Stable rental rates and rise in the vacant office space
The total inventory of class A and B office space in Sofia reached 2.1 million sq. m in the 3rd quarter of 2019, following the completion of 41 000 sq. m. The newly delivered space has been concentrated along Tzarigradsko Shousse Blvd, and the areas of Business Park Sofia and Paradise Mall. The total volume of office space under construction remains unchanged at 413,000 sq. m, of which 142, 000 sq. m are expected for delivery by the end of 2020.
Class A and B asking rental rates have remained stable within the €12-14 per sq. m range and €8-10 per sq. m respectively. Vacancy rate rose back to the levels from Q1 this year – 9.5%. This indicator is expected to remain around 9%-10% until the end of 2020.
The net absorption for Q3 amounted to 29,700 sq. m. We expect the annual figure to exceed last year’s result. On the other hand, the new lease acquisitions (take-up) for this quarter stands at 25,900 sq. m, amounting up to ca. 70 000 sq. m for the first three quarters of 2019. More deals are expected by the end of the year which would lead to an yearly take-up of nearly 90 000 sq. m. On average this is a good result for the local market, although it represents a decline compared to 2017 and 2018, when an exceptionally high demand was witnessed. IT Companies were most active during this quarter with 50% of the newly leased space.