The office market in Bulgaria was extremely subdued in 2009 with declining occupier demand and new development completions resulting in rental values falling by just over 20%, according to Cushman & Wakefield's report Office Space Across the World 2010, presented by Forton International.

Rental levels in the country are anticipated to fall further in 2010, with any recovery not expected until the second half of the year.

Bulgaria occupies the number 54 spot in the country ranking with annual office space occupancy cost of 205 euro per sq. m., or 17.08 euro/sq. m. monthly.

The weakness in the global economy impacted on the occupational market in every corner of the world in 2009. Vacancy rates increased and, coupled with declining occupier demand, rents fell in the majority of markets as the pendulum swung fi rmly in the occupiers' favour. Globally offi ce market rents decreased by 10%, the fi rst aggregated global fall recorded since 2003. No market escaped and rents were down in every region; a trend not previously seen.

Asia Pacifi c recorded the steepest decline year on year, with rents falling on average by 16%. Th e overall fall in rents was mainly driven by sharp falls in the key fi nancial markets in the region.

Singapore, Hong Kong and Tokyo recorded falls of 45%, 35% and 21% respectively, although Ho Chi Minh City saw the largest compression in rents with a fall of 53% recorded, as the supply of Grade A space rose sharply.

Once again, South America and the Middle East & Africa showed the best performance in terms of rents, recording rental falls of 5% respectively. One of the few countries to still record positive growth was South Africa, which supported regional performance in the Middle East & Africa, while Argentina was the only South American country to record double digit falls. Central & Eastern Europe meanwhile did not hold up as well with many cities recording rental declines of more than 20% over the year, with Kyiv and Moscow particularly hard hit.

Th is varying speed of rental falls coupled with currency fl uctuations saw some movement in terms of the relative cost of locating in cities across the world. While the top 3 most expensive locations remained constant, Tokyo was ranked number one in the world and London West End moved into second place, as Hong Kong fell from fi rst to third position.

Most global economies are expected to see positive GDP growth in 2010 and greater certainty should see improved occupier confi dence. Th is should start to translate into better levels of occupational demand throughout 2010. Th e scale of the recovery is likely to vary not only from region to region but intra regionally too. Th e lack of signifi cant construction in most cities, coupled with more limited occupier space rationalisation means that vacancy levels are anticipated to peak in most cities during 2010, with very few characterised as having a signifi cant oversupply.

However, there will be a number of markets where new speculative development completions are still anticipated to be high which will dampen any rental recovery.

Globally, rents are anticipated to reach their low point by the middle of the year. Occupiers will still retain the upper hand as aggregate demand remains relatively low but in some markets supply and demand will shift much more quickly back into equilibrium, as new development completions stall and rents will start to increase. 2010 will not be without its challenges and risks but it will be a year of recovery and cautious optimism for both landlords and occupiers alike will prevail.

Rental levels in the Europe, the Middle East & Africa (EMEA) region fell by 10% during 2009, as the global recession left no country unscathed. Occupiers retrenched throughout the region and tenant activity was primarily driven by cost consolidation and regearing of existing leases. Without exception letting activity was down year on year, while supply continued trending upwards as new developments completed and occupiers offl oaded surplus space onto the market. With the balance tipping fi rmly in the occupiers' favour, landlords competed to secure tenants with lower headline and eff ective rents evident across the region.

European rents fell furthest, recording an annual decline of 11%. Reversing the trend seen in 2008, overall performance was dragged downwards by Central & Eastern Europe. Th is was mainly due to both Moscow and Kyiv recording a massive rental readjustment over the year, of 33% and 52% respectively.

In Western Europe, Madrid, Central London, Dublin and Oslo recorded rental declines in excess of 20% year on year, as these markets were particularly hard hit from the fall out of the fi nancial crisis. All these markets suff ered from a sharp rise in supply particularly in the fi rst half of the year, although encouragingly supply levels showed signs of stabilisation in the fi nal quarter. In fact, vacancy rates in Central London were static over the last quarter, as letting activity was boosted by a fl urry of large deals and development completions were comparatively low.

Africa & the Middle East in comparison was relatively healthy on average but this was primarily driven by growth in South Africa. Elsewhere rents were down, with Dubai, Manama and Amman seeing double digit falls over the year. Nevertheless, a shortage of Grade A space in some markets such as Doha, Beirut and Cairo insulated them from signifi cant rental falls.

In total 86% of all locations observed in EMEA saw rents fall year on year, however there was evidence that rental levels started to firm during the second half of 2009. Positive economic sentiment coupled with occupiers anticipating the bottom of the rental cycle resulted in an upturn in letting activity during the latter six months, albeit year on year activity was on average down by a third. Supply levels continued to rise, but the pace of increase decelerated as the year progressed as both construction activity and occupier released space reduced. Availability is anticipated to peak in mid 2010 and already some submarkets are seeing competition for the best space which has seen rents start to move up. London City, Paris CBD and Oslo CBD all recorded positive movement over the fi nal quarter of 2009.

London West End remained the most expensive location in EMEA, despite headline rents falling by a quarter, Dubai DIFC has overtaken London City and Moscow to become the second most expensive location in the EMEA region. Rental levels in London West End and Dubai DIFC are almost on a par with each other at 897 euro and 869 euro per sq.m respectively but the total occupancy cost diff erential is wider due to higher service charges and property taxes in the UK capital.