Despite expectations that upbeat sentiments among office occupiers will fuel this sector of the real estate market in the capital Sofia, prices have hit unprecedented lows, a survey shows.
As a result of oversupply of office space and fierce competition between landlords to gain new tenants, asking rental levels continued to decline during the first six months of the year, according to a report by realtor Colliers.
The sharpest decline in rental prices was seen in the suburbs, where they ranged from EUR 7.5-8 per square meter. Rental levels were down to EUR 8-11 per square meter in the wider city center, and EUR 10-15 per square meter in the downtown.
The total area of "modern office space" in Sofia has reached 1.4 million square meters in the first half of 2011, a growth of 5% year-on-year, with many new buildings completed in the outskirts of the city.
About 65% (898 000 square meters) of the office space in Sofia are located in the suburbs, while 21% are in the greater city center, and 14% are in the downtown.
The consultancy's report further reveals that the average office tenant contract period in Sofia remains unchanged - 3 to 5 years.
Relocation remains the main driver of tenants' activity as recent months have seen many tenants of office space in Sofia shifting their location from the greater downtown area to the periphery of the city or moving into a place with more comfortable and suitable conditions.
Office space rental prices in Sofia may continue to decline before stabilizing hopefully in about a year at the earliest. (Source: Sofia News Agency)