Monthly Archives: September 2013

Companies that are making business in the city of Sofia or are outsourcing their activities to the Bulgarian capital are open to the alternative office locations. A few years ago many of the companies in Sofia were eager to find a good office in the very center of the city. Today things have changed and most of these companies are looking to relocate their offices to alternative regions of Sofia. Many companies are looking for office space between 300 and 600 sq.m. and are in search of modern facilities, extras and good infrastructure. The big international companies that want to open an office in Sofia are looking for even larger office premises, especially if they come from the sectors of telecommunication, financial services and internet technologies.

In general, the managers of the companies in Sofia no matter if these are smaller local companies or bigger international companies, are looking to secure a better working environment to their employees. That is why they show interest in the office buildings of class A in Sofia, which have good location with excellent infrastructure, access to metro station and other means of public transport. The popular destinations for offices in Sofia now include Mladost 4 region with the Business Center there, Tsarigradsko Schousse Blvd., Bulgaria Blvd. and Todor Alexandrov Blvd. Currently, the real estate agencies see a room for reasonable projects for office buildings with modern but not extravagant architecture and required extras.

The first half of year 2013 was marked with dynamic processes in the office market, compared to same sector a year ago. The real estate agencies registered activity in the demand for offices in Sofia, even when the office buildings are no yet fully completed. In general, the search activity of the companies has increased and as confirmation to that comes the fact that the rented office premises in Sofia for the first half of the year are 45% more than the last six months of the previous year. Currently, the rented offices in Sofia are approximately 75 000 sq.m, a real peak for the last 18 months. The companies that are most active on the Sofia office market are the outsourcing companies – research centers, call centers, and centers for financial services, as well as pharmaceutical companies, which are expanding their activities in Bulgaria, but also new companies that are yet coming to the Sofia market and are in search of offices of high class.

The new offices are with capacity of around 34 000 sq.m. and are mainly set in the outskirts of the city. There is a strong demand for Class A office space, however there are just 18 such office projects in Sofia, where many of them are almost fully occupied. During the next year several newly constructed office project in Sofia will be released, such as Bulgaria Tower and Capital Fort, which will offer a significant amount of space. There are companies which are looking for very large office premises in Sofia, a demand that will be answered by some of the newly constructed office buildings in Sofia. In general the predictions of the real estate companies are for lack of good modern offices by the end of the year.

The rental levels of Sofia offices from class A and B have been stable during the first six months of this year. This tendency is expected to remain the same until the end of the year. The serious demand for high-quality Sofia offices has led to a drop in the difference between the offer price and the contract price or in other words, the rental contracts for offices in Sofia are being signed at the asking price. Since there are no many new office projects that are waiting to be started, the number of the available offices of high class in Sofia is dropping. In the middle of 2013 the available office premises in Sofia were approximately 325 000 sq.m., most of them concentrated in the outskirts of the city, close to the ring road.

The available Sofia offices of class A are approximately 24 % of the market share, while the Sofia offices of class B – the lower standard of offices, are approximately 17% of the available office premises in Sofia. The companies that have been looking for offices in Sofia during the first six months of the year come from the IT sector and the outsourcing sector. These companies have rented more than 60% of the rented offices for that period of the year. The average rental levels for the high-class offices in Sofia in the very center of the city are around 16 Euro per sq.m. At the same time the average rental levels of the offices in the outskirts of Sofia are around 9 Euro/sq.m.

Leading real estate agencies from the capital of Bulgaria discussed the office market in the city of Sofia. Their research covered the first six months of the year and confirmed that a possible lack of modern offices could be expected in the near future. In the first half of the year many of the high-quality offices in Sofia have been rented out. Greatest interest provoked those offices, which answer the international standards for quality, location and extras. Almost 70% of the modern office buildings in Sofia are situated in the outskirts of the city, close to the ring road, namely around Mladost 4 District and the Business Park there, Tsarigradsko Schousse Blvd. and along Bulgaria Blvd. Approximately 20% of the available modern offices are placed in the central city area and 10 % are left for the offices in the rest of the good districts in Sofia.

No new office projects have started in the first six months of 2013, while at the same time many of the existing offices of high class in Sofia have been rented. At the beginning of the year were available 21% of these offices and in July the available offices of that type and standard were 14%. That is why the real estate agencies predict that at some point there will be a great demand for new and modern offices in Sofia. Most of the business companies are looking for offices of class A, which are characterized with excellent quality of the construction, adequate technical specifications, comfortable office layout and good location with perfect infrastructure and easy access with car and the means of the public transport.

In the past five years the tenants and the buyers of Sofia offices were the ones dictating the market for office space in the Bulgarian capital. This is expected to change in the near future, but why is this so? The answer is simple – the supply of office space in Sofia has increased just slightly in 2013 when only three business centers of class A have been completed. During the current year it is unlikely for significant office projects intended for rent to be completed. Some of those complexes that are currently under construction also slow a slight progress and the prognosis are that they will be delayed and will have 2015 as a completion date. The office space under construction may seem significant, but it is not certain that all projects will be completed as promised.

Five are the most sought after office centers in Sofia, where two of them are fully rented out or sold out. At the same time the vacant spaces in the other three are less than 10 %. The percentage of all office premises that are available in the top ten office complexes in Sofia are less than 14 %. This means that the large corporate companies will find it difficult to get office premises that correspond to their requirements for architecture of the building, location and transport connections. The rental levels have remain the same with the best and most prestigious offices being offered between 9 and 12 Euro/sq.m per month.