An active retail property market and a trend towards more expansions, especially in discount chains, is reported by the advisory company Cushman & Wakefield Forton in their report for the second quarter of 2022.


The market was stable during the period and tenants are reporting a return of their revenues to 2019 levels. At the same time, some of the major brands are shifting their expansion to different areas of Central and Eastern Europe due to the war in Ukraine, which is contributing to increased demand for space. Interest in malls is steady, but there is also a focus on retail parks. This trend is also a result of the expansion of retailers and discount chains to the regional and smaller cities in the country.


“In general, in recent months we have seen a dynamic and difficult to predict market for retail and logistics space. This is largely due to the war between Russia and Ukraine, which has forced many companies to close operations in these markets and look for new supply and sales routes. This is related to rethinking their plans in the field of real estate”, summarized Yavor Kostov, Managing Partner at Cushman & Wakefield Forton.


In the retail segment, Bulgaria remains attractive for discount chains, sporting goods, drugstores and local FMCG operators. These are dynamically growing brands that are targeting both large and smaller cities,” he added.


Retail parks continue to be attractive – both for retailers and investors in portfolios of such projects. As of mid-2022, there are 176,000 sqm of projects under construction or in the planning phase. Operating retail parks in the country with a leasable area of over 5,000 sqm total 227,000 sqm, according to Cushman & Wakefield Forton data.


Rental levels in shopping centers have overcome the pressure of the pandemic and are gradually returning to pre-crisis levels. In the second quarter of 2022, they rose to EUR 35/sqm for the more attractive premises in leading projects in Sofia. Rents in retail parks remain around EUR 10/sqm in Sofia and EUR 7-9/sqm in regional cities.


Among the more significant new stores opened during the period are those of JYSK in Retail Park Yambol, New Yorker in Retail Park Srednogorie, Pirdop. The fashion brand Sinsay opened doors in  Jumbo Plaza, Sofia on an area of 1,670 sqm.


Logistics market

Rental activity in the logistics market in Sofia has reached one of its lowest levels in the last two years. The reason for this is a shortage in the supply of vacant space, as their share in relation to the entire market is already insignificantly low.


“In recent months we have seen absorption of space with short-term rentals. This is partly due to the desire of many retailers and distributors to stock up on goods and raw materials in response to rising inflation,” said Zhoro Angelov, Industrial Property and Land Development Manager at Cushman & Wakefield Forton.


As a result, the vacancy rate is declining from levels as low as 2% in the spring and 4% by the end of 2021. The vacancy rate is expected to remain low in the short term despite the large amount of new construction and the potential for market expansion. As of mid-2022, nearly 400,000 sqm of manufacturing and warehouse space is under construction in Sofia, a record volume for the last 15 years. Most projects are planned for own use.


Due to rising operating costs, increasing construction costs and high demand, rents for modern logistics space in Sofia continue to increase and have already surpassed EUR 4.5/sqm for medium-sized facilities. Rents for large sites of over 10,000 sqm are around EUR 4/sqm.



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