Demand for office space in Sofia still outstrips supply

news date: 11:00 Tue 22 Jan 2008 - Desislava Leshtarska

Companies in Sofia are in desperate need of offices, despite 57 000 sq m of new office space entering the market in the third quarter of 2007, Kapital Weekly reports. At the moment the total volume of office space in the capital is 735 500 sq m, according to MBL consultants data. Office buildings are rented out long before completion and a total of 80 per cent of all property deals are signed off-plan.
In 2007 companies were looking for office premises of 1000 to 1500 sq m, while in 2006 companies had been asking for offices of 600-800 sq m, SOURCE consultants data shows. Companies prefer offices with central heating system, easy access, a spacious parking lot and cafes. More companies are choosing a property management firm to take care of their office. Office maintenance costs three euros a sq m on average.
But much of Sofia's current office stock is far from Western Europe’s concept of Class A quality. “In Bulgaria developers classify a building as class A, while it is more like Class B+, ” according to Elitsa Panayotova, Alfa Developments CEO, quoted in Kapital Weekly.
The most attractive office locations in Sofia are along the main boulevards and the centre's periphery, but not the city centre where traffic is heavy, parking places rare and large offices few in number. However, the heart of the city remains the most attractive area for lawyers and companies seeking a prestigious office location.
By the end of the third quarter of 2007 about 520 000 sq m office areas were under construction, 62 per cent of them along Bulgaria and Tsarigradsko Chausse boulevards, Business Park Sofia's area and Sofia Airport area. Experts expect oversupply in these areas in the next two to three years. Most of the buildings undergoing construction now should be completed by 2009 or 2010.
At the beginning of 2007 rental levels for Sofia's administrative centre started at 12 and reached 20 euros a sq m. By the end of 2007 the ceiling in rental prices reached 26 euros a sq m and there were even speculative offers for 36 euros a sq m. In the peripheral business regions the ceiling in rents was 15 euros a sq m, but the bottom went up to 10 euros a sq m.
Source – Bulgaria Property Wise Magazine

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