Leading real estate companies have registered a serious demand for office premises in the period January – September 2015. This tendency is accepted as a consequence from the expectations that the local and the outsourcing companies have in regards to their future development and also the economic situation ahead in Sofia, the country and the entire region. The serious demand is provoked by companies that need office premises in Sofia that are up to 500 sq.m. However, there are also enquiries for even greater office space. The companies that are demanding for such office space operate in different industries, yet most of them work in the IT sector and in the outsourcing industry.
More than 50 % of the office space demand comes from companies which are looking to consolidate their office space and they have several offices in the city of Sofia and are willing to place them under one roof to increase the productivity and to optimize the costs. The other 50 % of the demand comes from fresh companies that want to open a new office in Bulgaria. The current office rental levels are for 10 -13 Euro/sq.m. per month and the maintenance fee is 2-3 Euro/sq.m. per month.
On a meeting with Timo Soini, Finnish Minister for Foreign Affairs and Deputy Prime Minister, the Bulgarian Deputy Prime Minister for Coordination of European Policies and Institutional Affairs Meglena Kuneva stated that Bulgaria is an island of stability in Southeast Europe and in order to remain such should be applied the Schengen Area instrument. That happened on a two-day working visit of Meglena Kuneva to the capital Helsinki. The two Deputy Prime Ministers focused on the refugee situation and the possibility of Bulgaria to join the Schengen Area.
Bulgaria is technically ready for becoming a member state of the travel free Schengen area and all European institutions know that well. The Bulgarian Deputy Prime Minister stated that she is expecting a positive decision in October after the European Council sitting and the Justice and Home Affairs Council sitting. Bulgaria is already successfully guarding the EU’s external border using the 10-fingerprint biometric device in line with the latest Schengen Area standards. Jari Lindstrom and Meglena Kuneva further discussed the preparation of Bulgaria’s Presidency of the Council of the European Union in 2018. Finland will take over the presidency about a year later so the two talked about the consistency in European policies as well.
The outsourcing companies that are relocating their business to Sofia city are looking to rent more than 100 000 sq.m. of quality office premises. At the middle of the year that demand was for 70 000 sq.m but now it has increased. The companies from spheres such as IT, pharmacy, services that need to relocate as they are expanding their business, are in search of modern offices with all facilities needed, property maintenance service, and excellent location with easy access using the public transport, etc.
These companies are looking only for offices of the highest class A that answer all international standards and that have larger office premises that can reach up to 5000 sq.m. That is a brand new tendency as only a year ago the same companies were looking for offices of just 1400 sq.m max. This is a good sign as it speaks of the good place the economy is right now. At the same time, there is also an interest towards the offices closer to the city center and all the facilities there.
The High Representative of the European Union for Foreign Affairs and Security Policy and Vice-President of the European Commission Federica Mogherini attended the Annual Conference of Ambassadors to the Republic of Bulgaria in early September, hosted by the Foreign Minister of Bulgaria Daniel Mitov. During the even she stated that the international relations have been very intense in the past few years and that brought new challenges to all countries to face.
Federica Mogherini expressed her belief in the close links between all EU member states. She declared that she is aware of the challenges that stand before Bulgaria due to the country’s geographic location on the crossroad. Yet she stated that these are challenges that concern all European countries and that when united the European Union has the potential to be a strong world power. Federica Mogherini further stated that the European Union will never be complete in its integrity if the Western Balkan countries are not part of it.
Minister Mitov was asked whether the 2018 Bulgarian presidency of the EU will coincide with the possible membership of Bulgaria in the passport free Schengen area. According to him however, there are many comments on the matter and that the goal of Bulgaria is to join the Schengen area as quickly as possible.
There is a serious increase in the demand for offices in Sofia and in fact approximately 50 % more office premises have been rented or purchased by the local and the outsourcing companies in the first nine months of the year compared to the entire twelve months of the last year. The main players on the office market in Sofia come from the IT, service and the outsourcing sectors and that demand for offices have led to a renewal of postponed projects for office buildings in Sofia with capacity of 66 000 sq.m.
Another aspect that the real estate agents are pointing out is the fact that the companies are looking for larger and larger office premises as they are hiring a growing number of employees. In other words, if in 2014 the companies were looking for office premises in Sofia of 1000 – 1400 sq.m, now there is a demand for 3000 – 5000 sq.m. The companies that are most active on the Sofia business centers market are the ones that are expanding their business and those that are now outsourcing their activities in Sofia.
All these companies are looking for offices of the highest class AA with excellent location, large office premises and easy access with the available public transport. The rental levels remain the same and they are in between 10 and 13 Euros/sq.m. for the offices of class A in Sofia.
In a recent interview for a popular News Agency in Bulgaria, the Deputy Prime Minister Meglena Kuneva stated that Bulgaria being out of the Schengen area is against the interests of Europe and Bulgaria, especially in times when there are threats by terrorist organizations. Bulgaria is seeking to join the Schengen are including sea and air borders by October. This partial Schengen membership will increase the security of those countries that were not convinced of the benefits of Bulgaria to join the Schengen area.
The Bulgarian Deputy Prime Minister for European Policies Coordination and Institutional Affairs Meglena Kuneva made it clear that Bulgaria will engage in talks that concern this two-stage accession to the passport and visa free travel zone of Schengen. The accession on the sea and air borders will be then followed by accession on the land borders. Unless that happens, Bulgaria will not be able to fully complete its duties which relate to the security of the European Union. The membership of Bulgaria in Schengen will turn the country into a very reliable and strong external border of the European Union. All authorities in Bulgaria, as well as the residents of the country feel that Bulgaria is absolutely ready to join the Schengen Area.
The first nine months of the year marked a serious activity on the office market in Sofia. Many outsourcing companies opened offices and others relocated their offices in Sofia and their number is around 25 % higher compared to the same period last year. According to the real estate agents the key deals were signed with companies from the IT sector including Gameloft, IBM, Scale Focus and Apcom.
Due to the limited number of office premises in Sofia that are available, many projects for office buildings that have been postponed for years are now back in the game. This is valid for the City Tower projection Macedonia Square, for example, which once completed will offer 49 000 sq.m. The prognosis is for another 90 000 sq.m of office buildings of class A and B to be completed by the end of this year. Half of these office premises will be part of Capital Fort Business Center.
There is another tendency on Sofia office market that should be pointed out and that is the growing demand for offices in the center of Sofia. There is a serious interest towards the Millennium Center and the City Tower, which enjoy very central location with excellent transport connections and number of many facilities nearby.
On a press conference themed “Multidisciplinary approach to counteracting trafficking in human beings through a transfer of knowledge and good practices of Schengen Area member states and Norwegian experience, in particular”, the Bulgarian Deputy Prime Minister for European Policies Coordination and Institutional Affairs Meglena Kuneva stated that the presence of Romania and Bulgaria in the Schengen area should not be underestimated. If that goes on Bulgaria and Romania will be accepted as countries of less importance in terms of security and thus they are left outside the Schengen space.
The Bulgarian Deputy Prime Minister for European Policies Coordination and Institutional Affairs Meglena Kuneva expressed her hope that the country will continue to work in the field of the Mechanism for Cooperation and Verification (CVM). The conference marked the start of a new project for counteracting trafficking of human beings of the European Institute foundation, which is financed by a Norwegian financial mechanism. The project focuses on the raising the capacity of Bulgarian state institutions in their fight against organized crime and trafficking in humans through educating employees or increasing the knowledge they already possess.
The companies from the IT and the outsourcing industry, which are looking to rent or to buy office premises in Sofia, have specific needs which with they need to comply with. A great deal of the old office buildings in Sofia are not answering the needs of these modern companies. Yet, the new office projects in Sofia of the highest AA class do provide the right offices, location and facilities needed. The outsourcing companies which are already operating in Bulgaria require 5-7 sq.m on the average for each of their employees working in the call centers. This means a higher capacity of all systems in the office building including better ventilation, more powerful air-conditioning system, more toilets, more places for dining, and of course more parking lots.
The outsourcing companies are paying more attention now to the maintenance of the office, the expenses they have for heating and cooling of the office premises they are renting, the bills for internet, electricity, etc. The other parameters of the building are also of great importance for these companies and they include fast access to the public transport, pleasant working environment, etc. Usually the employees of these outsourcing companies are young people with dynamic life. That is why the offices in Sofia that the companies are looking for should be in communicative areas where they can have social contacts.
Along with the situation concerning the migrant crisis, Bulgaria has strengthened its demand for a membership in the passport free travel zone of Schengen. The aim of Bulgaria to become part of the Schengen area has been blocked by several member states led by the Netherlands on the basis of lack of progress in the fight against the organized crime and the corruption. Now with the refuge crisis, the position of the Deputy PM in charge of European affairs Meglena Kuneva is that this crisis will be facilitated to a great extent by the joining of Bulgaria and Romania to the Schengen area.
If the Romania and Bulgaria enter the Schengen zone, the information exchange between the member states will be easier and that will improve the chance of the countries to deal with the risks that are provoked by the refugee flow and the migration. The authorities in charge in Bulgaria think that now is the time for the Schengen zone to take the proper decisions, which will demonstrate unity between all European states and one unified position.
While that has been happening, Germany temporarily reinstated the border control at its border with Austria due to the influx of refugees. Two weeks ago Austria opened its doors to refugees, which provoked strong reactions of approval all over the world. Yet, the Vice-Chancellor and Minister of Economy Sigmar Gabriel stated that the lack of European action was forcing Germany to limit the number of potential refugees.
Bulgarian Deputy Prime Minister for European Policies Coordination and Institutional Affairs Meglena Kuneva stated that Bulgaria had been meeting the Schengen accession requirement for seven years now and it was time to become an equal member. Meglena Kuneva also gave comments on the forthcoming Bulgarian EU Presidency in 2018. According to her the first stage of the preparatory works was already finalized.
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