The lack of supply adequate to demand is increasingly tangible in the last year in Sofia's office market. But the balance is expected to change during the next two to three years, in which a series of large-scale projects should be completed.
As early as in the year-end another 250,000 sq m are expected to be added to the office inventory in Sofia bringing the total stock to one million sq m. With the buildings projected for delivery in the next three years the total inventory will increase to over 1.7 million sq m as Tsarigradsko Shosse Blvd. will establish itself as one of the major business locations. Only three of the projects that are currently developed there - the Hermes Center, Megapark and Tsarigradski Mall - should generate over 210,000 sq m of new offices. If smaller projects and those who have not broken ground yet are added only this part of Sofia should be expecting supply of 400 thousand sq m up to 2011.
Rents of EUR 12 to EUR 17 per sq m per month, which are now achievable even for class B buildings on major boulevards will be out of the Bulgarian property market then.
Yet, for the present, the alternatives for companies, which are looking for large areas, are to pay the rents for inferior buildings or the levels between EUR 16 and EUR 18 per sq m per month for some of the new offices in areas like Lozenets. With the completion of the business park the buildings around it have started to command rents between EUR 14 and EUR 16 per sq m per month.
For companies one possible alternative are purchases but then they have to pay around EUR 1,400-1,500 per sq m in neighborhoods like Studentski Grad or Druzhba.
Supply has been growing in Varna also where besides a business park a few large-scale projects have been planned but they do not give much hope for rental growth. Yet with prices between EUR 1,100 and EUR 2,500 per sq m in the center, some developers opt to sell. One of them offers around 9,600 sq m on Osmi Primorski Polk Blvd. to be delivered in two years time for prices starting from EUR 2,000 per sq m.
