Blog

According to data presented by the National Statistics Institute that was released at the beginning of this year, the permits for the construction of new office buildings in Sofia city that were issued at the end of 2013 were few in number. At the same time these projects for office centers in Sofia were for larger buildings with more office premises. For example, in the last quarter of 2013 the Sofia authorities have issued building permits for 36 new Sofia office buildings. This marks a decrease of 36% compared to the permits issued during the previous quarter a decrease on a yearly basis of 25%. At the same time, these buildings feature a 100 % increase in the space or in other words the office buildings in Sofia are becoming much larger in size.

In general, the total area of the new office centers that are to be built in Sofia will be increased by 33 % percent compared to the office buildings in the middle of 2013. The companies which are outsourcing their business to Sofia city in search of well-educated employees are in search of modern office buildings of the highest class, with many extras and easily-accessible parking zone, as well as with good location close to the stops of the public transport.

The office market in Sofia city is not only recovered, but it is actually in a process of being very stable. According to the reports of leading real estate companies, since year 2013 the office property market in Sofia reached its highest level since 2008. During the last year and in the current year the office situation in Sofia has been very stable and for the first time since the crises, it has exceeded 100 000 sq.m. of newly constructed market space. The office premises in Sofia that have been bought for investment purposes has increased to 56 million Euros, though the number of the deals signed is not large.

The number of the available offices in Sofia city has dropped significantly as the international companies outsourcing their business to Bulgaria have been renting the existing offices of class A. That is why currently the office market in Sofia has a limited number of available high-class offices and the rental levels at the moment have reached 12 Euro/sq.m. a month. The modern office buildings of the highest class come with high occupancy. It is expected these rental levels of offices in Sofia to reach new, higher levels of occupancy.

Sofia office market showed signs of recovery, marking the path for the other property markets in the country to follow. The total number of rented offices in Sofia reached its highest peak since 2008 and for the first time in the last five years as the world financial crises have started exceeded 100 thousand sq.m. According to the real estate and financial experts, this is a very good indicator that there is movement in the economics, more activity from the investors and many international companies from the IT and the outsourcing sector willing to relocate their business to Sofia.

Year 2013 was very important for the office market in Sofia. Many foreign companies invested in office space in Sofia and outsourced some of their activities to Bulgaria. According to the realtors, 2013 was the year of the office market in Sofia. The available office premises in the top ten projects have been reduced with 7.5 % and the available offices at the end of 2013 were only 10 %. At the end of this year, the realtors expect for another 60 000 sq.m of class A office premises to be completed. In a result of the reduced number of available office premises in Sofia, the rental prices of Sofia offices have increased to 10-12 Euro/sq.m.

The affordable prices of the Sofia offices are attracting many new companies that wish to relocated entirely to Sofia or to outsource some of their business in Sofia city. In year 2013 one third of all available offices from the highest class A have been rented by large international companies according to the reports of the leading real estate agencies. This is so as Bulgaria remains stable and is among the attractive outsourcing destinations with a lot of well-educated professionals and competitive market.

The international companies which are looking for new offices in Sofia are in search of office premises of class A. The business centers in Sofia they wish to rent office premises at have easy to reach location, many facilities services, large parking zones, etc. Almost 60% of all new rental contracts signed in 2013 was with international companies willing to relocate to another office in Sofia. At the same time 15% of the relocations in new offices in Sofia were due to the expansion of the company and 15% for the rental of offices in Sofia by the companies that are entering the market now. The current rental levels of Sofia office premises are around 10-12 Euro/sq.m., where the offices of class A are definitely being rented at 12 Euro/sq.m compared to the 9 Euro/sq.m a few years ago. The real estate companies predict that soon the number of the available office buildings of the highest class A will further decrease.

The serious international companies that are planning to move their offices in Sofia or to expand their business and rent more spacious office premises in the Sofia are showing interest in the more luxurious office buildings. In general, the office market in Sofia was activated last year and the number of the rented office premises reached the levels from the years before the crisis. In fact, in 2013 the number of office premises that have been rented by new companies and existing companies that are outsourcing their business to Sofia has increased with 30 %. This led to a decreased number of available office premises in Sofia.

According to the real estate agents, the office market in Bulgaria is being driven by international companies, mainly in the IT business. Almost 15 % of all office rental contracts in Sofia that have been signed in 2013 were with new companies that are outsourcing their business to Bulgaria. The prognoses of the realtors are for more such companies to relocate their business to Sofia. The new companies that are looking for office premises in Sofia, as well as the already existing companies operating their business from their Sofia offices are looking towards offices of class A with central location and access to many facilities, which have the necessary capacity to welcome large international companies.

The companies that are outsourcing their business in Sofia are looking for good location with easy public transport links and large parking premises. Currently such office buildings are available in the periphery of the city which make 67 %, while the office projects in downtown Sofia are just 12 % of the total available office space, with 21 % concentrated in the central parts of Sofia. Currently, the office projects in Sofia that are under construction comprise of around 185 000 sq.m.