Problem solved!
Seems like when Shadow Radius is >0 the physical size of the spotlight component affects shadows. By increasing the size of the component itself I was able to obtain the shadows that I were looking for.

No, I haven't tried IES. I suspect photometric light will kill render time. But if it's the only option, I will probably have to try it out...

Are you sure there is no other work around for this?

After my first render of this model I noticed that the spotlights in my scene produce harsh shadows, as seen in the files Example 1 & 2. I have placed the spots inside the ceiling lightning components that you can see in the Overview image.

I have tried to increase the value of "Shadow Radius" in the spotlight settings, but with no luck; the results were the same. Penumbra angle is set to 1.0, so this shouldn't be causing the hard shadows either.

Is there anything I can do to soften the shadows?

Thanks in advance!