GDP KEEPS GROWING, HORMUZ EFFECT SHOWS IN INFLATION DATA
On the back of the 4th highest GDP growth in the EU in Q1 (3.1% y/y), Bulgaria’s economy continued to expand in the second quarter of 2026.
The most recent readings of production indices (April) show solid and broad growth in the services sector, led by administrative and support activities, professional, scientific and technical activities. Meanwhile, the situation in the industrial sector (Apr. and May) was mixed – mining and manufacturing continued to struggle, while energy appeared to improve, and production in construction grew in high single-digits.
Domestic trade numbers (Apr.-May) were also mixed – wholesale volume thinned slightly while retail volume in stores grew in high single-digits (especially in non-food categories), and online retail volume expanded in the high teens.
The fallout from the crisis in the Strait of Hormuz showed clearly in inflation data. The annual rate of change of the HICP nearly doubled between March and June (from 2.8% to 5.3%). The cost of diesel shot up nearly 50% in this period, and transportation prices increased in the high teens. Prices in services increased at nearly twice the headline inflation rate.
YTD COMPLETED SPACE UP 47%
Supply of new retail space slowed in the second quarter after a burst in the previous three months. Delivered space in Q2 stood at 16,700 sq m, entirely in retail parks. The volume included finishing works at several facilities which opened partially in previous periods – Pirgos Park in Burgas, Retail Park Kostinbrod, Retail Park Radnevo, and the expansion of Holiday Park Shumen. In addition, two new parks were fully completed – Retail Park Mixx Centre in Kazanluk and a Fantastico #48 in Sofia’s Orlandovtsi district (designed in the retail park format). Finally, the volume includes a partial completion of long-awaited Retail Park Gabrovo. Year-to-date, the completed retail space amounted to 69,000 sqm, up 47% from last year.
Bulgaria’s total retail stock in shopping malls and retail parks reached 1.58 mln sq m, as of June 30, 2026. About 51% of this volume was in 26 shopping malls, and the remaining 49% was spread across 74 retail parks. Overall retail saturation edged up to 246 sqm per 1,000 people.
Construction proceeded on 11 retail park projects across eight cities, at the end of Q2 2026. Space in construction amounted to 131,000 sqm, with at least 166,000 sqm more (10 retail park projects + 1 shopping mall) in various stages of planning. The stock in retail parks would most likely exceed that in shopping malls by the end of Q3.
FASHION RETAILERS TAKE THE MOST SPACE
There was robust demand for retail space in the second quarter. A total of 82 new store openings for about 34,200 sq m were recorded in the period, up from 74 stores and 33,600 sq m a year ago. Some 49 new outlets in shopping malls took 7,800 sq m of space, while 33 new premises in retail parks took 26,400 sq m.
Retailers of fashion (apparel) occupied 23% of the newly opened retail space, followed by grocers with 17%, electronics and electrical appliances retailers with 10%, health & beauty operators and shoes, bags & accessories with 8% each, mixed retailers with 7%, and others with 27%. From a store count perspective, the most active category was again fashion (apparel) with 19 outlets, followed by health & beauty (10), and food & beverage (9).
A notable trend on the market is the expansion of entertainment venues in retail facilities – both shopping malls and retail parks. In the second quarter, Kino Arena opened a new theatre in DS Park Dobrich. This development comes on the heels of Arena openings in West Mall (2024) and Retail Park Kardzali (2023). An opening in one of Sofia’s prime shopping malls – Serdika Centre – is expected in Q3 2026. MARKET CONDITIONS FAVOR LANDLORDS
Leasing conditions on the Sofia market were decidedly in favour of landlords. Prime asking rents for Class A logistics space (10,000+ sqm) were at €5.80/sq m (excluding service charges and other expenses). The vacant space is critically low at 15,000 sq m, for a vacancy rate of 0.62%. Lack of available space is forcing some of the largest tenants to secure warehouse and production space in advance via pre-lease agreements. This works well for landlords as such contracts help secure financing for new projects.
On the investment market, yields for prime logistics assets (10,000+ sqm) remained flat at 7.25%
PRIME RENTS IN MALLS CREEP UP, BUT UNCHANGED IN RETAIL PARKS
Available retail space generally remained limited in the second quarter of 2026. In the retail park segment, vacant space narrowed slightly to an estimated 14,400 sq m or 1.9% of the stock. In the shopping mall segment, the situation was mixed. Vacant space in Sofia’s shopping malls crept up to about 14,000 sq m for a vacancy rate of 3.6% (3.1% in Q1 2026), while in Plovdiv vacancy remained unchanged at 2.7% or less than 3,000 sq m. Visibility in the rest of the country was patchy, but indications from key shopping mall players suggest no change from the previous quarter. Finally, vacancy on Sofia’s High Street was less than 600 sq m or under 2%.
Prime rents in shopping malls continued to rise in small steps. In the April to June period, the headline rent reached €48.50 /sq m in Sofia. Similar increases were observed in Plovdiv and Burgas, while in Varna prime rents added a full euro. The prime rent in retail parks was unchanged at €13.00 /sq m.
PRIME YIELDS UNCHANGED, MAJOR INVESTMENT IN THE MAKING
Three investment transactions in the retail segment were detected in Q2 for a combined value of roughly 30 million euros. These included Varna Mall, a store on Sofia’s High Street and another outlet at a prime location. The buyers of all properties were Bulgarian entities with domestic owners.
The new management of Varna Mall has announced plans to sell piecemeal part of some 4,000 sq m of office space in the building to give the retail facility (GLA 26,000 sqm) a face-lift.
However, the top investment news during the quarter was the announcement that Hyprop Investment, the South African retail-focused REIT, has agreed to buy Galleria Burgas (GLA 35,000 sq m) for 122 million euros from its fellow South African commercial property investor MAS Plc. The deal, subject to approval by Bulgaria’s Competition Protection Commission, is set for closure in the next quarter. As a result of the transaction, Hyprop will double its retail holdings in Bulgaria. In 2017, it acquired Sofia’s The Mall for 156 million euros.
Prime yields remained unchanged: 7.5% for shopping malls and 7.25% for retail parks.
