It is clear that the current vacancy level of 25.4% for contemporary office space in Sofia is the result of the general slowdown of the economy and the consequential decrease in demand for office space combined with the increased supply of new office buildings. However, the interesting finding of a recent analysis made by Colliers International is that a large part of the empty offices is located in either new buildings or in specific locations.
The analysis identified 20 existing buildings in Sofia (above 5,000 m²) with a combined size equivalent to only 19% of the total contemporary office inventory in Sofia, but contributing to 63% of the overall vacancy. The average vacancy of the 20 identified properties is an overwhelming 85%.
"The analysis confirms our notion of the market, that the majority of office projects will pull through the current slowdown," says Anton Slavtchev, Manager Office Services at Colliers International.
"But office projects with fundamental flaws, such as poor infrastructure, poor design, etc., are not likely to see improvements in occupancy levels until those issues are resolved."
Colliers' research shows that cleared of the distressed properties, the vacancy level in Sofia would be a modest 11.5%. This is equal to the vacancy level seen by the end of 2008 just before Bulgaria was hit by the global economic downturn.
"The segmentation in the market is becoming quite apparent," comments Anton Slavtchev. "These properties will have to make an extraordinary effort to win the competition for tenants. On the other hand, the study is a reassurance for the remainder of the market that the current supply/demand situation might be a cause for concern, but with the right strategy and the right product, it is manageable."
Source: Colliers International