Category: Offices for rent

Outsourcing companies from neighboring countries, UK, Russia, Israel, etc. are looking for spacious offices of high class to set up their businesses in Bulgaria. That was a major tendency on the office market in Sofia in 2016. The newly formed outsourcing companies that enter Sofia market are looking for offices of 200 – 300 sq.m, with an option to rent more in the same building. In addition, more companies are now looking for 700 – 800 sq.m of office space. These companies are representatives of the IT, pharmacy, consulting and outsourcing business.

Those new players on the office market in Sofia are looking for high class services and convenient location. Yet, the demand is not always meeting the supply on the Sofia office scene. However, more and more new office projects are being completed and new ones are being planned to cover those needs. That trend on the office market in Sofia is expected to continue in 2017.

Year 2016 brought a serious demand for office space in Sofia and this has been carried over into the entire 2016, setting a stage for very dynamic office market. The increased demand for office space have continued while new projects for office buildings in Sofia have entered the market. Some of these projects are in already established office locations and they provide office supply in response to the serious demand from the outsourcing companies. The offices with good location in Sofia and smart distribution of the area reach occupancy rates of 90 to 95%.

There is however a slight difference on the office market. In 2015 the newly opened companies were looking for office space of 200 to 300 sq.m, while in 2016 there was a demand for bigger offices in Sofia of 700 to 800 sq.m. The tenants for such office premises in Sofia are companies working in the outsourcing and IT business, as well as companies offering financial intermediation services. In many cases those companies working in Sofia do not serve the Bulgarian market but have clients abroad.

The rental levels of the offices in Sofia city have increased with 4 % on an yearly basis, reaching up to 13 Euro per sq.m for occupying the offices of the highest class A. These are average levels for this type of office buildings in Sofia, which are characterized by convenient location, excellent working conditions, many facilities. Such offices of high class which however do not share such central location can be found for lower rental levels.

In general, Bulgaria remains a very attractive office destination in comparison with the other countries from Eastern Europe. In addition to the strategic location and the attractive rental levels, the country also provides low taxes and professionals with excellent knowledge and rich experience. The rental prices of the offices of class A in Sofia are lower compared to such destinations like Prague, Budapest, Warsaw. Bucharest, Belgrade, Skopje.

Many office buildings in Sofia that were under construction have been completed or are near completion by the end of 2016. At the same time, the increased demand for such offices have let to the start of many new office building projects in Sofia. In the end of 2015 the city had 1.79 million sq.m. of office premises. The large office projects that were completed in the capital of Bulgaria included Capital Fort with its 42 000 sq.m, Brussels Business Center with its two office towers of 9000 sq.m and Trade Center Europe with 8000 sq.m, as well as the SPS Tower featuring another 10 000 sq.m.

The increased demand of the large companies led to the start of many new projects and enlargement of the ones that already existed. Approximately 30 % of these office buildings in Sofia were constructed for own usage or were not large enough to answer to the needs and demand of the large outsourcing companies. The companies that stay behind the increased demand are working in the IT and the outsourcing sphere. These companies already occupy almost three thirds of the rented offices of class A in Sofia. The low levels of supply of this type of offices lead to a slight increase in the rental levels.

Bulgaria keeps its position as a leader of the outsourcing market in Eastern Europe. The rental levels of the offices in the capital Sofia are still lowest compared to the rest of the capitals on the Balkans. Sofia and Bulgaria in general remain very attractive office destination, as the office buildings provided to the outsourcing companies are modern and functional, with great locations and many facilities. Bulgaria not only offers attractive rental prices and strategic location, but it also tempts the companies with lower taxes and perfectly qualified work labor, as well as improved procedures for starting a business.

Since the beginning of 2014 until the final months of 2016, the available office space in the Top 10 of the most sought after office buildings in Sofia have gone from 7.5% to 3.5%. The rental levels have gone up a little bit from 12 to 13 Euro per sq.m. In the next few months many new office projects of excellent quality will be completed in Sofia, attracting the attention of the outsourcing companies. All new projects of office buildings that are starting now in the capital of Bulgaria have been previously coordinated and consulted between the investors and the future tenants.

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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.

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.

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.

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 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.