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The office market in Sofia is characterized with limited supply of office premises and increased levels of rented office premises in the second quarter of 2014. The driving force behind the demand of new offices in Sofia are the new international companies that are planning to outsource their business in Bulgaria. These companies are mainly from the IT sector and they are yet to search for new, more spacious and comfortable office premises in Sofia.

In the middle of 2014 the available office premises in Sofia were around 1.68 million sq.m., since no new office buildings of class A and B were completed until July 2014. The office projects in Sofia that are in the pipeline are being built according to their plans. Approximately 21 300 sq.m of office centers class A and B are expected to be completed by the end of the year. Almost half of the office premises however are already rented out.

The Sofia office premises that have been rented in the period April – July 2014 were 37 500 sq.m, which is more than half of the office premise area that has been rented out for the same period in 2013 and 27 % more than the rented Sofia offices in the period January – March 2014. Besides the companies from the IT sector, the other industries that show interest in renting Sofia offices include companies from the financial and the energy sector. The available percentage of office premises in best new business centers in Sofia of the highest class AA is only 7 %. These projects are positioned along Bulgaria Blvd. and near Sofia Airport.

The lack of many available Sofia offices of the highest class AA results in a price increase as far as the rental levels are concerned. Some of the landlords in the business centers with offices of class AA have increased their prices with approximately 8 % per sq.m. and now they are offered at 12.5 – 13 Euro/sq.m. The decreased number of available office premises in Sofia of this high class has made some companies look towards other cities in Bulgaria that can offer them this high level of office premise such as the cities of Plovdiv, Varna, Bourgas. In these cities the outsourcing companies can also find well-educated and prepared professionals to hire.

The office segment in Sofia is the most active one on the business properties market in general. The main reason for that is the activity on the outsourcing sector. The companies from the outsourcing sector have rented more than 25 % of all available offices in Sofia in 2013. Since two of the large international operators are with new owners now, the real estate agents predict re-structuring and optimization of the available office premises they had taken.

In the first half of 2014, the offered office premises of high class in Sofia had 2 % increase, with the total size of office premises provided being more than 1.7 million sq.m. The new projects that have been completed are 37 000 sq.m. The available office premises in Sofia at the moment are about 24 %. The rental levels are stable.

The activity in the outsourcing industry sector in Sofia and the interest shown in the Sofia office centers led to an increase in the rental levels. This is especially valid for the rental levels of offices in Sofia, based in the new business centers and large shopping malls. The rental levels of Sofia offices have gone up with approximately 8 % and the market is characterized by a trend of stability and growth dur to the outsourcing companies. This increase in the rental levels of Sofia offices is the first to be registered since 2011.

Due to the sustained interest shown by the IT and the outsourcing companies, the percentage of the available office premises of class A in Sofia has dropped down. This tendency gave confidence to the development companies to start new projects, as well as to the landlords to ask for office rent up to 13 Euro/sq.m. Most of the companies are looking for Sofia office premises in the price range between 10.5 and 12 Euro/sq.m, where the rental price depends on the location and on the requirements of the tenants. The number of the rented offices in Sofia is going up and during the first six months of the year they were around 60 000 sq.m. Mainly, these office premises in Sofia have been rented by companies that are already present on the Sofia market, but are looking for more spacious offices or for better location.

In July one of the largest real estate companies operating in Bulgaria – Forton has stated that Sofia is to expect 130 million Euro investments in business properties by the end of the year. The statistics of the company includes sales of offices in Sofia, but also commercial properties and industrial properties, hotels and plots of development land. According to the Executive Director of the company, the office market in Sofia is in a good place.

Forton company expects continuing and solid recovery of the office market in Sofia. The company had its strongest 6 months of office rental since 2009. Some of the largest office premises in Sofia that have been rented in the first half of 2014 include the rental contract of HP company with “Kambanite Business Center”, the expansion of the VM Ware company on “Tsarigradsko Schousse” Blvd. and the rental of BM Global Delivery Center at Sofia Airport Center, etc. At the same time, the completion of new office buildings in Sofia at the moment is at its lowest level. The available office premises in Sofia are 28.5 %, while the number of the available offices in Sofia in the top 10 office buildings is only 6.6 %. Bulgaria and especially Sofia city are on focus by the large companies from Western Europe and from the United States. That tendency will keep the office market busy in the future months and years. The rental levels of the office premises in Sofia of class A are around 12 Euro/sq.m. The companies are looking for qualified employees and are thus helping the local economy.

A recent analysis issued by the real estate companies in Sofia shows that the local and international companies making business in the Bulgarian capital are on demand for high-quality offices. There is a tendency for these companies to grow and that is why they are searching for new, more spacious offices premises that will allow them to hire more professionals and expand their services. This is especially valid for the IT companies and the call centers.

Currently, several new IT companies are entering the Bulgarian market and are looking for office premises in Sofia. These companies are now in search of suitable office premises and well-educated and certified employees. The IT companies that are willing to outsource their business activities in Bulgaria are coming from Western European countries, as well as from countries like Ukraine, for example. Bulgaria is in competition with the other Balkan countries such as Serbia and Romania for drawing the attention of the investors and is by far the winning the contest.

The rentals of Sofia offices have gone up in the last months. The real estate agents confirm that there is a strong interest towards luxurious offices, which are on demand by the outsourcing and the IT companies. The rental prices of offices in Sofia have gone up with 8 % on the average for the first 6 months of 2014, in comparison with the same period last year. Currently, the rental levels are between 10.5 and 12 Euro per sq.m. The rental prices depend on the location, as well as on the additional services offered.

The price increase is due on the offered high-class business buildings in Sofia. At the same time, the office market in Sofia is characterized by high demand for luxurious offices. The outsourcing and the IT companies however, state that only 10 % of the currently available offices in Sofia are of the requested high class AA offices. The available business buildings are only 18 %, while a year earlier they were around 25 %. The real estate agents predict shortage of offices from class A and class B in Sofia. The companies in search of new offices in Sofia are looking for offices up to 150 sq.m. There is no serious demand for Sofia office premises above 200 sq.m. Until the end of 2014 in Sofia will be constructed approximately 800 sq.m. of office premises, which will be placed along Bulgaria Blvd. and Tsarigradsko Schousse Blvd.

The rental levels of the Sofia offices have gone up with an average of 8 % in the first six months of 2014, compared to the same period last year. Currently, the rental levels of the luxurious offices in Sofia are in the price range of 12 Euros/sq.m per month. The actual value for each rent of office premise in Sofia depends on the exact location and the additional services that are included in the asking price. The main reason behind the increase in the rental levels of Sofia offices lies in the lack of many high-end office premises, as such office buildings have not been constructed in Sofia in the last few years. At the same time, there is an interest in the number of the available office premises of class A, which are on demand by IT and outsourcing companies.

In Sofia city are not available around twenty office buildings of class A, with only 10 % free office premises available there. The companies looking to relocate their business to Sofia are in search of normal-sized office premises between 100 – 1500 sq.m. Currently there is no interest in office premises in Sofia above 2000 sq.m. Until the end of this year will be completed around 80 000 sq.m of office premises, which will be placed along Bulgaria Blvd. and Tsarigradsko Schousse Blvd.

Real estate experts predict a shortage of office space in the capital city of Bulgaria, Sofia. The number of the available space is limited and the construction of new business centers in Sofia is not to the best levels. It seems that the international companies that are working in the sphere of business services and information technologies in Sofia will soon face a shortage of office space that corresponds to their requirements. The number of the available office premises in the top 10 office buildings in Sofia which have been preferred by the tenants have dropped to 7.5%.

The area of the office buildings under construction at the end of March 2013 reached 236 000 sq.m, while an year later in March 2014 the Sofia office buildings in construction had only 143 000 sq.m. The real estate agents expect only 105 000 sq.m of brand new office premises to reach the market in 2014 and 2015, in case the office buildings are completed within the deadlines stated. As expected, the companies are still looking for office premises of class A, located close to Bulgaria Blvd. and Tsarigradsko Schousse Blvd.

In the first quarter of 2014 were put into operation 30 000 sq.m of office premises in Sofia. Since 20 000 sq.m were already rented through preliminary rental contracts that were signed during the construction of the office buildings. This means that only 10 000 sq.m of office premises were actually available for rent by the time they were officially released. The companies that were most active on the office market in the first eight months of 2014 were coming from the IT and the outsource spheres. Sofia city remains the most sought after spots in Europe for outsourcing of business activities in these spheres.

The most active companies on the Bulgarian office market are the international companies from the IT sphere and the pharmaceutical industry. These companies have not been bit from the world financial crises and are expanding. The specialists working in the Pharmaceutical sphere are looking for Sofia office premises with natural light, good ventilation system, modern air-conditioning system, low level of noise, large parking zone. These are the factors that make the experts working in the outsourced pharmaceutical companies to be more effective in their everyday activities.

The managers and employees in the large pharmaceutical companies that have been most active on the Sofia office market are also looking for business centers with good city location, immediate access to most means of the public transport and access to a sports hall nearby. The people working in these companies are also looking for office centers in Sofia with good proximity to nice restaurants. Many of the employees in these companies that have outsourced their business to Sofia are also looking for a shopping area nearby, with grocery store, a spa center, beauty salon and even a children’s playground area.