July 14 (SeeNews) - Office space under active construction in Bulgaria's capital Sofia increased by 19,000 sq m to 175,000 sq m in the second quarter of the year, as sentiment among developers improved and the market environment created preconditions for the start of new office projects, real estate consultancy MBL said.
The net absorption of office spaces in the period under review was 3,800 sq m, much lower than in Q1, the real estate consultant said in a report, noting that traditionally office absorption is usually slower in the second quarters.
IT and BPO companies were the most active tenants on the market with a share of 64% of the newly leased areas in Q2.
Such companies will continue to drive the up the demand for quality office space, as the main factors for leasing office space are not only cost and location, but quality of buildings systems and building management, amenities and flexibility in terms of future expansion, the consultancy noted.
The market environment continues to be positive for new construction starts. The majority of class A office space occupiers remain optimistic about their operations and plan further headcount increase within the next two years, which will lead to an office space increase among many tenants.
At the same time the office stock that meets the needs of tenants with evolving preferences is fairly limited. This will continue to cause upward pressure on rental rates in the short run, according to MBL. "Nevertheless, we believe rents will remain around current levels," it added.
Demand is expected to be stable within the levels observed in the past two years and vacancy levels will continue to diminish.
($ = 0.8999 euro)