What factors influence the office space market in Bulgaria
The office space market was seriously affected during the pandemic, and so far the recovery has been very slow. Back in the first quarter of 2021 there was a decline, but gradually the situation is changing in a positive direction.
According to the forecasts of analysts, the recovery of the office sector will begin only in 2022. As for the results of last quarter, a total of 16,073 square meters of office space was leased. This figure is 46% lower than what has been observed over the past 5 years.
Despite the fact that the global economy began to show positive dynamics at the end of 2021, not all countries are recovering in the same way. In the European Union countries, the process is slower than in the U.S. or China. A number of factors are affecting the recovery, including the lack of speed of vaccination and the introduction of stimulus programs that have proven ineffective. All of these have had their impact on the real estate market processes.
The company Cushman & Wakefield conducted its analysis of the office segment of the Bulgarian capital. It turned out that last year only 20-30% of the staff worked in office buildings. However, the more people were vaccinated, the more space was in demand. Despite the slow pace, the recovery process has started, and soon more people will be returning to the office.
Experts note that the rate of return will be influenced not only by the increased activity of investors, but also by the improvement of conditions for professional activity. Owners of commercial real estate objects need to provide a high-quality working environment, modernize the premises to make them as comfortable and attractive for tenants as possible. It should also be noted that many companies are not interested in having their employees work in the office. And in order to change this mindset, owners are looking for digital solutions that will help increase the flow of tenants.
The slowdown in the office real estate segment is observed in the building construction sector. In 2020 developers promised to commission about 18 thousand sq.m. of space, but as a result only 92 thousand sq.m. were commissioned. In 2021 the dynamics increased, and the market was enriched with new 200 thousand sq.m. However, demand is still weak, which stops many developers. They are not in a hurry to complete their projects for fear that the premises will be left idle. This is why a number of developers are postponing the commissioning of new facilities until the market is more active.
The first few months of the current year were marked by some changes in the rental sector. The number of retail and consulting companies has increased, while the interest from IT-sphere representatives has slightly subsided.