January 30 (SeeNews) - The office market in Sofia registered a net absorption of 70,000 sq.m. in 2022, making it the strongest year for office space since the pandemic, real estate consultancy MBL said.
The strong performance comes after a positive net absorption of 16,500 sq.m in the fourth quarter of the year, MBL said in a statement on Friday.
According to the data, new lease acquisitions amounted to 123,500 sq.m in the full year and 30,000 sq. m in the final quarter.
Vacant space in office class A and B at the end of the quarter stood at 402,000 sq.m, which corresponds to a vacancy rate of 16.1%. Suburban areas continue to have the highest vacancy rate of 19.0% as they also hold the largest portion of office space, MBL said. The most significant change in vacancy was observed in the central business district, with asking rents in the centre being the highest, the real estate consultancy added.
The available office space that is actively marketed in both existing buildings and projects under construction totalled about 552,000 sq. m as of the fourth quarter, which was an increase of 66,000 sq.m increase compared to the previous quarter. The real estate consultancy also said that the total stock of class A and class B office space in Sofia arrived at 2.493 million sq.m at the end of 2022, 70% of which was situated in the suburban areas of the city. At the end of the year, about 246,000 sq.m of office space was under construction, the data further showed.
In 2023, rental levels are expected to increase significantly as the 20-year high inflation rate will provide landlords with the opportunity to force indexation clauses on their existing lease contracts. Demand and vacancy rate will most probably experience short-term shifts as major IT companies have been cutting costs in the last months, which could cause a domino effect for local companies as well. As interests are increasing, it is expected investment yields to be on the rise as well in 2023, MBL said.
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