SOFIA (Bulgaria), August 12 (SeeNews) – Yields on prime office and retail properties in the Bulgarian capital continued climbing in the second quarter of 2009 even though the crisis is increasing its grip on the local economy, Sofia-based commercial property advisers Forton International said.
Prime office yields rose to 11.0% at the end of June from 9.5% at the end of 2008, while prime high street yields grew to 8.0% from 6.75%, Forton International said in a report.
At the same time, prime logistics yields notched up to 13% at the end of June from 12% at the close of 2008.
The office market in Sofia was characterised by a rapid decrease in demand in the second quarter of 2009 which coincided with a substantially increased supply of new office space. The Bulgarian capital saw some 31,500 sq.m. of new office space appear on the market. Almost 75% of the newly delivered stock is located along main roads. Thus, the accumulated office stock reached 966,000 sq.m. at the end of June.
Office space vacancy rates continued to increase with the average rate in Sofia reaching 13.3%. Forton expects the average vacancy rate to further grow through the beginning of 2010 when several large scale new office developments are scheduled to be completed, while at the same time business and economic activity is not projected to improve.
Prime high street retail rents in Sofia stood at some 80 euro ($113.1) per sq.m. per month, while secondary retail streets rents ranged from 30 euro to 70 euro per sq.m.
The second quarter of 2009 was marked by a decrease in revenue of all retailers, Forton said. The Bulgarian Retail Association announced a drop of at least 30% in the revenue of its members who are operating mostly in modern shopping centers and retail parks.
Logistics remained the real estate sector in Bulgaria that is least affected by the economic crisis. It has never experienced the explosive growth of office and retail developments, Forton analysts said. The sector has experienced a renewed positive trend since the beginning of the year as an increasing number of Western technology firms are looking at Bulgaria as an option to relocate and consolidate their operations.
Forton International (www.forton.bg) is an associated office of U.S. real estate services firm Cushman & Wakefield Inc. Forton operates in the capitals of Bulgaria, Serbia and Macedonia.
($ = 0.707 euro)