Sofia's office property market starting to bottom out

The office property market of Bulgaria's capital has shown signs of improvement and the segment is starting to enjoy higher demand, according to data of real estate consultancies Colliers International, Source Real Estate and Elta Consult.

The market's revival has been mainly triggered by the companies' efforts to optimise costs by moving to less spacious offices in business centres, offering quality space at lower prices. First-time tenants or companies expanding their business make up only 10-15% of the current transactions, said Krasimir Dimitrov, managing partner at Source Real Estate. According to the consultancy, companies mostly seek properties spanning between 600 square metres (sq m) and 1,000 sq m.

Key market parameters are the rental fees, the location and the facilities of the buildings, according to Anton Slavchev, business property manager at Colliers.

Meanwhile, Elta Consult has recorded a rise in demand for office space purchases in the third quarter of 2010 due to the 20% drop in prices.

Net absorption registered a 27% increase in the first half of the year compared with the previous six months, due to tenants interest coming mainly from firms operating in telecommunications, outsourcing and IT, Colliers noted. Meanwhile, the vacancy rate has reached 21% as at the end of the first half of the year, the consultancy added.

According to calculations of Source Real Estate, the vacancy rate has been on the rise, reaching 29% to 30% nowadays, chiefly due to offers of space in newly-completed business centres, which has grown by 35,000 sq m in the last three months, bringing the total Class A and Class B area to 1.25 million sq m. Prices vary between EUR 12 and EUR 13 per square metre, data of Elta Consult show.

Text source: news.dnevnik.bg
Photo: frognews.bg

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