The inventory of contemporary Class A & B office space in Sofia continued to grow in the second half of 2008, increasing by another 15% or 115,000 sq. m - more than twice the growth in the previous period, data by Colliers International show.

The total stock reached 874,000 sq. m, with more than 70% located in the Suburban area. Overall, vacancy rates grew more than 5 percentage points to 9.1%.

Currently, some 905,000 sq. m of office space is under construction across the entire Sofia market, marking a 23-percent growth in the past six months and 51% increase on a year-on-year basis. The growth in the pipe-line is driven by few, but very large projects that started in this period.

The net absorption for the second half of 2008 reached 63,000 sq. m which is an increase of 11,000 sq. m compared to the first half of 2008. However, on a year-on-year basis there is a decrease of 39,000 sq. m (38%), driven by the economic slowdown in Bulgaria and the overall financial insecurity.

The increased supply and diminished demand has created a downward pressure on asking rental rates on the market as a whole, shows Colliers' research.

In Sofia's Central Business District the decrease was a modest 3%, whereas in the Broad Center asking rental rates decreased by 10%. Not surprisingly, the largest decrease was in the Suburban area where new supply is highest. The average asking rents fell 13% and reached prices to the same level one year ago.

More than 150 000 sq. m of office space is planned for completion in the first half of 2009. In the first half of 2009 both tenants and developers will remain inactive.