The stock of modern office space in Sofia reached 2.340 million sqm, following the completion of 91,000 sqm of class A office developments in Q2 2021, thus marking a threefold increase compared to the amount of new deliveries in the first quarter of 2021. The majority of the newly completed office space is located on Tsarigradsko Shosse, G.M. Dimitrov blvd., Mladost and Hladilnika districts. As a result the total volume of buildings under active construction amounts to 234,000 sq.m. of which approx. 95,000 sq.m. are scheduled for delivery by the end of 2021. Vacant space in class A and B office space in Q2 increased with ca. 83,000 sqm and amounts to 359,000 sqm due to the significant number of developments entering the market this quarter. As a result the overall vacancy rate increased to 15.3% up from 11.2% in Q1 2021, thus marking the highest point in vacancy rates since 2015. Available office space actively marketed in both existing office buildings and projects under construction stands at approx. 557, 000 sqm as of Q2, marking a slight increase comparing it to last the quarter. Suburban areas account for 83% of all available space on the market mainly distributed between Tzarigradsko Shosse corridor and Hladilnika district. The office space market registered a modest second quarter in terms of net absorption- ca. 3,300 sqm, compared to a similar number in Q2 2020 of approx. 1,100 sqm. New lease acquisitions reached 28,000 sqm, compared to approx. 22,000 sqm for the last quarter and 15,000 sqm for Q2 2020 respectively. Currently there are signed pre-lease agreements for approx. 17% of the office space under construction, as just over a quarter of the pipeline was delivered by July 2021. Although the office space market in Sofia is slowly picking up the pace, it is still in its early stages towards recovery and is yet to reach pre-pandemic levels. There is still a great deal of uncertainty amongst office occupiers regarding their CRE strategies due to the pandemic, thus resulting in additional factors to be taken in consideration when planning for a new office and delays in the decision making process as well. Nevertheless, we expect market activity to pick up in the following quarters, resulting in more new lease acquisitions during the year. Downward pressure on rental levels in 2021 for both class A and class B office space is likely to continue due to the large amount of available space on the market, although we expect prime properties in preferred locations where demand is concentrated to sustain relatively higher rental levels, whereas developments in second-tier areas to experience greater strain. Source: MBL - Commercial Real Estate Solutions