NEW CURRENCY, NEW WINS, AND HEADWINDS
The first quarter of 2026 in Bulgaria started with uncertainty and ended with a solid achievement, more uncertainty, and an opportunity.
Literally, from day one, the economy faced a big challenge – the introduction of the euro. At the time of reporting, four months later, it appears that all the institutions and business entities passed the test with flying colours. Moreover, in this period, Bulgaria’s economy performed quite well. Inflation slowed, retail volume increased, and output in services and construction did as well.
The quarterly numbers could have been even better if it weren’t for external factors. The sudden war in the Middle East delivered a shock to the global energy markets and had an immediate effect on Bulgaria’s open economy. Domestic fuel prices already increased in double digits in March, raising fears of high inflation among consumers still adjusting to a new currency.
On a positive note, the economic success in Q1 2026 was followed by a watershed Parliamentary election in April. Early assessments suggest that the country has an opportunity to implement anti-corruption reforms and substantially improve its business environment and investment profile.
NEW SUPPLY AT 2 ½-YEAR PEAK
New supply hit a two-and-a-half-year peak in the first quarter of 2026 at 39,500 sqm of modern retail space. The entirety of the volume was in retail park concepts. Three projects were fully completed – Holiday Park Vratsa, East Road Retail Park, and Retail Park Simitli – while three more were partially completed – Pirgos Park, Retail Park Kostinbrod and Retail Park Radnevo.
The retail stock increased to 1.56 mln sqm, as of March 31, 2026. About 52% of this volume was in 26 shopping malls, and the remaining 48% was spread across 71 retail parks. Overall retail saturation edged up to 242 sqm per 1,000 people. Construction works were ongoing at 15 retail park projects across 13 cities at the end of Q1 2026. The volume of space under construction amounted to 133,483 sqm, with about 170,000 sqm (9 retail park projects + 1 shopping mall) in various stages of planning. The stock of retail parks is near certain to exceed that in shopping malls by October, 2026.
STRONG DEMAND LED BY FASHION
Demand was strong in the first quarter. A total of 67 store openings were recorded for about 33,000 sqm, compared to 36 stores and 17,000 sqm a year ago. There were 45 new stores in the retail park segment, taking 28,100 sqm of space, while 22 new stores opened in shopping malls, taking 4,800 sqm.
Fashion (apparel) retailers occupied 24% of the newly opened retail space, followed by grocers with 17%, mixed retailers with 13%, food and beverage operators with near 10%, furniture and homeware with 8%, and others with 29%. From a store count perspective, the most active category was food and beverage (13 outlets), followed by Fashion (12), and health & beauty (8).
Sports Direct, a leading international retailer of sports and fitness footwear, clothing, and equipment, was a key market entry in the first quarter. The brand, which operates a network of 715 units across 30 countries, opened its first store in Bulgaria at XoPark Sofia. True to its name, the retailer entered the market by setting up a wholly owned subsidiary.
AVAILABILITY EASING SLIGHTLY, BUT PRIME RENTS KEEP RISING
In the first quarter of 2026, available retail space increased somewhat from bare minimum levels. In the retail park segment, vacant space was 15,600 sqm for a vacancy rate of 2.1%, up from 1.5% in Q4 2025. At shopping malls in Sofia, the vacant space edged up to 12,500 sqm for a vacancy rate of 3.5%, up from 2.2% at the end of 2025. In Plovdiv, the available space across shopping malls was merely 2,300 sqm for a vacancy rate of 2.7%. The situation was similar across most shopping malls in the rest of the country.
Prime rents in shopping malls edged up in the first three months of 2026. The headline rent reached €48.00 /sq m in Sofia, in Plovdiv it was €28.00 /sq m, in Varna it was €28.50 /sq m, and in Burgas it was €24.00 /sq m. The prime rent in retail parks held firm at €13.00 /sq m.
PRIME YIELDS STABLE
At the start of 2026, one notable transaction with a mixed-use asset, combining retail and office premises, was recorded. Varna Towers, with 29,000 sqm of retail leasable area and 18,500 sqm of office leasable area, was acquired by two domestic private investors. The retail part of the property appears to be struggling with very low occupancy.
Prime yields for shopping malls remained unchanged for a sixth consecutive quarter at 7.5%. In the retail park segment, prime yields held steady at 7.25% for a fourth consecutive quarter.
