BULGARIA Industrial MarketBeat Q4 2024
ECONOMY: GROWTH ACCELERATES
In 2024, Bulgaria’s economy showed accelerated growth each quarter, ranking among the EU’s top 10 most dynamic economies. This was driven by domestic consumption and investments, while external trade faced challenges due to weak international demand.
By year-end, the economic environment remained positive. Inflation fell below EU and Eurozone averages, and unemployment hit a record low. Consumer optimism was high, with business leaders in manufacturing and construction showing increased confidence, while the services and retail sectors remained stable.
SUPPLY & DEMAND: narrowing available space
Development activity in Sofia was steady in Q4, with 59,000 sqm of light industrial and warehouse space completed. Total deliveries for the year reached 180,000 sqm. Of the 11 projects finished in Q4, 9 were built for own use, mainly by manufacturing companies in food, furniture, chemicals, and metalworking. Two speculative projects added just over 9,000 sqm to the market, bringing the speculative stock in and around Sofia to approximately 640,000 sqm.
Four new projects totaling 21,000 sqm were launched in Q4, all for own use by wholesale trading firms. Space under construction dropped 6% from Q3 to 335,000 sqm.
Demand surged, with take-up rising 80% q/q and 14% y/y to 95,000 sqm. This was driven by a large build-to-suit contract for an international manufacturer and smaller leases for logistics and warehouse space. Occupied space reached 66,000 sqm, reducing the vacancy rate to just 1.6%.
PRICING: Creeping up
At the end of 2024, prime yields for Class A logistics space (10,000+ sqm) held steady at 7.50%, with expectations for decrease over the next few months. Prime rents rose 2% q/q to €5.4/sqm, with a flat to marginally upward trend expected.