ECONOMY: on an upward trajectory

In the first nine months of 2024, Bulgaria’s economy maintained its upward trajectory. Accelerating growth reflects solid domestic demand and improving investments, offsetting soft external demand. The leading indicators suggest that in the short-term the economy would stay on course. Economic sentiment is firmly in positive territory and rising. Consumer optimism is at its highest this century and confidence is above average across all parts of the economy, including the very important retail sector.

SUPPLY & DEMAND: large construction volume

In the third quarter, supply of new retail space was low. About 3,000 sqm of GLA were delivered by two partially opened retail parks. Technical issues in a facility in Ruse pushed the completion of 5,000 sqm towards the next quarter. Yet, overall development activity was anything but low. At the end of September, the total modern retail space under construction stood at 214,000 sqm. This equals almost a dozen new and the expansion of an extra five retail parks. Not to mention, the planning of further 11 retail parks with 132,000 sqm of GLA.

The volume of newly opened store space reached 13,500 sqm across 52 outlets. Openings in shopping malls stood at 41 units with an area of 8,500 sqm. While the number of premises was flat year-on-year, the volume was up 15%. Mega Mall, Serdika Center, and Ring Mall saw most of the action and accounted for over half of the space opened in shopping malls. Absent freshly completed space, just a handful of stores opened in retail parks for a volume of 5,000 sqm.

PRICING: edging higher

During the quarter, the vacancy rate across shopping malls and retail parks was in low single digits across the country. This pushed prime rent levels in Sofia up to 42 euros/sqm in shopping malls and 12 euros/sqm in retail parks. Prime yields remained unchanged at 7.75% in mall and park facilities, though looking forward some degree of compression appears likely.