Category: Offices for rent

Sofia is a busy city with cosmopolitan atmosphere and as such it tries to offer modern office buildings. The business centers in Sofia however are almost fully rented with not many projects for office buildings waiting in the pipeline. Those that have been recently released such as Infinity Towers and Capital Fort offer a great solution in terms of quality, energy efficiency, aesthetics, fast proximity to the center of the city and the rest of the districts. Among the other factors that are of great importance for the optimal functioning of each modern office building are the light, acoustic and spacious factors, the excellent infrastructure of the area, the availability of parking lots, the low exploitation expenses, etc.

The good news is that the market of office premises is in stable progress with more than 40% increase in the office premises being rented out in 2014 compared to the year before that. The main engine that drives that tendency is the interest towards offices from class A, which are on demand by the international companies in the outsourcing and the IT sector. Currently in Sofia are under construction 124 000 sq.m of offices with many projects being restarted.

Capital Fort is the new business center in Sofia, which is to open doors on “Tsarigradsko Schousse” Blvd. It is among the highest buildings in the country and is about to change the office market in Sofia. Capital Fort comes with a height of 126 m and will offer the impressive 42 000 sq.m of office premises of the highest class A. For a certain period of time, the business center will be the largest one that is providing such spacious office premises. The investor has picked the right moment with that project since there is a serious demand for quality offices and their rental prices have gone up. The owners believe that by the end of the year the business center will be completely rented out.

The construction of Capital Fort business center has started in 2010 by a solid investor with many completed holiday complexes along the Black Sea coast. The office center has excellent location among which a metro station 50 m away, and many administrative and trade centers along the boulevard. The plans of the investors are to build other business buildings in the area in the future and to run the entire complex on a long term basis. Capital Fort business center is in process of getting certificate according to the British standard for ecological buildings BREEAM.

Capital Fort is coming on the office market in the very right moment, when the demand for offices by companies in the IT and the outsourcing business is very serious. The expectations are for 95 % of the office premises in the building to be rented by outsourcing companies. The rental levels are between 10 and 16 Euro/sq.m. depending on the location and disposition, the size of the offices and the duration of the contracts.

The increased demand for quality offices in Sofia will lead to increase in the rental levels of these offices, according to the reputable real estate agents in Bulgaria. This will further increase the difference between the rental levels of the offices of class B and those of class A. The prognoses are for further reduction of the percentage of available office premises in Sofia. The experts believe that the completion of the first and second stage of the metro lines in Sofia, the interest towards the business centers around Cherni Vrah Blvd. and the Business Park in Sofia will increase.

As a rule, all large companies that are outsourcing their business in Bulgaria have interest towards the office buildings of the highest segment. That is so since these offices have high energy efficiency, retail zone, sport centers nearby, etc. In 2014 and in the first half of 2015, there was a demand for spacious offices of more than 500 sq.m. and towards offices of more than 1000 sq.m. These premises are in the focus of the IT companies. The top center of the Bulgarian capital is not among the most sought after office locations in Sofia due to the high taxes, the limited parking hours and the lack of large office premises. At the same time, there is interest towards the business areas near the ring road where the rental levels are lower and the parking is not an issue.

The careful analysis of the real estate companies has shown that most of the outsourcing companies still prefer to rent offices in Sofia rather than buy them. The interest that the companies which want to outsource their business show is towards business centers with energy efficiency, parking zone, shopping area, sport center and good location, covered by the public transport means. Many companies doing business in Sofia have already moved to new, larger offices with more amenities. Large companies from the business process outsourcing sphere and from the IT sector continue to be the driving force behind Sofia office market.

As several major metro stations have been completed and extensions of the first and second diameter of Sofia underground are soon to be ready, the real estate agents expect a revival of the office market in the areas around the Business Park Sofia and the airport, Kambanite zone and “Cherni Vrah” Blvd. The major companies that are outsourcing their business to Sofia are focused primarily on the high-end office buildings. Naturally, that reflects on the rental rates, which range from 10 to 14 Euros per sq.m for class A offices. Sofia offices vacancy rate continues to decline and is expected to fall below 10%.

The percentage of the available offices of class A in the capital Sofia is dropping and the expectations for a lack of suitable office premises for 2015 are met. The increased interest in Sofia offices of class A, along with the numerous contracts signed and the insufficient construction of office buildings during the last couple of years let to almost full coverage of all office projects of the highest class.

One of the reasons for the decline in office vacancy is the weak investment in such construction projects due to the unstable political and economic situation in the country in 2014. That led to a record low level in the number of the completed office buildings of the highest class A. The newly opened Infinity Tower on “Bulgaria” Blvd. and the recently completed Capital Fort complex of offices on “Tsarigradsko Shosse” Blvd. are more than 80 % full. In general, in 2014 in Sofia was initiated construction of 16.5 sq.m of office space which is almost 9 % less than in the previous year.

When it comes to rental levels, Sofia is the cheapest place to rent an office. That fact, along with the great number of well-educated professionals with a good command of foreign languages, makes Sofia an appealing destination for the outsourcing companies. The average rental levels for Sofia offices in the heart of the city is 10.5 Euros/sq.m, while the top offices of class A are rented for 13 Euro/sq.m. Sofia remains one of the fastest growing cities in Europe, according to the London School of Economics and the Bloomberg Foundation.

The difference between the office rental levels in Sofia and in the other capital cities on the Balkan Peninsula is not big, yet the average rent for Sofia is lower than the rental levels that are asked for in the rest of these capital cities. On the top of this rental price rating stays the city of London with the average rental price of 85 Euro/sq.m.

Recently made survey showed the tendencies for the Sofia office market and the expectations that the companies and the investors in this sector have. The researched showed that more than 80 % of the companies expected higher income in 2015 compared to the income a year ago. At the same time 60 % of these outsourcing companies working in Sofia are planning to increase the number of their employees in 2015, as well as to hire larger or more offices in Sofia. Most of these companies mentioned the location, the level of expanses, the parking and the easy access as the most important factors in getting a new office in Sofia.

At the same time the number of the available office premises in Sofia is not seriously increased. There are available offices of class A – yet they are only around 20 000 sq.m in number with rental levels between 10 and 14 Euro/sq.m, depending on the specific requirements of the company. The prognosis is for the outsourcing sector to become the main engine on the office premise market. There are also plans for the re-structuring of existing projects, in order for them to provide excellent office premises of class A.

Sofia office market had 138 300 sq.m of office transactions in 2014. The net rented offices in Sofia from class A and class B are similar to the ones in 2013. The outsourcing sector showed and still shows positive attitude towards expansion and in fact more than 40 % of the companies asked showed intention for changing their office premise in Sofia for a larger one.

The interest towards the offices in Sofia has been very stable in 2014 and remains such in 2015. There is a serious demand towards the office premises of the highest class A in certain areas in Sofia such as Business Park Sofia, Tsraigradsko Schousse Blvd. and Bulgaria Blvd. The zone near Capital Fort Building is also within the focus of many companies looking for luxurious office premises in Sofia.

Half of the contracts signed concerning offices in Sofia in 2014 were for relocation of companies, 30 % of the contracts were by companies that are expanding their business in Sofia and 10 % from the contracts signed were by companies opening their first office in Sofia. A main engine in the office segment search are international companies working in the IT sector and in the outsourcing sector.

According to the Research Report made by Cushman & Wakefield issued in the beginning of 2015 and concerning the office market in Sofia in the previous year, the capital is very stable and the demand towards offices in Sofia is very serious. By the end of last year in Sofia have been completed several projects for office buildings that didn’t add plenty of sq.m to the existing number of office premises, yet that not lead to a serious increase in the number of Sofia offices.

The interest towards the offices in Sofia was concentrated towards offices with great location, with good number of facilities and great transport links. The companies that were driven the office market in Sofia in 2014, are the same which drive the market since the beginning of 2015. These are companies working in the IT sphere, in the outsourcing area, the energetics and in the pharmacology sectors. The number of the rented or purchased office premises in Sofia in 2014 was 154 000 sq.m, which is 40 % more than the previous year.

The rental levels for the offices of class A in Sofia in 2014 and again since the beginning of 2015 vary from 10 to 14 Euros / sq.m. Slight increase in these rental levels for the Sofia offices is expected in 2015. The estimated profits from the rental of the office premises of class A remained stable around 9%.

The interest towards top quality offices in Sofia of the highest class A has been seriously increased in the last couple of years. This came as a result from the annual report of the consulting company MBL CBRE. The main reason behind that is the development of the companies in the IT sector and the outsourcing of numerous call centers. At the same time the number of the completed office buildings in Sofia has been reduced in comparison with the year before that.

According to the same report, in the last 12 months, permission for construction has been granted to office building projects in Sofia of up to 36 000 sq.m. in 2014, again half the number of the sq.m. in the building permits in 2013. That serious drop in the figures is a result from the weak interest towards the office buildings during the years of the crisis. Yet, now the things have changed and the rented Sofia offices for 2014 were 88 000 sq.m. In the end of 2014, the number of the available offices of class A and B in Sofia were only 15 %. The most sought after were the office buildings with open-space premises, high-quality of the construction and good, easy to reach location. The rental levels for these offices of high class in Sofia are around 13.5 Euro / sq.m.