QUALITY AND FLEXIBILITY ARE THE FUTURE OF SOFIA'S OFFICE MARKET, ACCORDING TO AVISON YOUNG
The global real estate advisor published its H1 2022 market report
In the coming months, the Sofia office market will see even more relocations of tenants to new buildings for various reasons: tenants wanting a “fresh” new office; tenants relocating because their existing headline rents will become higher than the asking rents of new buildings on the market (due to indexation); and tenants consolidating their office space in one place.
This is one of the takeaways from the H1 2022 market report of the Sofia market by Avison Young, a global real estate advisor.
In the first half of 2022, the total office inventory in Sofia remained stable at around 2.5 million sq. m – of this the actively trading inventory of completed class A&B office space tracked by Avison Young Bulgaria is 1.92 million sq. m area). 37,320 sq. m were delivered to market in the first half of 2022. The construction pipeline stands at 178,000 sq. m with 18,895 sq. m due to be completed in the second half of 2022. The overall vacancy rate of completed class A&B space increased to 15.3%. Asking rental rates for class A office space remained stable and are largely in the range of €11 - €15 per sq. m per month.
New projects coming to market will command premium prices and some will exceed the €15 level mark. However, the monthly service charge will likely move upwards in the immediate future due to rising utility costs and costs of services due to inflation.
With the current high demand for flexi, serviced type offices, the market will see more traditional office space converted into these types.
There will be more captive outsourcing by companies from Western Europe centralizing their operations in Central and Eastern Europe, and Bulgaria in particular, since Bulgaria proved to be a successful outsourcing destination in Europe due to its highly educated and less expensive workforce. Asking rental levels for class A office space are likely to remain unchanged from their current levels of €11 - €15 per square meter per month depending on the
Overall, the two major trends in the coming months will be the flight to quality and shorter, more flexible lease terms.
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