The real estate agents are facing an improvement on the office market situation in Sofia in the last couple of years. This means increased demand for offices and reduced number of available offices spaces, as well as increased expenses for the tenant companies and less options on the labor force market. At the same time the companies have higher requirements concerning the Sofia offices they want to move in.
The companies do consider the rental price when they are searching for a new office to relocate and that rental price is the main factor that leads them. However, the companies are now also considering the location of the working area and the quality of the building and the facilities and services offered. Most of the companies who are working in Bulgaria or have outsourced their businesses to Sofia and the other big cities in the country plan to develop and in fact grow with 25 % and more, renting bigger and more spacious offices.
In a recent interview the Slovenian Prime Minister Miro Cerar stated that the next migrant wave that comes to Europe might lead to conflicts on the Balkans. He further noted that the European countries should do everything that is in their power to protect the external borders from the conflicts and the disintegration of the travel free Schengen zone. The Slovenian Prime Minister stated that in case the Balkan route is left open, this will bring many conflicts in Europe resulting in economy crises and damage in the tourism sphere.
The Prime Minister of Slovena Miro Cerar further stated that his country will support Bulgaria against the migrants as its neighboring countries Greece and Macedonia are not defending the borders of Schengen in an efficient manner.
Almost 85 % of the outsourcing companies in Bulgaria have increased the number of their personnel, where a great deal of them (almost 65%) register a 25 % increase in the number of their employees in the last five years. This is especially valid for the sectors of the outsourcing, information technologies, professional services, finances, real estate. The same sectors are expected to offer many new jobs in Bulgaria in the years to come. Approximately 15 % of the companies that work in Bulgaria and already have an operating office in Sofia, plan to open a new office outside Sofia, while 13% of them have already opened new offices in other big cities of the country.
Many factors are taken into account and they have different significance depending on the needs and requirements of the different companies. Among the main factors are the expenditures, the professionals available, the facilities in the area, the technical characteristics of the building and the management of the building. The location of the building is also a factor of great importance. The competitive situation on the labor market in Sofia requires a wide range of tools not only to attract but also to retain talented employees, among which being the aggressive remuneration packages, additional health insurance, various teambuilding events, sports activities cards, free catering, etc. The most sought after business regions in Sofia remain the offices along Tsarigradsko Schousse Blvd., Business Park Mladost, Lozenets District offices, Bulgaria Blvd. Offices, and Sofia City Center.
A top government official from Bulgaria stated that Bulgaria needs to move ahead, adopt the Euro currency and join the visa-free travel zone of Schengen. Bulgaria is a country in the geographic periphery of Europe, which however is exposed to all crises on the continent. Bulgaria entered the European Union in 2007 with restrictions, yet the country tries to live up to the regulations and norms of the European Union, even if being hit by the migration crises through its borders.
According to the European Union and the authorities in charge of managing the EU funds and economic policy, Bulgaria is ready to join the Euro currency. It a public debt of 27 % of economic output and budget deficit of 1.9% of the domestic gross product, where the two figures are less the limit that the European Union places. In other words, Bulgaria will not be a burden to the European Union.
It is ironic, but Bulgaria even if covering all requirements to become part of the passport-free Schengen zone, was not admitted to this travel free area for political reasons, yet now it guards one of the most important external borders of the European Union.
Sofia Office Market today faces increasing demand for offices and lack of suitable available business premises, as well as a slow increase in the rental prices. Besides finding a suitable office in Sofia, the companies are in search of good employees as well. In fact, finding professionals that will want to work in the specific company is among the main challenges that the outsourcing companies face.
According to a market research among the companies renting in some of the largest office buildings in Sofia, the most important factors are the easily accessible location, the presence of large office premises, and the presence of many facilities. The competition among the tenants to attract and retain talented employees and keep in mind their standards in the selection of office space is a clear message to the building companies of Sofia offices that in addition to the financial costs, other factors are also increasing the potential of the building – the quality of the building, the standard of management, the flexibility, the facilities.
Bulgaria got a serious support from the Czech Republic for its entry in the travel-free Schengen zone. That happened at a press office of the Bulgarian President, where the Czech Prime Minister Bohuslav Sobotka stated that his country will support Bulgaria in the accession to the Schengen area. The two politicians agreed that their two countries have similar views on issues that concern security and migration.
The Bulgarian President confirmed that his country has been strictly following the Schengen rules ever since the migration crises from 2013. The words of the president came against the back drop of the Prime Minister of the country who commented that the city of Sofia will not take back the migrants that are sent by Western Europe even if they have come to Europe through Bulgaria. According to the press office of the president, the Czech Prime Minister Bohuslav Sobotka said that the measures Bulgaria took to protect its external borders and thus the external borders of the European Union have considerably helped in the lowering of the migratory pressure on all countries in Western and Central Europe.
Sofia Office Market in 2016 is driven by the large rental deals. The average size of the rented offices exceeds 2000 sq.m compared to the office premises size of 1200 sq.m. in 2015. The negotiations of such large office rental deals in Sofia, however takes more time and efforts. The companies that are looking for such spacious office premises are operating in the IT and the outsourcing sphere. The main problem that they face is the insufficient number of suitable office premises.
According to the real estate agents, the office market in Sofia has approx. 3 % available office premises in the top 10 office buildings in Sofia, which is below the required market minimum. The great demand for offices of the highest class A and the insufficient supply resulted in an increase in the rental prices which now reached 13 Euro/sq.m. Looking to optimize their offices, many companies are now considering other models of working premise optimization such as activity based working and hot desking.
The Schengen passport free zone started in June 1985 when representatives of five European union countries gathered on a boat to sign a treaty that abolished the passport controls in their country. This Schengen agreement became a European Union law in 1997 and thus turned into a defining feature of the European Union itself. Today the Schengen Agreement covers 26 countries that are members’ states and one non-EU member – Switzerland. Bulgaria, even if a member state of the European Union, along with Romania, Croatia, Cyprus, Ireland and Britain remain outside of the Schengen zone and agreement. The treaty as it is now concerns 400 million people on an area of four million sq.km and has made the labor mobility and the trade between the European countries much easier.
Until several years ago, everyone loved Schengen. Today politicians talk about shutdown of the Schengen zone and reintroduction of border controls. The European Union have been under serious pressure in the recent years due to crises, migrants and terrorist attacks. The abolition of the border controls was supposed to be accompanied by stronger external borders and security policy, so that the European Union members should be aware of the people who enter the zone. Yet, Schengen was not prepared for the refuges, for the external crises and the home-grown jihadists. What is more, the Schengen area showed weakness in the very first sign of trouble and several countries already re-introduced their border controls. Talks started on forming a smaller Schengen zone between several countries as a plan to restore the order in the European Union.
Now, in order to save Schengen, the European Union should understand that a borderless area with no sharing of the burden between the countries is not possible. The saving of the Schengen zone depends on a common security and migration policy.
The holistic method of the investors and the companies, along with the desire of the young professionals to form strong connections and a great work team are now implemented in the search for office premises. The outsourcing and IT companies, as well as the companies working in the pharmaceutical sphere, which are among the main type of companies renting Sofia offices are using special software and applications that help them use their offices in a wise way and thus make most of the employees’ time while at work.
The various office projects in the capital are already in competition, as the investors are trying to offer the best conditions and to answer the needs of both the outsourcing companies and their employees. Currently, approximately 70 % of the deals signed are with companies from the outsourcing and the IT business.
Many Central European governments have acted by overselling the benefits of the European Union in their attempt for these countries to become members of that same union. The boom of the joining countries happened in 2004 and turned into bust as the financial crises of 2008 become a fact. The migrant crises however and the huge debt of Greece have shown the flows of the European union. Thus, several of the ex-Communist countries showed their resentment and were labelled as Eurosceptic. Hungary and Poland, Slovakia and the Czech Republic claim that the western European countries treat them as second hand members and thus they strongly resent the meddling in their domestic issues, as well as the attempts for imposing the European Union solutions against their will.
The four countries agree upon a EU based on cooperation between the capitals and some western European countries like Sweden, Denmark and the Netherlands find is useful and an opportunity for the east-west division between the European Countries to stop.
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