Asking rental rates for office space in the Bulgarian capital Sofia have dropped approximately by 25% since the beginning of 2008 driven by the large supply and the weaker demand, a survey shows.

“On paper, this appears to be a relatively moderate reduction, given the oversupply and the soft demand. Reality is that few, if any, leasing transactions are signed at asking rental rates,” says a report of realtor Colliers International.

During the first half of 2010 the average decreases in asking rental rates in Varna CBD are 15%, and in the Broad Center – 22%.

The momentum of supply of new office space in Sofia and Varna lingers in the first half of 2010, and will continue in the coming months.

According to the latest office research from Colliers International, 106,000 sqm of new, contemporary office space was added to the total stock in Sofia during the first six months of the year, reaching a total stock of 1,168,000 sqm. 21% of the new offices are located in the Broad Center and 64% in the Suburban areas.

The majority of the new supply is delivered by the European Trade Center, Doverie Business Center, DSK Bank Headquarters and Krystal Business Center, which added a total of 66,500 sqm to the office market in the capital.

During the same period the office market in Varna saw a moderate 5% increase office stock, reaching 177,600 sqm in total. The Suburban areas accounts for 45% of the total inventory, while Central Business District and Broad Center hold 26% and 29% respectively.

The volume of the projects under construction in Sofia decreased to 668,300 sqm by the end of June 2010, which is the smallest pipeline recorded since 2007. The total amount of office space in the active pipeline in Varna is 77,300 sqm of which more than 50% is expected to be delivered by the end of the year.

The overall vacancy in Sofia (245,000 sqm or 21% of the total stock) and Varna (27% of total stock) continues to increase. As of June 2010, the vacancy level in Sofia was higher in Class A than Class B buildings, a testament to the price sensitivity of the market. In terms of location, the highest overall vacancy level in both Sofia and Varna can be found in the Suburban areas.

“The most active companies in terms of demand are mainly from the telecom, outsourcing and IT sectors. Key parameters in Sofia remain the rental levels, location, functionality of the buildings as well as operational costs,” comments Anton Slavchev, Manager - Offices and Business Parks at Colliers International.

According to Slavchev the office market segmentation, as well as the competition for finding new tenants, will continue to increase.

We need your support so Novinite.com can keep delivering news and information about Bulgaria! Thank you!