Colliers International analysis for the first half of 2013 records a significant reduction to 12 % in office vacancy in Sofia. This is mostly due to the increased absorption of class A office projects, which fall in the focus of client preferences. Only for the first half of the year acquired office A space has increased by 44% over the previous half. The advantages of this type of office premises include many features, such as high-quality construction and adequate technical specifications, functional office layout and, last but not least, a convenient location, which involves fully developed infrastructure and easy access by car and public transport. Latest statistics show that class A office investors prefer locations at the periphery of Sofia - 67% of the modern office projects are situated in this part of the capital. Due to the active absorption of class A offices and in view of the fact that no new projects of this type have been launched during the reported period, vacancy rates are expected to decrease significantly towards the end of the year. Furthermore a shortage of contemporary office space is possible in the short term.

Buyers from the mid-plus and high-end residential market are also oriented towards modern properties – i.e. "compounds". Colliers survey conducted in early 2013, shows that customers’ choice in this segment is determined by the following property characteristics: well-developed internal infrastructure, parking space availability, professional management of the common areas and overall friendly environment - lack of urban noise, more green areas, security. As a result, approximately 9% of all housing units in compounds in Sofia have been absorbed during the first six months of 2013. This trend is expected to continue towards the end of the year.

On the logistics and industrial real estate market several international operators chose Bulgaria to outsource their production facilities, among them the Turkish Altanmarka, the Swiss LEM, the German Mecalit and Hella-Behr Thermal Control - the first investor in Sofia–Bozhurishte Industrial Zone. Colliers recent survey reveals that Sofia is among Europe’s Top 5 Manufacturing centres. The capital is the logistics location with the lowest operating costs out of 40 other European destinations. The launch of three new projects in the segment is expected by the end of 2013.

Absorption of vacant retail space in the newly opened shopping centers continued under severe competition during the first half of the year. According to Colliers survey, the market will remain active – 63% of the respondents plan to expand during the next 2 years. The newly added retail space of 110,000 sq m, together with the upcoming openings of Sofia Ring Mall, Mega Mall and Plaza West, would allow for better positioning of retailers on the market. The High Street and Vitosha Blvd. in the main, became increasingly accessible due to a double rise of vacant retail space there, as compared to the preceding six months. For the first time, prime rental prices for a 100 sq m store on the High Street and

in a shopping center equalized at 30 euro per sq m. The improved look of Vitosha Blvd and the expected openings of several international flagship stores by the end of 2013, will draw retailers’ attention again. With a vast variety of available store locations, retailers will become still more selective in assessing their expansion opportunities and long-term positioning.

"Expansion" is the term to describe the big box segment in Bulgaria during the reported period. Some of the major operators like Piccadilly, Carrefour, Kaufland, Lidl and bauMax opened new stores. Sports fashion giant Decathlon will follow their lead with a brand new retail location on the Ring Road in Sofia and a further launch of several stand-alone stores in the capital and across the country, as well as the chain’s first shopping center location in Plaza West.

Absorption of modern real estate space will remain high during the following six months. Decisions will be taken based on professional approach, careful analysis and quality assurance. In some segments of Bulgaria property market, intense absorption of quality projects in the coming half of 2013 may lead to depletion of the available space and create new opportunities for investment.


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