Yearly Archives: 2013

The office market in Sofia is busy and the office premises of the highest class A are on demand. The number of the available offices of that class however is going down. That is why many experts think that Sofia city needs several new office projects with excellent location and modern facilities. Large office premises in Sofia are on demand by banks and international companies which are already part of the Bulgarian market and economic life, but are willing to expand their business and services. Of course, there are some other companies that are new to the market and are now looking to enter it. Many of the companies that are coming to open an office in Sofia are companies that want to outsource their business aiming to reduce their expenses. Currently, the office market in Sofia is driven by such companies that want to outsource part of their business processes and companies from the IT sector.

According to the experts, Bulgaria is appealing to the outsourcing industry mainly thanks to the low rental levels of Sofia offices, the low levels of the wages and the low tax levels. In general, there are many well-qualified employees and good infrastructure as well. Even so, some of the international companies still prefer the office market and options in Poland, the Czech Republic and Slovakia. The international companies that decide to invest in an office in Sofia are usually looking at the best office buildings in Sofia at the moment including Megapark and Sofia Airport Center, ETC and Serdica Center and Sofia 1.

In a recent survey organized by leading real estate agencies based in the capital of Bulgaria, it became clear that the offices in Sofia resemble the offices in any European capital. In other words, the Sofia offices have the same qualities and offer the same high level of extras as all other offices in Europe. This declaration is especially valid for the offices which were constructed in the last four or five years, being characterized with excellent features and work conditions, which Bulgaria offers. It comes as no surprise that with the fantastic office premises in Sofia and the well-educated and trained staff, the favorable tax conditions and the low wages, Bulgaria ranks among the favorite outsourcing destinations in Europe for the companies.

The rental levels of Sofia offices are among the lowest in Europe. The offices of class A could be rented for 9 to 12 Euro/sq.m., depending on their location and the size of the rental office in Sofia. Even in a situation of economic crises, there is a tendency among the investors to be more demanding when their tenants are concerned. The investors now are not only looking for three-months rental as a guarantee but asks for guarantee for the branches of the international companies from the main office of the company. The tendency is for the offices of the highest class A to be quickly rented. In 2012 the rented office premises in Sofia were around 96 000 sq.m, while for the first half of 2013 they were 45 000 sq.m. with another 25 000 sq.m. of Sofia office premises to be rented in the near future. In general the second half of the year us more active than the first, which means that the real estate agencies are expecting more offices in Sofia to be rented with the rental peak to be in October.

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.