Despite the expected delivery of 55 000 sq m new office space to Sofia’s business property market this year, it will not be enough to meet the existing demand, according to a forecast by business property agents Forton, cited in a research paper by Cushman&Wakefield property consultants.
The current lack of high quality space was one of the main features of the Bulgarian office market during 2007. Prime rental levels were unchanged as demand for high quality space remained high. Sofia is the main target for occupier interest, although a number of secondary cities have started to see an increase in an occupier activity.
Rental levels should rise in 2008 as the lack of grade A space will remain a concern for occupiers and the development pipeline is still low, the Cushman&Wakefield report said. Supply is expected to catch up with demand in 2009, allowing rent rates to settle.
European rental performances in 2007 continued to follow the positive trend of the previous three years. With the leasing market noticeably stronger in many markets across Europe, rents grew by 11 per cent in 2007, a rise of four percentage points over the previous year. London remains the most expensive location, not just in Europe but globally. With rents in the West End submarket rising by 30 per cent over the year, total occupancy costs amount to over 2 200 a sq m a year. The West End extended its lead over the second most expensive location in Europe, which this year is Moscow. In 2007, Paris has slipped to the third most expensive location in Europe.
Bulgaria is ranked 52nd among 58 office space markets by Cushman&Wakefield with an annual rental cost of 228 euro a sq m. Elsewhere in Europe, office space is cheaper to rent only in Lithuania, Latvia and Estonia.
