Category: Serviced Offices

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.

Companies that are looking to outsource their business are often asking for a formula which with to compare the office rentals in Sofia. In case we take two office buildings with the same rental levels per sq.m but different service charge per month, we will assume that the building with the lower service charge is the better one and the one to be taken. But maybe we will be wrong. Before making a decision we should check what is included in the service charge.

One way to compare the rental levels of Sofia Offices and the charges that apply is the method of the open book. This method is based on the fees paid during the 12 months of the previous years and such sum is taken as a base sum for each month. The open book rental contracts usually enumerate all the expenditures – security service, technical support, landscaping, video surveillance, etc. Other issues that have to be taken into account include how often that Sofia office in particular is being cleaned.

The companies which are willing to outsource their business in Sofia should be aware of the service charge and of the utility charges. The service charge includes the expenditures made for the proper functioning of the building. They include facility management, security service, technical support, building taxes, etc. The utility expenses include electricity bills, water bills, heating / air-conditioning bills, etc.

The Sofia offices of the highest class A, which are on demand by so many of the international companies that are outsourcing their business to Bulgaria, are not many in number. At the same time new first class office buildings in Sofia are not planned. That is why finding a suitable office in Sofia with all the facilities is not easy. The main search is for office of class A in Sofia and not for offices of any kind. Yet Sofia office buildings of class A that are in good locations come with almost no supply.

Sofia is yet among the most sought after destinations for outsourcing of the business. That is so, since the costs for renting and office in Sofia and paying for all the expenditures is quite low. It should also be mentioned that the number of skilled professionals is also impressive and that all of them are fluent at least one foreign language.

The offices of class A in Sofia that come with prime location are usually sought by companies from the high-tech sectors and the outsourcing sectors. The rental levels of the prime Sofia offices are between 13 and 15 Euros per square meter per month. For 2015 are expected to be released only three new buildings of the highest class A that met the highest standards. That is why there is an expectation for the rental levels of Sofia offices to go up.

The real estate market for the commercial and the office buildings in Bulgaria is showing quite an excitement since the beginning of this year. According to the real estate experts, the investors are looking towards offices and commercial properties as a result of the accelerated recovery of these markets that became effective last year. In 2014 assets that are worth 239 million Euros have changed their owners and most of the transactions were related to financial restructuring of the debts.

Since year 2014 and until that moment has been noticed a serious and lasting recovery on the Sofia office market with a growth of more than 40% in the acquired areas compared to the year before that. The offices in Sofia that were rented or purchased were over 154 000 sq. m, which is almost 30% up than the office premises in Sofia that were rented or sold two years ago. Currently the main engine that drives that need is the interest towards the offices of class A, which have easy to reach and very communicative locations, as well as all facilities that are required by the expanding international companies.

The prognosis for 2015 made by almost all realtors working on the Sofia office rental market are for increased rental levels. According to the real estate agents from different consulting companies, the offices of the highest class A will be offered for rent at approximately 13 Euro/sq.m. Even if being the most expensive ones, these Sofia offices of the highest class A are still the ones in greatest demand due to their amenities and efficiency indicators.

The data provided by the realtors reveals that the large office buildings in Sofia only 4 % of the office premises are still available. It should also be noted that large offices in Sofia with more than 2000 sq.m are extremely hard to find. The prognoses for 2015 that concern the office market in Sofia are for an increased demand for office premises of the highest class A. The companies that show strongest interest towards the office market come from the outsourcing and the IT sphere.

The realtors today often speak about interest towards the Sofia office market and increased number of the investors, mainly large international companies looking to outsource their business. In general the Sofia office market goes through lasting period of recovery and faces a positive trend ahead. The share of the vacant office premises in Sofia has fallen with nearly 30 % in the last quarter of 2013 to 26 % for the last quarter of 2014. That is so due to the strong interest towards the office premises of class A and the expansion of the international companies which have decided to outsource their business in Sofia.

The rental levels of the Sofia offices vary between 10.5 and 13.5 Euro/sq.m. and the number of available office premises is dropping down. The investments in office buildings for 2014 have increased and many office projects that were postponed are now being restarted. Bulgaria and its capital Sofia is now only provoking the interest of the companies that wish to start a business in the area but are also managing to keep that interest, which is expected to bring many new investments.