CUSHMAN & WAKEFILED FORTON: SIGNIFICANT GROWTH IN DEMAND FOR SHARED OFFICES IN SOFIA
- STABLE RENTS AND SUSTAINABLE VACANCY LEVELS IN THE THIRD QUARTER OF 2022, NOTES CUSHMAN & WAKEFIELD FORTON
- OFFICES UNDER CONSTRUCTION REACHED THEIR LOWEST VOLUME IN 5 YEARS
Increasing interest in leasing of shared offices was observed in the third quarter of the year. Total supply in this segment has surpassed 50,000 sqm in Sofia and is expected to continue growing, according to third quarter data from the commercial property consultant Cushman & Wakefield Forton. The reason for this lies in the hybrid working model and the desire of tenants to find more flexible solutions for their employees.
“Flexible office solutions are no longer just in the sights of freelancers and small teams of professionals. For many companies, having shared offices in the building where they work is already a serious advantage, as it allows them greater freedom of action depending on the development of their business,” said Jordan Krastev, Office Space Manager at Cushman & Wakefield Forton.
For smaller teams, he says, serviced offices are also a workable option, as it saves them problems associated with equipping and maintaining a single workspace. At the same time, they have all the amenities that a standard office offers.
In general, the leasing activity in the office market in Sofia remains unchanged compared to the levels of the previous years. In the first nine months of the year the total leased space (take up) reached 110 646 sq. m. Lease renewals and tenant relocations remain the main drivers of the market, while expansions account for only around 11% of the total volume. Net absorption remains positive since January and stands at just over 20,000 sqm.
Cushman & Wakefield Forton’s observations on tenants’ attitudes show that the share of employees returning permanently to the offices at the beginning of autumn remains lower than the expectations of the companies’ managers. The expectation is that mid-2023 there will be a healthy balance of people working remotely and those working in the office.
Although in smaller volumes, the office rental market currently shows a relative balance between supply and demand. In the third quarter of 2022, only two small office buildings with a total lettable area of approximately 7,000 sqm were completed. This kept the vacancy rate in the capital stable at 16.6% compared to 16.7% in the previous period.
Space under construction continues to decline due to the lack of new office buildings being started. As of September, 167,300 sqm were under construction in Sofia – the lowest level of office construction in the last 5 years.
„The limited demand for office space for rent and the availability of vacant space are not conducive to the launch of large new projects. Some buildings under construction are also delayed in time, which for the moment maintains a relatively stable balance on the market,”, added Yordan Krastev.
The slow recovery of demand has kept the rental levels of prime offices in Sofia stable for a consecutive three-month period – EUR 15/sqm in the central part of the city and EUR 12-14/sqm along the main boulevards. Maintenance and service charges also remain unchanged at 2.75 – 4 EUR/sqm.
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