The Bulgarian capital Sofia has the lowest office space rent prices in Europe but the supply continues to increase, according to a survey of Forton International.

The rental prices of office space in Sofia declined by 2% in the first quarter of 2011 compared with the last quarter of 2010, and saw a drop of 7.7% compared with the first quarter of 2010.

In downtown Sofia, average office space rent is about EUR 12/square meter, while the offices in the outskirts cost about EUR 8/square meter. Thus, the prices have gone back to the 2004 level when downtown offices cost EUR 12-16 per square meter, and in the outskirts – EUR 8-10 per square meter.

Forton has pointed out that offices in Eastern European capitals such as Riga, Tallinn, Belgrade, Zagreb, and Ljubljana are more expensive by about EUR 5/square meter. Even Macedonia's capital Skopje has higher office rent prices that Sofia but it lacks a big supply of office space unlike the latter.

At present, the Bulgarian capital has a total of 1 354 000 square meters of office space with new 40 000 square meters of office space added only in the first quarter of 2011, according to Forton International, a Bulgarian consultancy which is a local partner of Cushman & Wakefield.

"The top class office space that are entering the market now are practically introducing new standards in office space. The opportunities they present as well as the good price-quality balance lead many companies to move to new offices. The relocations, which are the major share of the deals on the office space market right now, combined with the high level of supply of new space, explain the growing amount of unoccupied office space," explained Forton International office space manager Vladislav Kayzerov.

According to Forton, office space under construction in Sofia in the first three months of 2011 retains the level from the same period of 2010. Thus, a total of 560 000 square meters of office space are under construction in the Bulgarian capital, with 135 000 square meters to be completed by the end of 2011.

Yet, some of the investors are still expected to delay some of their office space projects in anticipation of higher occupancy.

Forton's data further shows that 10 000 square meters of office space were newly rented in Sofia in the first quarter of the year. This is the lowest amount of office space rented in any first quarter since 2008.

Since most of these have been relocations, 30% of the total office space in the Bulgarian capital remains unoccupied. The income from first-class office space in Sofia did not change in 2011 Q1, and remains about 10%.