Bulgarian firms sublet the offices they leased to match thinning staff and cut costs in the face of the economic downturn, according to Nikolai Neov, office space manager at real estate firm MBL.

The trend started in January among mainly financial, consulting and IT companies, which have rented offices off-plan for three to five years with a view to have room for future growth. Now that the ongoing global financial and economic crisis have dashed their expansion hopes, firms began subletting some of the space even at lower price to reduce the burden, Neov said.

Office rental prices have slipped already this year and the trend remains a downward one, MBL director Assen Lissev said. Upscale offices in downtown Sofia and on major boulevards are now available for 14-18 euro a sq m. Offices for 9-12 euro a sq m are now sought the most, Lissev said, forecasting that vacant office space would increase by two percentage points to 11 per cent.

Office rents started to fall at the end of 2008, with some sliding by as much as 30 per cent, real estate firm Forton executive director Sergei Koinov said. He forecast rents of offices outside the Sofia centre to hover around 10-16 euro a sq m.

Fifteen out of 60 projects under construction are on hold, MBL commercial space manager Manol Goigadjiev said.

What иs left on the market is one or two German funds and the usual high-risk players chasing after bigger returns, CB Richard Ellis manager for Central and Eastern Europe Colin Waddell said. He said he expected between five and ten funds to take a closer interest in Sofia by the end of the year, when the global trend will be for attractive assets to hit the market.

The real estate market will settle over the next two to three years, but the price fall will continue because many properties have been greatly overpriced, he said.

Source: Dnevnik