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.
SUBDUED DEMAND
In Q1 2026, the general mood in Sofia’s office market was subdued. Roughly half of the building owners participating in our flash survey said they felt enquiries from prospective tenants were fewer than in Q4 2025, and a further 30% of the respondents noted that enquiries were about the same.
Actual leasing data confirmed these perceptions. Gross take-up stood at 43,200 sq m, down 4.9% q/q and down 15.9% y/y. Lack of clarity on social and pension insurance rates, general economic policy, the introduction of the euro and its impact on inflation, and the unexpected war in the Middle East all contributed to rising unease among business leaders, prompting some to delay office decisions for the time being.
Leasing activity was highest in the Suburbs. Some 24,000 sqm were contracted mostly in office buildings along Sofia’s ring road, in or around Business Park Sofia. Main Road came second with about 14,000 sqm contracted, followed by the Broad Centre and CBD areas with a combined 5,400 sqm. The contracted space was split between IT firms (65%), administrative and support entities (9%), health care firms (7%), wholesale players (5%) and others (15%).
NEW SUPPLY TIGHT YET AVAILABLE SPACE IS STILL PLENTIFUL
New supply remained very limited. Oxia, developed by Bernard Investments, was the single completed project in the first quarter. The office building, with GLA of 3,800 sqm, received an occupancy permit and opened for business in March. Certified LEED Platinum, the Class A building delivered a mix of serviced and standard office spaces to the Main Road submarket.
The volume of ongoing office construction works stood at 219,000 sqm at the end of Q1 2026. About 46%, or some 100,000 sqm spread across 16projects, were due for delivery in 2026. As a result, oversupply is among the chief concerns of landlords in Sofia.
The office stock in the capital was 2,349,000 sqm at the end of March, 2026. The available space on the Sofia market was 278,000 sqm at the end of March, for a vacancy rate of 11.8%.
The least available office space (12,600 sqm) was registered in Sofia’s CBD area, where vacancy slipped to 5.3%, and the most (130,000 sqm) was available in the Main Road submarket, where vacancy also slipped to 11.5%. The highest vacancy rate of 16.0% was recorded in the Suburbs area.
TENANT-FRIENDLY PRICING IN MOST SUBMARKETS
Rent levels were stable and tenant-friendly in Q1 2026, reflecting softer demand, good volume of readily available space across most submarkets, and unease over potential oversupply. Rents for Class A space remained mostly in the range of 14 to 18 euro/sq m. In the CBD area, prime rents stayed at the 20 euro/sq m level for a fourth consecutive quarter..
NEAR 50,000 SQM OF OFFICE GLA TRANSACTED
There were two notable transactions with office properties during the first quarter of 2026. Bernard Investments acquired both office buildings of BSR One, located in Sofia’s suburban Slatina district. Through this deal, the developer added almost 30,000 sqm of office space to its portfolio, currently amounting to 120,000 sqm across 10 buildings in Sofia. In the second transaction, two domestic private investors acquired Varna Towers, a mixed-use property (office and retail) in the largest city on Bulgaria’s Black Sea coast. The office part of the transaction included two office towers with a combined GLA of 18,500 sqm.
