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.
In 2015 only one office building in Sofia opened doors and that is the office project Capital Fort on Tsarigradsko Schousse Blvd. With the opening of the new business center, the capital Sofia will get 42 000 sq.m. of office premises to be used by the outsourcing companies. Currently under construction is also the second phase of the Infinity Tower Building next to Bulgaria Mall, placed on Bulgaria Blvd. This new office premise is to be completed in 2016. At the same time several other projects are to be completed. These projects are not new but they have been postponed until now, waiting for better time to come. Among them is the City Tower Building on Macedonia Square, which is to be completed in 2017. The same is valid for the Millennium Center close to the National Palace of Culture. This building will feature residential premises, trade zones and offices.
The real estate agents believe that the total area of the new office buildings in Sofia to be released on the market is 72 000 sq.m, which is the amount of office premises that is being rented by the outsourcing companies for a period of 6 months approximately. This means that there is a serious demand for the construction of many other such office projects in Sofia. Currently, the rental levels of the Sofia office premises are stable and the offices are being rented for 10-13 Euro/sq.m, with no increase planned for in the next two years. Besides the rent however, the companies that are renting offices in Sofia also need to cover various maintenance taxes and other expenses.
Several Ministers of Home Affairs and Justice gathered a week ago for an emergency meeting, during which they were to agree upon the revised proposal of the European Commission concerning the resettlement of 160 thousand refugees currently being in Greece, Italy and Hungary. In addition to the temporary solution, the European Council is also offering a permanent mandatory relocation mechanism based on the number of filed asylum applications and the number of illegal entries into a country in question, both for a period of six months.
Bulgaria, which is still not a member of the Schengen Zone but is a member of the European Union, is against the permanent mechanism. According to the Bulgarian authorities, the crisis development reveals that a simple relocation will not be enough as it will lead to secondary relocations and will increase the tension among the refugees. Besides, the member states cannot stand against the wishes of the refugees that have certain destination. Bulgaria is for a financially secured and well working integration policy, accepted by all member states of the European Union. Bulgaria is open to accept more refugees, but demands the preferences of the refugees to be taken into consideration.
In the last few years the profile of the companies that are active on Sofia office market has changed. Currently, the companies that show interest to outsource part of their business and even the entire business are mainly IT companies and companies from the outsourcing industry, and currently – the companies for easy loans which need not only front offices but also large back office premises. These companies now have higher and higher requirements for the office premise in Sofia they want to rent or to buy. The requirements of these companies are associated with the improved quality of the construction, with better infrastructure and onsite services offered. These companies are also looking for better property management.
In addition to all those criteria, that the Sofia office building needs to cover, it further needs to have pleasant façade and to be placed in an area with good infrastructure with excellent transport connections. With all that in mind, it should be noted that the number of the available office premises in Sofia and in the other large cities in the country are not many in number. It is expected their number to go down further by the end of the year. That is so, as the demand for new office buildings is serious, while the existing business buildings in Sofia are already 80 to 90 % full.
Didier Reynders, the Deputy Prime Minister and Minister of Foreign Affairs of the Kingdom of Belgium, arrived to Bulgaria on an official 2-day visit in early September upon an invitation from Daniel Mitov, the Bulgarian Minster of Foreign Affairs. During the official talks, the two ministers discussed the two-way cooperation between Bulgaria and Belgium, as well as some major initiatives of the European Union.
The Deputy Prime Minister and Minister of Foreign Affairs of the Kingdom of Belgium stated that Belgium will back Bulgaria in the country’s efforts to access Schengen. Yet, Didier Reynders stated that Bulgaria has certain issues to solve first that concern the Parliament, the anti-corruption legislation and some other reforms. According to the Deputy Prime Minister, Bulgaria should have progress in the fight against corruption, and its efforts to protect its borders and to guarantee security of the residents.
Currently, Belgium takes a second place in investments in Bulgaria. This was stated by the Minister of Foreign Affairs of Bulgaria Daniel Mitov. This is so, as the total volume of Belgium investments surpasses EUR 1 billion. Most of the investments are made in the light and in the heavy industry, etc. There is also a growth of tourists coming from Belgium with more than 30 %.
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