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 down, retail volume increased, as did output in services and construction.
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 prices of fuel increased in double-digits already in March, causing 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.
OVERALL DEMAND AT USUAL Q1 LEVEL
Leasing activity on Sofia’s logistics and light industrial market in the first quarter of 2026 was in line with the Q1 average for the previous three years. Gross take-up amounted to 43,373 sq m. Retail companies took 46% of this volume, followed by manufacturing enterprises with 38%, wholesale firms with 5% and others with 11%. The most important deal for about 15,000 sqm was ultimately a prelease – build-to- suit warehouse facility for eBag, the leading online grocery retailer in the country, at High Tech Industrial Park Hemus.
Looking at the big picture, the lack of available space on the market was holding back leasing activity. Building owners noted that the majority of enquiries during the quarter were for smaller warehouse spaces of up to 2,000 sqm. Still, there were also some enquiries for larger spaces from foreign manufacturing and transport players.
NEW SUPPLY HIGHEST IN THREE QUARTERS BUT ENTIRELY FOR OWN USE
New supply in Q1 2026 edged up to 25,123 sqm, the highest level in the last three quarters. Importantly, the entire volume, spread among five projects, was for own use and did not help alleviate the shortage of available space on the market. As a result, the total stock increased to 2,376 thousand sqm, while the speculative stock remained essentially unchanged at 805 thousand sqm, as did the vacancy rate at 0.77%.
Development activity in the first quarter was steady. Construction works were carried out at 23 locations. The volume of space in construction was 227,000 sq m, comparable to Q4 2025. Some 51% of this volume was intended for leasing purposes. A notable construction start in the period was the production and warehouse facility of the cosmetics firm Biotrade in Sofia’s Iskar manufacturing zone.
PRICES CREEP UP
Leasing conditions on the Sofia market favoured landlords. Prime rents for Class A logistics space (10,000+ sqm) edged up to €5.8/sq m (excluding service charges and other expenses).
PRIME YIELDS UNCHANGED, INVESTMENT VOLUME AT EUR 7 MILLION
Small deals for industrial and warehouse space are the norm on the Bulgarian investment market. Q1 2026 did not deviate from the usual. Three warehouse facilities in Sofia, Plovdiv and Burgas with a combined GLA of
6,800 sqm changed hands for a total of EUR 6.73 million. All were acquired with the intent for own use. Yields for prime logistics assets (10,000+ sqm) remained flat at 7.25%.
