Category: Offices for rent

In the last couple of years became clear that the business buildings and office centers in Sofia have been planned carefully, so that to attract the interest of the investors. The good location, the perfect infrastructure and the extras planned in the Sofia offices of class A evoked the interest of the local and foreign companies, who either invested into or rented their office premises in Sofia. This however is not the situation with the tallest business building in Europe – The Shard in London. Recently completed, the new business building that imposed too many expectations has two downfalls – bad location and high rental levels.

The new office building is 310 m high and has 72 floors, but has no many tenants and owners of offices. Currently, the only two tenants are the restaurant on the 32nd floor and the gallery that occupies the last five floors, wherefrom are revealed spectacular views towards the city of London. At the same time however, not a single office from all 26 office floors has been sold. The reasons for that are the high rental level and the economic stagnation, which is valid for the UK just as for the rest of the world. The experts however blame the bad location of The Shard building in London, as it is placed on the southern bank of Thames river, while the rest of the financial institutions are placed on the opposite bank. Thus, careful location planning is important for all office buildings in Sofia and in London alike.

The construction of new office premises in Europe is among the investments of highest priority on the property market on the continent. This was shown from an analysis of the company Patrizia Immobilien, cited by the news web portal investor.bg. It is believed that by year 2017, there will be 11 million sq.m. of new offices in the European countries. This will happen regardless of the high levels of unused office premises in many parts of the old continent in the last few years. The city that is most active when it comes to construction of office premises is Warsaw, where are expected to be constructed 900 000 sq.m. of brand new office buildings. Serious construction of office centers is to be seen in the city of Sofia as well, even though the levels of construction are not that high.

The key investors are focusing on relatively low-risk markets such as London. To get more profit however, they can focus on markets with a higher risk like the ones in Dublin, Athens and Madrid, which are currently experiencing economic difficulties. The European cities that have highest percentage of unused office premises include also Barcelona and Budapest. More stable are the office markets in Germany and the four biggest cities there – Berlin, Munich, Frankfurt and Hamburg. In Sofia city, there is an interest towards the offices of class A, which have good location, easy access and many extras.

Almost 57 billion Euros were invested in the construction and organization of European offices during the year of 2012. The sum is reduced with 7 % according to the sum spent the previous year. Of course, the overall economic stagnation in all countries of the European Union lead to no rental growth in the prices, however the interest in relocation and opening of new offices of the local and international companies in all member states was serious. Such increase in the rental prices was seen in Munich and Dusseldorf, Lyon, Oslo and Moscow, however in Sofia the rental prices of the offices remained the same or slightly lower compared to the same period a year ago. A decline in the rental levels of the offices was seen in the cities of Madrid and Lisbon.

According to the prognosis, the rental values will remain the same in most of the European business markets. The interest will be towards the modern office buildings of the highest class, which also have very good locations. The rental levels of offices of class B will remain low and the interest towards them will not increase. Reductions in the rental levels of the offices are expected in cities that have been hit badly by the economic crises like the city of Madrid or face a large supply of office space such as the city of Warsaw.

At the end of April was made the first sod of the construction of the new metro line “Mladost 1” – Business Park Sofia. The Present Mr. Rosen Plevneliev, along with the mayor of Sofia, Mrs. Yordanka Fandakova were attending the ceremony and stated that the new metro line will be 3 km long and will have three stations, serving more than 45 000 people each day. The new line of the metro will be financed by the European Union with 110 million Euros and the “Transport” program, while the municipality will invest 10 million leva.

The new line of metro will make easier the transport towards the largest office zone in the capital Sofia, where are placed the offices and headquarters of many big international and local companies. There will be yet a second metro line that will be constructed from James Bouchier Blvd to Srebarna Str. and the new Paradise Center. This second line will be 1.2 km long and will have just one metro station. According to Sofia municipality, the metro station towards the airport will be completed in 2015. Thanks to that, local and foreign business travelers will be able to reach the airport and catch their flights more easily.

The first skyscraper in the city of Sofia will bear the name Capital Fort and will offer an intriguing mixture of offices of class A, trade zones and service centers. The offices will be modern and perfectly arranged, according to all the international regulations. The building will have a total area of 32 000 sq.m. and will be 126 m high. It will have twenty-four floors of offices that will be serviced by 12 modern elevators. The modern offices will come of various sizes ranging from 80 sq.m. to 1200 sq.m. The lower building attached to the skyscraper will also offer offices of class A, according to all international standards. This lower building will have total area of 12 000 sq.m., height of 30 m and will feature six office floors, served by six elevators. The offices there will be of the open-space type and will spread over 400 to 1700 sq.m. of area.

The new office center Capital Fort will feature a two-level central lobby area with trade zones, bank offices, two conference rooms, as well as several dining places – two restaurants and three fast-food places, a pharmacy, a tour agency, a flower shop, a newspaper stand, a beauty salon and dry-cleaners. The central atrium will have four escalators that will offer fast and easy access to the offices and a pleasant environment for the visitors. The skyscraper will have several showrooms with separate entrances and second levels. In addition to the offices, there will also be a fitness center, a children’s playground area, and a winter’s garden. The underground garages will offer 670 parking lots, arranged in several zones.

The local and international companies that are operating in the capital Sofia are paying between 700 and 3000 Euros per month for their offices. Approximately 40 % of them are looking for office premises with size that varies from 150 sq.m. to 250 sq.m. At the same time 22 % of the companies required offices in Sofia that come with more than 500 sq.m. of area. There is almost no interest in the small Sofia offices with size between 30 sq.m. and 100 sq.m.

The rental sums that the companies were eager to pay for the offices they have rented in Sofia in the second half of 2012 were between 700 and 3000 Euros, which includes more than half of the companies in Sofia. They were followed by 25 % of smaller companies with a budget for office rental varying between 300 and 700 Euros. At the same time, approximately 10 % of the companies stated that they can afford to pay more than 3000 Euros for monthly rental of their office in Sofia. The interest towards the offices of class A remains high, since companies are looking for good location, easy access and extras such as parking zones. When looking to register a company and start a business in Sofia or to relocate, the companies are in demand for high-class offices.

A brand new multifunctional complex will open soon near the building of the Bulgarian National Television. The construction of San Stefano Plaza complex started in 2005 but was prolonged for various reasons. The project includes luxurious apartments, offices of the highest class, shops and garages. The construction stages of the complex were accompanied with various problems, issues by the previous owners of the site, financial difficulties and world crises. After several changes in the investors companies that stood behind the project for offices and residential units and a change in the ownership rights, currently the project on San Stefano Plaza complex is owned and arranged by the Swiss company Edelweiss, presented by Dr. Beat Schpeck.

At the end of 2012, the new owner of the project invested more than 9 million Euros in the capital of the company, a sum which was required for the construction of the complex. The sale and rental of offices, as well as of apartments and shops will start slightly before the project is completed. According to the prognoses, the new Sofia office complex and residential zone will get permission for usage in the middle of 2014.

The financial crises had its impact on the office market outside the capital of Bulgaria, Sofia. If we have to describe the offices market situation outside Sofia with one word only, this would be: frozen. The lack of interest from the business in the rest of the cities in the country led to a drop in the average sales levels of the offices. Nowadays, an office in a nice building that is not placed in Sofia city is below 850 Euro per square meter. According to the brokers from the real estate agencies, this is so because of the lack of companies and investors who are willing to buy or rent such office premises. Behind the bad results stays the poor economics of the country, which has no increase in the last few years and that prevents the business from making investments.

The cities that still evoke the interest of the companies when it comes to rental of offices and apartments are Plovdiv and Varna. These are the two biggest cities in the country after the capital Sofia. There are a few office buildings there, but the interest is not as it should be and the demand is not serious. A rumor goes, according to which certain outsourcing companies will enter the country but will settle in the cities of Varna and Plovdiv, rather than in Sofia. One big outsourcing company from German already moved its offices to Plovdiv. Even so, the investors who are heading towards Sofia are looking for rental premises of around 300 sq.m, while those in Varna for example are looking for much smaller offices around 50-60 sq.m. The real estate specialists say that the office market outside Sofia will improve once the entire economics in the country faces better times.

When a certain industry is in progress, this affects other spheres of businesses as well. This happened in Sofia, when the film industry brought here many new companies and workers. An interest had been shown in luxury houses for rent in the areas of Boyana and Dragalevtsi, close to the studios and in the offices nearby and along Bulgaria Blvd. that connects the two prestigious districts with the center of the capital Sofia. The interest of the foreign investors towards Bulgaria and especially towards Sofia is serious; however they are more focused on renting apartments and offices in Sofia rather than buying them. The foreign citizens who rent offices of the highest class and apartments in good areas are usually working for the big international companies. Ninety percent of the actual buyers of luxury houses, apartments and top offices however are local people and companies.

For the first three months of the year, the rental market of offices and apartments in Sofia is stable and has increased twice if compared with the same segment of the market last year. It seems that the film industry had a lot to do with that, since the movie companies were renting many luxurious properties for the TV episodes and movies they are filming in Bulgaria. These companies are usually looking for luxuriously furnished houses in Boyana district that had four or five bedrooms.

According to two German politicians from the conservative party, Romania is to be blamed for the delay of the accession of Romania and Bulgaria in the Schengen zone. The vice chairman of the European People Party Manfred Weber opposed his own government and the official position of the European Commission. He congratulated Bulgaria for the progress it had made and blamed Romania for the blocking of the membership of the two countries. He stated at a public event held in Brussels that the two countries are always coming as a package, which should not be so.

The European Commission has stated that Bulgaria and Romania are ready to enter into the Schengen zone. However, thanks to several of the member states their accession was postponed based on the Cooperation and Verification Mechanism. Even so, the European Commission finds this mechanism inappropriate in order to judge the readiness of Bulgaria and Romania to enter the border free Schengen zone.