Superfluous supply and weak demand equal 19 100 sq m of new office space on offer
In Sofia for the first quarter of 2009, 19 100 sq m of new office space have been completed and made available on the market, the consultant company Forton revealed on May 12. According to the most recent report, the highest supply currently available is around the Sofia circular Road along major boulevard arteries and near Sofia Business Park.
A new tendency is also observed on the market. Many companies renting out office areas are either switching to cheaper locations, re-negotiating their contracts to obtain cheaper rents or allowing a third party to rent office space in parallel, so allowing for sharing of expenses. Concurrently, landlords have initiated different promotional campaigns and tactics in their attempt to boost demand. Some of those tactics pertain to free office space allowances for anything from three up to 12 months, as part of a long term deal package, Dnevnik daily has reported.
The economic downturn has had a serious impact on retail centres as well, according to the Forton report.
Vacant shops are observed along some of the busiest streets in Sofia, such as Graf Ignatiev, Maria Luisa, and Stamboliiski Street. So rates have started to drop to offset the sharp decline of demand. And, if this over-supply and lack of demand disturbing the equilibrium on the market were not enough, there are five new large shopping malls under construction in Sofia alone. these, when completed, will offer a total of 193 000 sq m of retail space.
"The deals which we process today are due to negotiations conducted in 2008," said Pavlina Nikolova, manager of Retail Areas and a partner of Forton International.
"Every shopping center is like a child who needs constant attention and cares. Every missed opportunity or detail will cost much more effort in the future", she said.
"Supply is superfluous whereas demand is cautious, at best. This makes investors nervous and cautious in turn, taking a step back and allowing traders to set the rates themselves," she said.
Meanwhile, Sergei Koinov, CEO of Forton International has told the company website:
"We expect the crisis to be a cure for the retail sector - the necessary preventive care, which will create good condition for the players on the market to protect themselves from the mistakes and risks they have ahead"
‘I expect in two years the market will see fewer projects than what was planned, however better than the existing ones at the moment. I am convinced that the development of retail centers will continue, still with a changed script and just few players.’
A new tendency is also observed on the market. Many companies renting out office areas are either switching to cheaper locations, re-negotiating their contracts to obtain cheaper rents or allowing a third party to rent office space in parallel, so allowing for sharing of expenses. Concurrently, landlords have initiated different promotional campaigns and tactics in their attempt to boost demand. Some of those tactics pertain to free office space allowances for anything from three up to 12 months, as part of a long term deal package, Dnevnik daily has reported.
The economic downturn has had a serious impact on retail centres as well, according to the Forton report.
Vacant shops are observed along some of the busiest streets in Sofia, such as Graf Ignatiev, Maria Luisa, and Stamboliiski Street. So rates have started to drop to offset the sharp decline of demand. And, if this over-supply and lack of demand disturbing the equilibrium on the market were not enough, there are five new large shopping malls under construction in Sofia alone. these, when completed, will offer a total of 193 000 sq m of retail space.
"The deals which we process today are due to negotiations conducted in 2008," said Pavlina Nikolova, manager of Retail Areas and a partner of Forton International.
"Every shopping center is like a child who needs constant attention and cares. Every missed opportunity or detail will cost much more effort in the future", she said.
"Supply is superfluous whereas demand is cautious, at best. This makes investors nervous and cautious in turn, taking a step back and allowing traders to set the rates themselves," she said.
Meanwhile, Sergei Koinov, CEO of Forton International has told the company website:
"We expect the crisis to be a cure for the retail sector - the necessary preventive care, which will create good condition for the players on the market to protect themselves from the mistakes and risks they have ahead"
‘I expect in two years the market will see fewer projects than what was planned, however better than the existing ones at the moment. I am convinced that the development of retail centers will continue, still with a changed script and just few players.’