Colliers International Croatia says that a new wave of office development in Zagreb is underway, prompted by falling vacancy rates in recently constructed class A offices. The findings come in the international property consultants' new Zagreb Office Market Overview for the first half of 2008.

The most recent Colliers research says that vacancy rates in recently constructed class A offices fell steadily through 2007 and have now reached a level of only seven per cent, a rate that is expected to fall to five per cent over the course of this year.

New Colliers research for the whole of Europe shows that the lowest vacancy rates are in Kiev (0.8 per cent), Vilnius (1.3 per cent) and Bucharest (1.6 per cent). By contrast, Frankfurt has a rate of 15 per cent and Budapest has a rate of 12.2 per cent.

The current stock of class A- and class B-standard office stock in Zagreb comes to some 500 000 sq m. Out of this, about 280 000 sq m is class A and 220 000 sq m is class B. More than 95 per cent of class A office stock comes from projects that came onto the market in the period 2006/07.

Future office projects will need to offer additional value to the consumer, for example smart buildings, in order to attract and retain tenants. There will be increasing pressure for new buildings to conform to green building standards as sustainability becomes a major issue.

Vedrana Likan, general manager of Colliers International Croatia, said: "Any office building that is constructed now in Zagreb that does not conform to international green building standards runs the risk of becoming obsolete soon. It is more cost effective to willingly adopt the latest technology now rather than being forced to do so later."