Monthly Archives: November 2013

The office market in Sofia is driven by the foreign call centers that have relocated to the Bulgarian capital. These investors and owners of these call centers are interested in high-quality office buildings in good areas of the city with fast and easy access. The rental levels vary from 8 to 12 Euro/sq.m, mainly depending on the location and the number of the available amenities. The rental market of Sofia offices is powered by the interest of the different foreign companies as well as several large domestic companies. The key clients on the Sofia office market horizon are the business process outsourcing companies and the stable and well-developing IT companies. Even so, the interest towards available Sofia premises remains below the levels before the crises.

During the third quarter of 2013 in Sofia city were rented more than 20 000 sq.m of office premises, which marks an increase of 13% compared to the same period last year. Since there are a few office rental deals that are currently being arranged, it is possible that the total number of the rented office premises for 2013 to be more than 100 000 sq.m. More than 80% of all offices that have been rented were actually taken by companies which are increasing their business. The most serious rental deal for an office in Sofia during the last three months was the one with the technology company Comverse. This company rented an office of 2500 sq,m placed in Serdika Offices building. However, this is an exclusive deal, since most of the companies are renting office of 600 – 700 sq.m. of area.

The number of the available Sofia offices is decreasing but even so the available office premises in the Bulgarian capital are still around 15 %. That is why the rental levels remain stable and vary between 9 and 12 Euro/sq.m depending on the exact location and level of facilities in the office building. Sofia city has a quickly developing office market and the prognoses are that soon the percentage of the available office premises will drop, if the political and economic situation in the country remains stable.

The real estate specialists think that Bulgaria has released only half of its potential for new office premises. This, however, does not mean that there is room for any large office projects to be constructed in Sofia in the next few years. At the same time, the office market during the last two years in Sofia was driven by large international companies which are looking to outsource their business in Bulgaria and especially in Sofia. These companies are interested in modern office buildings in Sofia with good location, parking zone and easy access via the public transport system of the city. Offices in Sofia, which are placed in areas that are not appealing and with fast and convenient access, are not in the focus of the foreign companies that are outsourcing their business in the country.

For the first time in a period of more than 3 years will start the implementation of several new projects for business and office buildings in Sofia. The offices that have been rented out in the last three months have increased in number with 45%, due to the number of new foreign companies that emerged on the market. In the period between June and September the rental offices in Sofia were 20 000 sq.m. Most of the companies that decided to open new offices in Sofia city came from the outsourcing sector and the information technologies sector, which make 60% of the total coverage area of all rented office premises during the third quarter of 2013.

In the last three months the large international companies are moving to bigger offices due to the development of their business. The foreign companies are interested in the reasonable tax system and are attracted by the low wages and the low rental levels of the Sofia offices of class A. That is why during the third quarter of the year has started the construction of 15 000 sq.m of offices. Even so, by the end of next year 2014 will be completed only two large office projects in Sofia – the office area of Bulgaria Mall and Capital Fort. The interest is towards offices along Bulgaria Blvd. and the airport Sofia. The rental levels are expected to remain the same between 9 and 12 Euro/sq.m and 12.5 Euro/sq.m for the top center of Sofia. These levels will most probably remain the same until the end of this year and the beginning of next year.

The number of the completed office premises in Sofia for the first half of 2013 has dropped down with 63 %, compared to the same period a year earlier. During the six months’ time were put into operation approximately 30 000 sq.m. of office premises. The low levels of activity from the investors are due to the increase number of premises in the recent years and the decreased number of companies that are looking for offices for rent. At the second half of the year were released only three office buildings – one in the downtown Sofia and two in the central zone of the city.

This reduction in the construction of office buildings is a result of the increased supply of Sofia offices over the last several years and the slow economic recovery of the country. The real estate agents warn however that the limited construction of offices now and the required time for completion of new projects could lead to a vacuum in the office market in Sofia during the next couple of years. Currently in Sofia are being constructed 193 thousand sq.m of office area. The prognoses are that there will be a 10 % increase in the number of rented office premises in Sofia city, in case the political and the financial situation in the country remain stable. Real estate agents confirm, that there is interested towards the rental of the office premises and not towards more serious investments like purchase.