Category: Serviced Offices

In the last few years the profile of the companies that are active on Sofia office market has changed. Currently, the companies that show interest to outsource part of their business and even the entire business are mainly IT companies and companies from the outsourcing industry, and currently – the companies for easy loans which need not only front offices but also large back office premises. These companies now have higher and higher requirements for the office premise in Sofia they want to rent or to buy. The requirements of these companies are associated with the improved quality of the construction, with better infrastructure and onsite services offered. These companies are also looking for better property management.

In addition to all those criteria, that the Sofia office building needs to cover, it further needs to have pleasant façade and to be placed in an area with good infrastructure with excellent transport connections. With all that in mind, it should be noted that the number of the available office premises in Sofia and in the other large cities in the country are not many in number. It is expected their number to go down further by the end of the year. That is so, as the demand for new office buildings is serious, while the existing business buildings in Sofia are already 80 to 90 % full.

The real estate investors are looking for clear requirements concerning the in office buildings in Sofia. At the same time the companies that are looking to outsource their business to the capital of Bulgaria or to relocate their office in Sofia to a bigger one are paying greater attention to the facility management and the technical standards. There is a great interest towards the office projects in Sofia that are certified according to the international standards like BREEAM, LEED, etc.

Currently in the city of Sofia the side that is setting the rules is the one of the tenants. The companies that are looking for office premises in Sofia show interest in high quality office buildings which are energy-efficient built with modern materials and according to the latest technologies. The requirements are becoming more and more and that means better working environment for the employees.

Besides being efficient, the modern offices in Sofia should also have a good structure that allows for the premises to be rented by different companies working in various spheres. The companies that are interested in these offices of class AA in Sofia are mainly companies from the IT and the outsourcing sphere, which are mobile and open to changes. These companies are also interested in the way the office building looks like, in the design and the façade of the building. The organization of the common area is also of great importance.

The intensive increase in the outsourcing industry in Bulgaria has led to a great interest in the office premises in Sofia. The main demand is for offices of class A, located close to “Tsarigradsko Schousse” Blvd. and the Sofia Airport, the Business Center Sofia and “Bulgaria” Blvd. The available office premises of class A in Sofia for 2014 have decreased in half compared to the year before that. The serious demand for offices and the lack of many projects for business centers have led to that situation.

The main companies that are active on the market of offices are coming from the outsourcing sphere. Almost all of them expect increase in their income for 2015 and around 60 % plan to increase the number of their staff with 100 to 200 new employees. Approximately 40 % of the companies are planning to change their office and move to a larger one. The main factors for choosing a new office premise in Sofia are the location, the expenses, and the availability of parking area. There is strong interest towards several new office projects in Sofia, namely – Capital Fort, Kambanite Business Center, Sofia Airport Center.

The recovery of the Sofia office market in 2014 and in the first half of 2015 is easy to see. The percentage of the rented office premises in Sofia in 2014 has gone up with 42% compared to the year before that. This means that in 2014 the number of the rented offices has been around 154 000 sq.m. At the same time the percentage of the available offices in Sofia city has dropped to 26% in 2014. The main interest is towards the Sofia offices of class A, which are in the focus of attention of the outsourcing and IT companies, which are looking to relocate their business to Bulgaria. The average rental levels are around 10 and 13 Euro/sq.m. with a tendency to go up.

At the same time the office market in Sofia is coming with new projects for business centers including Capital Fort Business Center, the office center next to Bulgaria Mall, Trade Center Europe, Sofia Airport Center, etc. The interest of the outsourcing companies is provoked by the offices of class A, the young professionals in the country with knowledge of foreign languages, etc.

Several major projects for business centers are in the focus of attention in Sofia city and their development is strictly followed by the real estate agents. Which are these projects and what is to be expected?

Capital Fort – the business center is almost ready, expecting to get certificate for habitation soon. It is believed to be the tallest building in Sofia with 126 m of height and 42 000 sq.m of office premises. Capital Fort is among the significant office buildings in the capital, with elegant architecture and strategic location on Tsarigradsko Schousse Blvd. The new business center in Sofia will have offices of class A, trade area, underground parking zone with 670 parking lots, etc. The building will be certificated according to the criteria for green buildings BREEAM.

City Tower – located in the heart of the capital on Macedonia Square, this business center will offer 55 sq.m of office premises and trade areas, as well as six underground parking levels in Sofia. The business center will be constructed using the top down method. And is expected to be ready in a period of two years.

San Stefano Plaza – the construction of the multifunctional complex goes fast. The new project will feature 56 000 sq.m of area including offices and residential units, shops, sports center and huge underground parking zone. In the eastern part of San Stefano Plaza will be located a small office building.

Sofia Airport Center – the start of the second phase of the complex will be by the end of 2015. The new office building will offer 25 000 sq.m of area and is expected to be certified according to the LEED Platinum standards.

Trade Center Europe Building 1 – that is the last of 15 buildings located near the airport. It has 156 800 sq.m. of area including offices and storage zones, shops, two-level restaurant and a multifunctional sports hall. The office building will be certified by the ecological system BREEAM.

Millennium Center – located near the National Palace of Culture and expected to be ready in two years. It will feature a large trade center on five levels, a five-star hotel, SPA center, restaurants, and level a helicopter platform. There will be an office building as well with 24 floors and a third building occupied by luxury apartments.

Expo 2000 Office Park – new office building with LEED Platinum and DGNB Gold certificates. It features one 8-storey building and one 3-story building and many facilities.

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.