Category: Offices for rent

The rental levels of Sofia offices from class A and B have been stable during the first six months of this year. This tendency is expected to remain the same until the end of the year. The serious demand for high-quality Sofia offices has led to a drop in the difference between the offer price and the contract price or in other words, the rental contracts for offices in Sofia are being signed at the asking price. Since there are no many new office projects that are waiting to be started, the number of the available offices of high class in Sofia is dropping. In the middle of 2013 the available office premises in Sofia were approximately 325 000 sq.m., most of them concentrated in the outskirts of the city, close to the ring road.

The available Sofia offices of class A are approximately 24 % of the market share, while the Sofia offices of class B – the lower standard of offices, are approximately 17% of the available office premises in Sofia. The companies that have been looking for offices in Sofia during the first six months of the year come from the IT sector and the outsourcing sector. These companies have rented more than 60% of the rented offices for that period of the year. The average rental levels for the high-class offices in Sofia in the very center of the city are around 16 Euro per sq.m. At the same time the average rental levels of the offices in the outskirts of Sofia are around 9 Euro/sq.m.

Leading real estate agencies from the capital of Bulgaria discussed the office market in the city of Sofia. Their research covered the first six months of the year and confirmed that a possible lack of modern offices could be expected in the near future. In the first half of the year many of the high-quality offices in Sofia have been rented out. Greatest interest provoked those offices, which answer the international standards for quality, location and extras. Almost 70% of the modern office buildings in Sofia are situated in the outskirts of the city, close to the ring road, namely around Mladost 4 District and the Business Park there, Tsarigradsko Schousse Blvd. and along Bulgaria Blvd. Approximately 20% of the available modern offices are placed in the central city area and 10 % are left for the offices in the rest of the good districts in Sofia.

No new office projects have started in the first six months of 2013, while at the same time many of the existing offices of high class in Sofia have been rented. At the beginning of the year were available 21% of these offices and in July the available offices of that type and standard were 14%. That is why the real estate agencies predict that at some point there will be a great demand for new and modern offices in Sofia. Most of the business companies are looking for offices of class A, which are characterized with excellent quality of the construction, adequate technical specifications, comfortable office layout and good location with perfect infrastructure and easy access with car and the means of the public transport.

In the past five years the tenants and the buyers of Sofia offices were the ones dictating the market for office space in the Bulgarian capital. This is expected to change in the near future, but why is this so? The answer is simple – the supply of office space in Sofia has increased just slightly in 2013 when only three business centers of class A have been completed. During the current year it is unlikely for significant office projects intended for rent to be completed. Some of those complexes that are currently under construction also slow a slight progress and the prognosis are that they will be delayed and will have 2015 as a completion date. The office space under construction may seem significant, but it is not certain that all projects will be completed as promised.

Five are the most sought after office centers in Sofia, where two of them are fully rented out or sold out. At the same time the vacant spaces in the other three are less than 10 %. The percentage of all office premises that are available in the top ten office complexes in Sofia are less than 14 %. This means that the large corporate companies will find it difficult to get office premises that correspond to their requirements for architecture of the building, location and transport connections. The rental levels have remain the same with the best and most prestigious offices being offered between 9 and 12 Euro/sq.m per month.

Sofia offices of the highest class A are the ones that are most sought after and their rental levels remain stable. At the same time the number of the available offices of that class is going down since not many investors are now starting new projects for luxurious office buildings. The stable rental and sales levels of these high-class Sofia offices will remain the same, according to the prognosis of the real estate agents. The demand for such offices is due to the outsourcing business, the IT companies that are based in Sofia, the pharmaceutical companies and the shared services call centers. All those companies and business representatives are looking for business centers of high class that have large office premises and convenient to use transport infrastructure.

Approximately 65 % of the available office premises in Sofia are based in the business districts outside the center of the Bulgarian capital, followed by 20 % office premises in the center of Sofia and 15 % in the other regions of the city such as Lozenets district, for example. Due to the increased demand for offices of class A and the lack of new projects the construction of which have started this year, real estate agents predict that there will be a shortage of quality offices in the near future, which will lead to a new niche for prime buildings construction with reasonable investment and a great location. In the next months to come shall be finished several new office projects that will meet to some extend the needs in that segment of the market.

The modern offices in Sofia that are part of high quality business buildings of class A are not that many and in the near future there might be a great demand for such top offices. This is so, as in the first six months of the year were rented or sold 44 % of the high-quality Sofia offices. These are offices with excellent location in Sofia, many facilities and extras, large parking zones and perfect business atmosphere. The available office premises in Sofia of that class are approximately 12% and their number is going down. Managers of top companies that have entered the market prefer the business districts and the Sofia office buildings of higher class where they can count on parking zone, lack of city noise, more green areas, security services and common parts management services.

Sofia city remains one of the most sought-after destinations in terms of good professionals, low expenses levels and great offices. That is why many foreign companies decide to invest in Sofia and relocate their entire business or just a part of it. It is no surprise that so many outsourcing companies are now coming to Sofia, renting offices in the business zone of Sofia and hiring local professionals.

Typically, the property market is not very active during the summer season and this is valid for the market for sale and rent of offices in Sofia. During the last few months, the office market in Sofia faced no big changes. The situation in the Bulgarian capital shows that there are many office buildings and the tenants still have a good choice of office premises. The companies are looking for more extras and better location of the Sofia offices, while at the same time they are trying to get them at lower prices.

According to the real estate agents, the modern offices that are part of office buildings of class A are rented out in the price levels 8-11 Euro/sq.m. However offices in Sofia could also be rented at 5 Euro/sq.m if the location is not that good and in case the office is not part of a modern business center.

The expectations of the real estate companies are that there will be a higher and more serious demand for offices in September, when many companies will decide to get a new, bigger office in Sofia and relocate before the winter season. Thus, the agencies predict that some of the modern office buildings will get new tenants soon and the Sofia office market will enter a new phase.

The number of available offices in Sofia has dropped, since the interest towards them is serious for the first time after the start of the global financial crises. The Sofia offices that are now available are around 20% from the total number of offices in Sofia or around 350 000 sq.m. Around 70% of the available office premises in Sofia are positioned in business buildings outside the center of the capital. Since the beginning of the year have been rented almost 76 000 sq.m of office premises which is an increase with 150% compared to the first half of 2012. The companies which are in search of offices in Sofia come from the outsourcing sector mainly. These are large international companies that are coming to Sofia for the low rental levels, the easy process of company registration in Bulgaria and the low taxes. These companies are renting the offices of class A, which offer many facilities and modern extras.

According to the real estate specialists, there are 18 office centers in Sofia of the highest class, which correspond to the international requirements for the quality of construction, the easy access with automobiles and public transport, etc. The offices that the investors like most are set along “Tsarigradsko Schousse” Blvd. and “Bulgaria” Blvd., as well as near the Sofia Airport and the ring road. The rental of Sofia offices varies from 9 to 12 Euro/sq.m depending on the location.

According to real estate company Colliers, in the first six months of the year were rented more than 75 000 sq.m. of office premises. This means that the number of the available offices in Sofia is decreasing and has dropped with 12% for that period. Currently, the available office premises in Sofia are around 348 000 sq.m. The research shows that there is a serious interest by many international companies and outsourcing companies which are looking for offices of high class in Sofia city. At the same time, year 2013 started with low level of activity in the construction of new office premises. The Sofia office buildings that were completed in the first half of the year had total area of 34 000 sq.m. and at the same time no new office projects were started. Currently are being constructed 190 000 sq.m of office premises, which will be completed next year. These offices will be part of two office centers – Bulgaria Tower on “Bulgaria” Blvd. and Capital Fort on “Tsarigradscko Schousse” Blvd.

Sofia offices that are on demand are those with good location, placed in office centers and business centers with many extras. The companies which are looking for offices in Sofia city work in the sphere of software, pharmacy, trade, call centers. The two large companies that entered the office market in Sofia are Covance Medical in Bulgaria House office center and Servantes Institute in Sveta Sofia business center.

According to a research organized by the International company for management of trade and office premises Tishman International, there is a demand for business premises and offices for rent in Sofia, the capital of Bulgaria. The potential investors in Sofia office buildings come from all parts of the world, being intrigued and attracted by the flat income tax and the well-educated staff with good knowledge of foreign languages. Jullian Edwards, the managing director of Tishman International confirmed that and talked about the region's prospects in the online based forum for international real estate and investment RINFOR.

According to Mr. Edwards, the company he presents had several inquiries from global financial institutions, pharmaceutical and insurance companies, call centers, and also manufacturers who are interested in the opportunities that are offered by Bulgaria. He further stated that Sofia city is attracting major companies with worldwide reputation and this is despite the current political situation. Tishman International company confirms that the available office premises of the highest class A in Sofia city are not many and they hope that the new office projects in Sofia that are about to be completed soon will give more opportunities to the prospective investors.

As part of the Central European office market, the offices in Sofia are in demand. The investments made in business properties in Central and Eastern Europe has reached 3.7 milliard Euro for the first five months of the year which marks 30 % increase compared to the first half of the last year. These data was provided by the consultancy company CBRE and were presented by Investor.bg website. The increase in the sales of offices in Sofia and the rest of Europe, as well as the increase of the rental of Sofia offices are due to the strong market in Russia. The Russian investors are heading towards the business properties and the office premises in Sofia and in the other capitals in Eastern and Central Europe. Still valid is the tendency according to which the investors are looking for high-class office premises with many extras and facilities.

The companies in Sofia which are looking for office premises show interest in the modern business centers, however they are also interested in the small individual offices in the very center of Sofia city. The prognosis are that once the situation in Bulgaria allows for more investments to be made these companies will move towards the new office buildings in Sofia, even though they are outside the very center of the capital. The companies are attracted by the office centers in Sofia which have parking area, 24-hour security service, management and service team and other comforts.