Yearly Archives: 2013

Sofia office market is driven by those large international companies which are opening their offices in the Bulgarian capital and by the companies which are already on the market but wish to relocate due to the increase of the work load and the number of their employees. The situation on Sofia market could be explained like that – there are plenty of offices on offer, but the selection is limited. This is a problem that many large international companies are to be facing on the Sofia office rental market in the months to come. Why is this so? Many construction companies focused on residential projects rather than in the office projects during the crises, while at the same time many international companies started seeing Sofia as a great destination for outsourcing. That is why many of the available and completed office premises and the ones in the business centers near completion were rented. Actually the business centers with greatest occupancies are placed on some of the largest boulevards.

The expectation of the real estate companies is that the outsourcing companies coming to Bulgaria will focus on the areas near the metro stations in Sofia. This means that some locations that were not popular until now will become more appealing in the next two years to come. The business centers with the highest number of rented office premises include the Europеan Trade Center with 95%, Megapark with more than 80%, as well as Sopharma Business Towers, Litex Tower and Polygraphia Office Center, followed by Serdika Offices.

For two years in a row the Sofia office market is driven by the companies from the IT sphere and the outsourcing area. These are the main companies that show interest in the office premises in Sofia and have rented the largest number of offices in the first three quarters of year 2013. The country and especially its capital Sofia is attracting the attention of the international companies which are oriented towards customer support and business processes. These companies open offices in Sofia as they are tempted by the low levels of expenses for labor, taxes and rental prices. This is good for Bulgaria, since these companies are hiring local people and are offering good working conditions.

In the recent years however, the construction of offices of class A has decreased and the number of new luxurious offices that are completed has dropped. At the same time, this brought to an investment activity. The ten office projects of the highest class in Sofia are attracting the attention of the greatest number of the companies which are looking for an office to rent. That is why the available office premises in this ten office buildings in Sofia is decreasing and the available office premise there is just 12 %. Hopefully, the construction companies will take note of that and will start new business projects for construction of Sofia offices of the highest class.

The trend of activity on the office market in Sofia that was valid for the first six months of the year, continued during the third quarter of 2013 as well. At the end of September, the number of the deals and contracts that were signed reached the total number of all rental office deals for the previous year. The tendency with the rental of offices is for larger number of deals for a smaller amount of money. The total amount of the recently rented offices from class A and B in the third quarter of the year have reached 16 500 sq.m., which is a decrease of 15 % compared to the second quarter. The total amount of all Sofia office premises of class A and class B for the first nine months of 2013 reached almost 50 000 sq.m.

In the first six months of the year the number of the available office premises from class A in Sofia that correspond to the requirements and the international qualifications have dropped from 21% to 14%. As there is a significant interest towards this type of office premises, it is expected the number of the available office premises of class A to drop even further by the end of the year. The major international companies that are opening offices in Sofia show interest towards the areas around Bulgaria Blvd. and Tsarigradsko Schousse Blvd., Sofia Airport region and the ring road. The average rental levels in the office market segment remain stable and this tendency is expected to proceed.

During the first six months of year 2013, the office market in Sofia showed a slight increase and the total area of office premises that were offered almost reached 1 700 000 sq.m. The completed office buildings in Sofia during 2013 added approximately 35 000 sq.m more, most of which being placed in the outskirts of the Bulgarian capital. The greatest number of modern office premises of class A is to be found in the southeastern part of the capital, near the ring road, followed by the downtown and then by the central city zone. During the first six months of the year is registered an increased activity in the office rental practices. The office premises that have been rented cover approximately 76 000 sq.m, which is up with 45 % compared to the figures at the end of the previous year.

The office market in Sofia is driven by the new companies that are emerging on the market and the expansion of the activities of the existing companies which are already operating in Bulgaria. The most active are the companies from the spheres that were not that affected by the financial situation in the past few years including companies working in the spheres of trade, software production and pharmacy. The companies are mainly interested in large office premises with reasonable monthly rentals and functional distribution of the interior area. Great attention is also paid to the good transport connections. Currently, the city of Sofia features 18 projects of class A, which are completed and correspond to the requirements of the international qualifications for office buildings of the highest class A. The highest percentage of rented offices in these buildings, testify for potential shortage of that type of office space in the near future.

The office market in Sofia is driven by the foreign call centers that have relocated to the Bulgarian capital. These investors and owners of these call centers are interested in high-quality office buildings in good areas of the city with fast and easy access. The rental levels vary from 8 to 12 Euro/sq.m, mainly depending on the location and the number of the available amenities. The rental market of Sofia offices is powered by the interest of the different foreign companies as well as several large domestic companies. The key clients on the Sofia office market horizon are the business process outsourcing companies and the stable and well-developing IT companies. Even so, the interest towards available Sofia premises remains below the levels before the crises.

During the third quarter of 2013 in Sofia city were rented more than 20 000 sq.m of office premises, which marks an increase of 13% compared to the same period last year. Since there are a few office rental deals that are currently being arranged, it is possible that the total number of the rented office premises for 2013 to be more than 100 000 sq.m. More than 80% of all offices that have been rented were actually taken by companies which are increasing their business. The most serious rental deal for an office in Sofia during the last three months was the one with the technology company Comverse. This company rented an office of 2500 sq,m placed in Serdika Offices building. However, this is an exclusive deal, since most of the companies are renting office of 600 – 700 sq.m. of area.