Sofia office space vacancy rate rises to 13.6% in Q4 – Forton

Sofia office space vacancy rate rises to 13.6% in Q4 – Forton

The office space vacancy rate in Sofia increased to 13.6% in the last quarter of 2020 from 11.4% in the third quarter, Forton, member of Cushman&Wakefield Alliance for Bulgaria, said.

The increase of vacant space is expected to keep rents under pressure in the coming months, especially in areas with new office construction, Forton said in its fourth-quarter 2020 office market report published last week.

The report shows that prime asking rents in central business district (CBD) remained unchanged at 15 euro ($18.1) per sq m, but the main road and suburban submarkets registered slight decreases. At the end of 2020, the asking prices for Class A projects alongside main boulevards were relatively stable at 12-14 euro per sq m, Forton also said.

The challenging market makes developers more cautious when starting new projects, which results in a significant pipeline decrease to 319,400 sq m in the respective quarter of 2020.

"As expected, some companies reconsidered their office space needs, offering part of their premises for sublease. According to our research, this supply accounts to 28,046 sq m at the end of 2020, which is about 10% of the available space in Sofia," Forton said.

According to Forton, with 107,832 sq m gross leasing area, 2020 was the weakest of the last five years for the office market in Bulgaria's capital. The take-up fell by 39% compared to 2019.

Previously driven by expansions and preleases, now the office market registers mostly renewals and some relocations. Although some notable preleases were signed in the last three months of 2020, the share of this type of deals remained insignificant for the year, in general.

The slow office market led to lower-than expected new completions last year - roughly 93,000 sq m, as many occupiers felt uncertain about their business and office space needs, Forton noted.

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