SOFIA, BULGARIA-The momentum of new office supply in the Bulgarian capital of Sofia persisted in the first half of 2010, and this will continue in the coming months, according to Colliers International. New office space of 1.1 million square feet boosted the total stock in Sofia to 12.6 million square feet in the period.

The bulk was delivered by European Trade Center, Doverie Business Center, DSK Bank Headquarters and Krystal Business Center. Varna saw a moderate 5% increase office stock to total 1.9 million square feet. Projects under construction in Sofia dropped to 7.2 million square feet at the end of June, the lowest level since 2007.

Sofia’s overall vacancy rate of 21% continues to increase, and was higher in Class A than Class B buildings, reflecting price sensitivity. In free fall since the first half of 2008 peak, asking rental rates in Sofia have dropped about 25% driven by oversupply and weaker demand. While this appears relatively moderate reduction, few if any leasing transactions are signed at asking rates. The opportunity to negotiate more attractive lease conditions and multiple incentives offered by landlords will continue to be the main driver for office relocations. Net absorption of office space was 541,000 square feet. in the first half, mainly due to the relocation of Vivacom’s Head Office to European Trade Center and DSK Bank’s new corporate office of DSK Bank.