ECONOMY: exceeding expectations

There were several major economic developments in Q3 2025. The Council of the European Union formally approved Bulgaria’s accession to the euro area. Standard & Poor’s and Fitch upgraded the country’s long-term foreign currency credit rating. GDP data for Q2 exceeded expectations, and finally, the IMF, the World Bank and the EBRD all revised upward their Bulgaria forecasts, adding 50+ basis points on top of their previous GDP projections for 2025 and 2026.

Most economic indicators maintained their trajectories in Q3. Output in retail, services and construction grew y/y, while industry continued to suffer. Domestic consumption was again the key pillar of the economy, benefitting from a significant wage hike in the public sector in Q2. External demand was weak. Exports of goods dropped in low double digits, as did the preliminary numbers for FDI in July and August. Surveys showed that business climate was stable and economic sentiment remained positive.

DEMAND: mixed feelings

In Q3 2025, leased office space in Sofia was the highest in seven consecutive quarters. Gross take-up reached 61,000 sqm, up 8% y/y and 49% q/q. IT companies, led by heavyweight SAP, were particularly active securing 57% of the space, up from 34% in Q2 2025. Firms from administrative & support services, manufacturing, and professional services got hold of some 15,000 sqm (roughly equally split between them), and the remaining 18% were taken by players from wholesale, retail, finance, and other industries.

Leasing activity was highest in the Main Road submarket. About 40,000 sqm (66% of gross take-up) were contracted in office buildings along Tsarigradsko shose, Cherni Vrah, Vaptsarov, Bulgaria and Todor Alexandrov blvds. The Suburbs were a distant second with 13,600 sqm, followed by the Broad Center and the CBD areas with a combined 7,140 sqm. In terms of lease type, renewals accounted for 48% of total space, followed by new leases with 29%, expansions with 13%, and preleases with 10%.

Despite the solid leasing results, asset managers were not of one mind regarding demand. Just over a third of the managers interviewed indicated they felt enquiries for office space exceeded those in Q2, a similar number sensed less enquiries, and over a quarter experienced no change.

Supply: plenty available and more to come

Although no new office projects were completed in the third quarter, the period was hardly uneventful. There were clear indications that some commercial real estate owners in Sofia were taking a hard look at the prospects for their assets. The records of the city’s construction authority showed that а 2,150 sqm-office-building in the CBD area was granted a permit to convert into a hotel establishment and a former hotel (TBA 1,800 sqm) near Tsarigradsko shoes blvd. received occupation license after converting into an office building. Considering all options was also the argumentation behind the end of lease activities in another relatively large office building (8,500 sqm +) in the suburbs area.

The volume of office space in construction at the end of Q3 stood at 204K sqm, unchanged from the previous quarter. Relatively large portion of this volume is expected to be brought online by the start of 2027. Concern about potential oversupply of office space holds back development activity. No new projects were started and no new plans were announced.

All-in-all, at the end of the period the total office stock in the city slipped slightly to 2,327,000 sqm. The available office space narrowed to 289,000 sqm for an overall vacancy rate of 12.4% (down from 12.9% at the end of Q2). The least available office space (14,000 sqm) was registered in the CBD area, where vacancy was less than 6% and the most (148,000 sqm) was available in the Main Road submarket, where vacancy stood at 13.1%. The highest vacancy rate of 14.2% was recorded in the Suburbs area.

Pricing: tenant-friendly conditions

During Q3 2025 the Sofia office market was generally tenant-friendly. There was plenty of available office space across all but one submarket (CBD), average rent prices were stable (14 – 18 euro/sqm), and the development pipeline was strong. Even in the central business district, where conditions favored landlords, Prime Class A office rents stayed unchanged at 20 euro/sqm.

Investment market: Six dots on the radar

Office buildings remained on the radar of commercial real estate investors in Q3 2025. One facility changed hands in the period. Bulgaria Office Center, a premise with 5,500 sqm of office space, was acquired by Borika AD, the leading operator of payments and card infrastructure in the country, for 11.5 million euro. The purchase aimed to consolidate the workforce of the operator.

Since the start of the year, various domestic players bought as much as six office buildings. The total value of these investments stood at 150 million euro, for a total GLA of 70,000 sqm. Looking at the last quarter of 2025, the market could see further deals, as investor appetite remains present.