Economy: Services-driven expansion
Bulgaria’s economy continued to grow in Q4 2025 thanks to a strong services sector. Production indices for October and November show broad-based expansion. Output volumes increased at a pace faster than in the same period of last year in information and communications, real estate, professional, and administrative and support activities. Even if production was inconsistent in transport and hotels & restaurants, sales volumes in wholesale and retail grew at a healthy y/y rate.
Meanwhile, the industrial sector continued to struggle. Manufacturing and power supply contracted in October and November, and mining output was inconsistent. A single bright spot in the sector was construction, as production in buildings and civil engineering continued to rise.
A key development with wide economic implications in the fourth quarter was the turmoil stirred by the 2026 draft state budget. Higher tax, debt, and spending levels set in the document provoked mass protest and ultimately its withdrawal and the cabinet’s resignation. As a result, Bulgaria enters 2026 somewhat shaken but with high hopes for beneficial advancement in its first year in the Eurozone and positive change at the early elections in mid-April.
Demand: the best quarter in 2025
Leasing activity on Sofia’s logistics and light industrial market in Q4 was the highest in 2025. Gross take-up amounted to 69,061 sq m, twice higher than in Q3, yet 27% lower year-on-year. Almost two-thirds of the volume was taken by retailers. Additionally, wholesalers leased 17%, manufacturers secured 16%, and logistics enterprises snapped the remaining 5%. Notably, some 27,000 sq m of the contracted volume was preleased.
Looking at the big picture, in calendar 2025, gross take-up stood at 152,000 sq m, down 37% from 239,000 sq m in the previous year. Retailers accounted for 36% of the contracted volume. Manufacturers came second with 25%, followed by wholesalers with 20%, and transport and logistics firms took the remaining 19% of the volume.
Lack of available space and limited new supply are key inhibiting factors on Sofia’s logistics and light industrial market.
Supply: few completions in Q4 but good prospects for 2026
New supply in Q4 remained very limited, at just over 22,000 sq m. This volume was split among five projects. Three of these, for a combined 13,000 sq m, were for the own use of manufacturers of furniture and PVC frames, and a wholesaler of water systems. The remaining 9,000 sq m was speculative warehouse space, mostly in the suburbs of the city. The logistics and light industrial stock in and around Sofia edged up to 2,344,051 sqm, of which just 800K or 34% were for rent.
Importantly, new supply in 2025 was the lowest in four years. The volume of completed works stood at 114,000 sq m, down 36% from 2024.
Development activity slowed in the fourth quarter. Construction works were carried out at 24 locations. The volume of space being built stood at 230,615 sq m, down 9% from Q3 2025. Some 48% of this volume was intended for leasing purposes. No significant project starts were observed.
A bright spot on the supply side is the fact that almost the entire volume of space in construction is due in 2026. This is likely to boost take-up next year and ease the upward pressure on rents.
Pricing: steady
The available space on the market at the end of Q4 narrowed to 15,800 sq m, for a vacancy rate of 0.67%. Prime rents for Class A logistics space (10,000+ sqm) held steady for a third consecutive quarter at €5.6/sq m. The prime yields were unchanged at 7.25%.
