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: leisurely last meters in otherwise excellent run
In the twelve months to December, 31, 2025, leasing activity on Sofia’s office market improved. Gross take-up amounted to 204,000 sqm, up 10% from 185,000 sq m in 2024. The structure of the contracted volume remained essentially the same, as did the breakdown by submarkets.
In the last quarter of 2025, the market switched from gallop to a trot. Gross take-up stood at 45,224 sq m, down 28% from the previous quarter and down 22% from a year ago. The contracted space was split between IT firms (35%), professional services companies (17%), administrative and support entities (11%), financial institutions (10%), wholesale and distribution players (8%) and others (18%). Relocations and new arrivals accounted for 43% of the contracted volume, followed by renewals with 41%, expansions with 13%, and subleases with 3%.
Leasing activity in Q4 2025 was highest in the Main Road submarket. About 25,000 sqm (55% of gross take-up) were contracted in office buildings along Tsarigradsko shose, Cherni Vrah, Vaptsarov, Bulgaria and Todor Alexandrov blvds. The Suburbs came second with 16,000 sqm, followed by the Broad Center and the CBD areas with a combined 4,400 sqm.
In Q4 2025, half of the interviewed asset managers felt that enquiries from prospective tenants were about the same as in the previous quarter, over a third felt that enquiries were fewer, and less that a fifth felt these were more.
Supply: OFFICE SPACE IN ABUNDANCE
Projects for a total of 6.100 sq m were completed in the fourth quarter. Office buildings 1 and 2 at High Tech Park Lozen brought near 4,000 sq m of Class A space to the Suburbs. Importantly, the conversion trend from previous quarters continued. In the Broad Center and Main Road submarkets, two hotel buildings (Latinka and Castle) were refurbished and repurposed for office use.
At the end of the period, the volume of office space in construction stood at 241K sqm. Relatively large portion of this volume, some 145K sq m spread across 18 projects, is expected to be brought online in 2026. This volume is causing concern of potential oversupply on the Sofia market.
Thanks to the recently completed projects, the total office stock in the capital edged up to 2,332,000 sq m. At the end of the quarter, the available space was 287,000 sq m for an overall vacancy rate of 12.3% (down from 12.4% at the end of Q3). The least available office space (13,500 sqm) was registered in the CBD area, where vacancy was 5.6% and the most (144,000 sqm) was available in the Main Road submarket, where vacancy slipped to 12.8%. The highest vacancy rate of 14.5% was recorded in the Suburbs area.
Pricing: unchanged and tenant-friendly
Office rents in Sofia remained stable and tenant-friendly during the last quarter of 2025, reflecting relatively high vacancy across most submarkets and fears of impending oversupply. Rents for Class A space were mostly in the range of 14 to 18 euro/sq m. Although landlords in the CBD area seemed much less flexible, compared to other submarkets, the prime Class A rent failed to break the 20 euro/sq m level for a third consecutive quarter.
Investment market: Investment market: four buildings with new owners
After a relative lull in the third quarter, office acquisitions exploded in the last three months of 2025. Investors snapped four buildings in Sofia – three in the Suburbs and one in the Main Road area – for a combined GLA of 35,000 sq m. The most important transaction was the acquisition of Interpred World Trade Center by SG Alpha Invest. This deal went through a speedy two-week regulatory oversight. The buyer received financing from Municipal Bank to the tune of 26.5 million euro.
For the full year of 2025, as much as 10 office buildings with a combined GLA of 83,000 sq m changed hands. The total value of these investments stood at near 240 million euro. These numbers compare to 11 buildings with a combined GLA of 86,000 sq m sold in 2024 for 183 million euro.
