Firms switch to cheaper office rents

 

More and more companies are opting for lower office rents or are extending contracts for small spaces to optimise costs, said Dobromir Ganev, manager of real estate agency Foros. The trend triggered in late 2008 by the global financial crisis is bound to contrinue through 2009, he forecast.

After dumping private flats converted into offices, companies are expected to move back in over the smaller rents.

Currently, it is easy to rent out office space for 7-12 euro a square metre, said Krasimir Dimitrov, managing director of SOURCE Real Estate Advisers Ltd.

Many present office tenants will refuse to adjust rents by the annual inflation rate and might even seek a further reduction, he added.

Foreign companies, on the other hand, are putting off planned Bulgarian expansions for better times, Dimitrov said.

Foros predicted over 10 per cent of Bulgaria’s rentable office space will be vacant as new projects are unveiled and companies cut costs.

New offices will concentrate at the periphery as suitable downtown plots are scarce. Plovdiv will be the only exception, where several projects are under development in the centre. The biggest, Forego, will deliver over 26 000 sq m of offices and 4500 sq m of retail space.

The office segment was one of the most lucrative for property investors last year, with over two million sq m announced, according to a survey of Foros. However, the global crisis might thwart some of the projects, Ganev warned. In Sofia alone, the construction of almost 850 000 sq m of offices hangs in the balance, according to Foros data.
 

The Sofia Echo
10 February 2009