Monthly Archives: October 2014

The companies that are outsourcing their business to Bulgaria are looking for Sofia offices of class A, which are of the highest possible class and are placed in areas with excellent location. The outsourcing companies that are looking for offices in Sofia cover 65 % of all rented premises in the first half of 2014. Some of the outsourcing companies that have already established their offices in Sofia are HP and IBM, VM Ware, etc. The average rented offices in Sofia are around 1608 sq.m in size.

The companies that are relocating to Sofia city are looking for comfortable office premises, which have great location with excellent infrastructure. These companies are looking for high quality air conditioning, ventilation, architectural vision. These companies are looking for image. That is why the available office premises in Sofia at that moment, located in the top 10 office buildings in Sofia are less than 7 %. The companies are looking for parking zone, good access to public transport and facilities nearby. The rental that these companies are paying varies between 10 and 13 Euros/sq.m, where the rental price of the offices of class A depends on the location and the available facilities. The offices of class B have lower rental levels between 6 and 8 Euros per sq.m. The prognoses of the real estate agents are for increased number of international companies that will be looking to outsource their business to Sofia city.

The high class office projects in Sofia are currently 21 with total office premise to be available being 361 350 sq.m. In the first half of the year, the available office premises of the highest class AA increased with 2 % and their total area reached 1 723 500 sq.m The completed office projects added 37 000 sq.m more to the already available office premises in Sofia. Great part of these new office area was added by the Infinity Tower on Bulgaria Blvd. which added 22 000 sq.m.

The main characteristics of such office projects include high quality of implementation and excellent technical specifications, great location with easy access to all parts of the city, public transport access, and effective distribution of the office area. In the first months of the year up to now no new projects have started. During that period the existing office premises have been rented to companies. The total area of the office projects that are currently being in construction amounts to 150 000 sq.m. The rented offices in Sofia of class A and B from the beginning of the year until now amount to 46 000 sq.m, which is 14 % more than the second half of 2013. It is expected the rented office premises to go above the levels in 2013. More than 70 % of the rented offices in 2014 were taken by shared services centers and outsourcing companies. The rent of offices in Sofia varies from 10.5 to 13 Euro/sq.m.

The office market in Sofia is characterized with limited supply of office premises and increased levels of rented office premises in the second quarter of 2014. The driving force behind the demand of new offices in Sofia are the new international companies that are planning to outsource their business in Bulgaria. These companies are mainly from the IT sector and they are yet to search for new, more spacious and comfortable office premises in Sofia.

In the middle of 2014 the available office premises in Sofia were around 1.68 million sq.m., since no new office buildings of class A and B were completed until July 2014. The office projects in Sofia that are in the pipeline are being built according to their plans. Approximately 21 300 sq.m of office centers class A and B are expected to be completed by the end of the year. Almost half of the office premises however are already rented out.

The Sofia office premises that have been rented in the period April – July 2014 were 37 500 sq.m, which is more than half of the office premise area that has been rented out for the same period in 2013 and 27 % more than the rented Sofia offices in the period January – March 2014. Besides the companies from the IT sector, the other industries that show interest in renting Sofia offices include companies from the financial and the energy sector. The available percentage of office premises in best new business centers in Sofia of the highest class AA is only 7 %. These projects are positioned along Bulgaria Blvd. and near Sofia Airport.

The lack of many available Sofia offices of the highest class AA results in a price increase as far as the rental levels are concerned. Some of the landlords in the business centers with offices of class AA have increased their prices with approximately 8 % per sq.m. and now they are offered at 12.5 – 13 Euro/sq.m. The decreased number of available office premises in Sofia of this high class has made some companies look towards other cities in Bulgaria that can offer them this high level of office premise such as the cities of Plovdiv, Varna, Bourgas. In these cities the outsourcing companies can also find well-educated and prepared professionals to hire.

The office segment in Sofia is the most active one on the business properties market in general. The main reason for that is the activity on the outsourcing sector. The companies from the outsourcing sector have rented more than 25 % of all available offices in Sofia in 2013. Since two of the large international operators are with new owners now, the real estate agents predict re-structuring and optimization of the available office premises they had taken.

In the first half of 2014, the offered office premises of high class in Sofia had 2 % increase, with the total size of office premises provided being more than 1.7 million sq.m. The new projects that have been completed are 37 000 sq.m. The available office premises in Sofia at the moment are about 24 %. The rental levels are stable.

The activity in the outsourcing industry sector in Sofia and the interest shown in the Sofia office centers led to an increase in the rental levels. This is especially valid for the rental levels of offices in Sofia, based in the new business centers and large shopping malls. The rental levels of Sofia offices have gone up with approximately 8 % and the market is characterized by a trend of stability and growth dur to the outsourcing companies. This increase in the rental levels of Sofia offices is the first to be registered since 2011.

Due to the sustained interest shown by the IT and the outsourcing companies, the percentage of the available office premises of class A in Sofia has dropped down. This tendency gave confidence to the development companies to start new projects, as well as to the landlords to ask for office rent up to 13 Euro/sq.m. Most of the companies are looking for Sofia office premises in the price range between 10.5 and 12 Euro/sq.m, where the rental price depends on the location and on the requirements of the tenants. The number of the rented offices in Sofia is going up and during the first six months of the year they were around 60 000 sq.m. Mainly, these office premises in Sofia have been rented by companies that are already present on the Sofia market, but are looking for more spacious offices or for better location.

In July one of the largest real estate companies operating in Bulgaria – Forton has stated that Sofia is to expect 130 million Euro investments in business properties by the end of the year. The statistics of the company includes sales of offices in Sofia, but also commercial properties and industrial properties, hotels and plots of development land. According to the Executive Director of the company, the office market in Sofia is in a good place.

Forton company expects continuing and solid recovery of the office market in Sofia. The company had its strongest 6 months of office rental since 2009. Some of the largest office premises in Sofia that have been rented in the first half of 2014 include the rental contract of HP company with “Kambanite Business Center”, the expansion of the VM Ware company on “Tsarigradsko Schousse” Blvd. and the rental of BM Global Delivery Center at Sofia Airport Center, etc. At the same time, the completion of new office buildings in Sofia at the moment is at its lowest level. The available office premises in Sofia are 28.5 %, while the number of the available offices in Sofia in the top 10 office buildings is only 6.6 %. Bulgaria and especially Sofia city are on focus by the large companies from Western Europe and from the United States. That tendency will keep the office market busy in the future months and years. The rental levels of the office premises in Sofia of class A are around 12 Euro/sq.m. The companies are looking for qualified employees and are thus helping the local economy.

A recent analysis issued by the real estate companies in Sofia shows that the local and international companies making business in the Bulgarian capital are on demand for high-quality offices. There is a tendency for these companies to grow and that is why they are searching for new, more spacious offices premises that will allow them to hire more professionals and expand their services. This is especially valid for the IT companies and the call centers.

Currently, several new IT companies are entering the Bulgarian market and are looking for office premises in Sofia. These companies are now in search of suitable office premises and well-educated and certified employees. The IT companies that are willing to outsource their business activities in Bulgaria are coming from Western European countries, as well as from countries like Ukraine, for example. Bulgaria is in competition with the other Balkan countries such as Serbia and Romania for drawing the attention of the investors and is by far the winning the contest.

The rentals of Sofia offices have gone up in the last months. The real estate agents confirm that there is a strong interest towards luxurious offices, which are on demand by the outsourcing and the IT companies. The rental prices of offices in Sofia have gone up with 8 % on the average for the first 6 months of 2014, in comparison with the same period last year. Currently, the rental levels are between 10.5 and 12 Euro per sq.m. The rental prices depend on the location, as well as on the additional services offered.

The price increase is due on the offered high-class business buildings in Sofia. At the same time, the office market in Sofia is characterized by high demand for luxurious offices. The outsourcing and the IT companies however, state that only 10 % of the currently available offices in Sofia are of the requested high class AA offices. The available business buildings are only 18 %, while a year earlier they were around 25 %. The real estate agents predict shortage of offices from class A and class B in Sofia. The companies in search of new offices in Sofia are looking for offices up to 150 sq.m. There is no serious demand for Sofia office premises above 200 sq.m. Until the end of 2014 in Sofia will be constructed approximately 800 sq.m. of office premises, which will be placed along Bulgaria Blvd. and Tsarigradsko Schousse Blvd.