorption – 10,848 sqm in the first quarter.

      Growing demand for coworking space is another noteworthy market trend. In order to respond to occupier preferences, increasing number of office buildings are incorporating flex office solutions. At the beginning of 2023, the supply of coworking and serviced office space in Sofia surpassed 61,000 sqm, with another 11,500 sqm under development. Unlike the coworking segment, the office pipeline is tightening, due to the anemic start of new projects. The vacancy rate for class A and B office buildings in Sofia is hovering around 16% and is expected to remain stable for the foreseeable future.


      Read the full report here.

      Blog
      Twins
      Blog

      MyFlex Coworking opens second location at Twins Center in Sofia

      In April this year, MyFlex Coworking is expected to welcome its first customers in the Twins Offices business center on “Nikola Gabrovski” street. The new space has an area of ​​1,500 sqm.

      Research
      Research

      Office trends Q4 2022 by C&W Forton

      ECONOMY: GDP growth is slowing down

      The Bulgarian economy is forecasted to lose speed in 2023, reflecting the lower domestic demand and worsening external environment. According to the World Bank, Bulgaria’s GDP is expected to increase by only 1.7% in 2023 in the light of the looming global recession. One of the main growth factors – private consumption, is negatively affected by the price increases, tightening labor market and higher borrowing costs. The latest projections of the Bulgarian Central Bank are for 14.9% annual inflation at the end of 2022 and gradually slow down to 4.1% at the end of 2023. Although remaining volatile, food and energy prices are expected to decelerate gradually, especially in the second half of the year.

      SUPPLY AND DEMAND: Low pipeline and stable vacancy rate

      With 76,009 sqm leased space in the last quarter of 2022, the office market in Sofia registered activity comparable to the prepandemic time. The total take-up for the year reached 186,655 sqm. Although looking optimistic, this volume is formed mostly by renewals and relocations, with minimal net effect for the market. Space optimization remained the leading trend over the last year, since many companies continued to use their offices at partial capacity, due to the hybrid work model. Overall, the market was driven primarily by tenants with expiring contracts, looking to renew their leases or move to another location. Net absorption remained moderate, with 48,683 sqm annual volume.

      Development activity posted visible decrease in 2022. The office completions were reduced to 55,514 sqm over the year, since a lot of projects were withdrawn in time. However, this will give more time for the available office space to be absorbed and keep the vacancy rate stable in the coming quarters. As at the end of 2022, the share of vacant offices in Sofia remained around 16%. The space under construction is still under 200,000 sqm, although the start of a new part of large office project at the fall of the year.


      Read the full report here.

      Blog
      IMG_2395
      Blog

      MyFlex signed the largest serviced office deal in Sofia

      Shared offices in Sofia have reached over 55 000 sq.m, shows recent research of Cushman & Wakefield Forton.

      Blog
      campaign-creators-e6n7uoEnYbA-unsplash
      Blog

      Top 5 advantages of the flexible working space over the traditional office

      Shared offices in Sofia have reached over 55 000 sq.m, shows recent research of Cushman & Wakefield Forton.