Analyses and trends


15.02.2013 Bulgaria tops the CEE office buildings available to area

Sofia remains one of the highest in Central and Eastern Europe (CEE) in respect of offices under construction in the common stock of modern office space, says in a new report from consulting firm CBRE.

Sofia ranks first among the Member States of the European Union on this indicator and fourth place overall in Europe since Kiev, St. Petersburg and Zagreb.

Among these markets, however, our capital is the city with the highest proportion of vacancy. According to the Sofia-based consulting firm MBL | CBRE at the end of the fourth quarter of 2012, this is generally around 22%, or 330 thousand square meters of vacant office space.

A total of 221 thousand square meters were under construction at the end of last year, and another 214 thousand square meters were frozen. This compares with a total stock, Class A and B of 1.52 million square meters

From CBRE noted that the so-called "structural unemployment" in Central and Eastern Europe continues to increase. According to the definition of the Technical University in Delft structural vacancy of the office market is measured by the volume of the same areas that remain available for three or more years.

The company explained that a similar trend of prolonged inactivity was observed in Western Europe at the beginning of the last decade when the bursting of the dotcom bubble, when construction activity in the office sector was too high.

In Central and Eastern Europe, however, much of the inventory was built 10-15 years relatively low standards of some of these areas and increasing customer demands have made these areas difficult to abandon. Moreover rental markets in the region remain weak and significant change is not expected before the presence of a palpable growth in the economy that would make more employers consider hiring new employees.

As for Sofia from MBL reported a decline of 40% in absorption of office space on a quarterly basis. Yoy decline in the last quarter of 2012 was 6% total area A and Class B.

In 2013, the company predicts that vacancy rates in the segment will remain stable, but is likely to rise, which will continue to put pressure on rents. A total of 100 thousand square meters of new office space is expected to be available this year, as the absorption is not expected to rise above the levels of the past few years.

Asking rents in prime areas in central Sofia at the end of 2012 were between 14 and 17 euros per square meter per month, depending on location and on the outskirts of the city - between 8 and 11 euros. For Class B areas they were between 5 and 8 euros.