Waiting for tenants

Two years ago, high office occupancy boosted rents. Nowadays, this seems to have been like a bad joke played on developers who failed to evaluate the market in depth.
Several major projects completed in 2008 and some other to be completed by the end of 2010 have rapidly pushed availability up while rents in Sofia went 30% down reaching the levels registered in 2006, say international consultant companies.

According to Forton International’s data, availability of office space has risen from 3% to more than 13% since the middle of 2008. Colliers International say occupancy in H1 of 2009 has declined to just 40,000 sq m -36% down since the first half of 2008. Rents in suburban regions have reached 12 euro per sq mwhile back in 2008 they were more than 15 euro.
Surprisingly, King Sturge has announced that prime rents have gone up by 10% in Q2 reaching 22 euro per sq m. But the rise actually refers to buildings in the top center where new builds simply lack. "Honestly, I have never seen such a city where supply seems to be insufficient yet oversupply is present too," commented Andrew Pierson, manager of King Sturge’s Bulgarian filial.
Although there have been some major deals closed recently, they are not enough to boost occupancy which has fallen below last year’s figures.   
Varna, too, has seen rents declining as a result of the completion of three projects in the city center, some new office buildings and Business Park Varna.
Experts say there are still sectors which are developing - e.g. IT and data outsourcing, call centers, retailers or pharmaceutical companies. But the main driver for office demand will be the companies which try to reduce their costs and improve efficiency through moving out to cheaper buildings of better quality.