Every 6 out of 10 companies that are operating on the territory of Sofia are looking for office premises larger than 500 sq.m. The companies working in Bulgaria that are most active in the search process are the coming from the IT sphere. Often, some of the outsourcing companies have two or three offices and they take steps towards setting all their employees under one roof for better expenses optimization and more productive communication. The other companies that show interest in the offices of class A in Sofia are new to the local market and usually they start with up to 50 employees, to increase their number within an year and start looking for larger offices in Sofia.
Sofia office market can provide available offices of class A with area of up to 500 sq.m, yet there are not many offices of the same quality in Sofia above 1000 sq.m in size. Several large office projects are about to be released in Sofia next year, which is good for the companies and the business. The rental levels of the Sofia offices of class A run between 10.5 and 12.5 Euro/sq.m. and 2-3 Euro/sq.m for the maintenance fee.
In early October the President of the European Council Donald Tusk stated that Bulgaria is may be the best example of how the borders should be protected. He further stated that Bulgaria is ready to become part of the Schengen zone. Bulgaria is bordering Greece and Turkey, as well as Macedonia, and these countries are under great migratory pressure. Yet, Bulgaria still manages to protect its borders well.
The President of the European Council further stated that the borders of Bulgaria are also borders of the European Union. That is why, in his words, the country is ready to become part of the travel free Schengen zone. In fact, many politicians and people from abroad feel that Bulgaria entering the passport and visa free Schengen area should have happened long time ago.
The country still needs to make sure that all judicial reforms are mad and the fight against the organized crime and the corruption is still strong. Along with Romania, Bulgaria has hoped to enter the Schengen area in March 2011, yet this was postponed by several members of the alliance due to concerns associated with the security situation and corruption levels. The two Balkan states are still waiting.
Throughout 2015, the companies that have decided to make business in Bulgaria have shown interest towards larger office premises situated in office buildings of class A. This comes as a result from the good expectations of the companies in connection with the future situation of the economics in Bulgaria, the region and the European Union in general.
The companies looking for offices in Sofia are focused on office premises of 500 sq.m (or more) where some of the outsourcing companies are looking for Sofia offices of 1000 sq.m. The companies that are on demand of such large office premises operate in the IT and in the outsourcing sector. They are usually relocating since their business is growing. Yet, the office market in Bulgaria is also attracting new companies that are planning to open their first office in Sofia. There is a serious interest towards unification and getting all office branches of one company under one roof aiming optimization of the expenses and better communication in the team. Approximately 80 % of all requirements for offices in Sofia come from companies that plan to start working with up to 50 people as staff.
At first Romania and now Bulgaria are slowly abandoning their hope to receive an invitation to join the passport-free travel zone of Schengen area. The admission of the two countries is on hold for many years now, though both states have proved their technical and border readiness to become part of the Schengen zone. The European Council sessions have put on hold all discussions concerning the admission of Romania and Bulgaria into the Schengen area and the expansion of the Schengen area in general.
Romania and Bulgaria have hoped to join the borderless zone since 2010. Through the years several nations have opposed the joining of Bulgaria and Romania, mainly Holland, Germany and Finland. Their reasons for that were concerned with the serious corruption issues that the two countries were believed to have. Yet, both Romania and Bulgaria are meeting the technical criteria for entering Schengen and for controlling their borders, including the borders with the countries that are not part of the European Union.
According to the Romanian political analyst Cristian Inteanu, the immigrants’ crises have caused serious issues and will influence the perpective of EU states over the future extension of the Schengen space. As the experts said, Romania and Bulgaria will be allowed to the Schengen area, if that will strengthen the eastern border of the European Union.
The interest towards the offices for rent in Sofia has been strong throughout 2015 and the figures show that the companies show a demand for more than 100 000 sq.m. of office premises in Sofia and in the country in general. During the first half of 2015 the interest towards the offices for rent in Sofia and in Bulgaria has gone up with 40 % more compared to the same period in 2014 when the interest shown was towards 70 000 sq.m of modern office premises.
More than 60 % of the active companies on the market come from the IT and the outsourcing sector and this percentage is going up. That tendency in the rental market of Sofia is not new, yet in 2015 the contracts sign are much serious. That is so as the IT and the outsourcing companies are hiring more employees and need much more space. Back in 2014 the companies have shown interest in Sofia offices of approximately 1000-1400 sq.m, while in 2015 the interest was in class A offices in Sofia with area between 3000 and 5000 sq.m.
The companies that are most active on the Sofia office market are the new one which experiences increase in their business. The demand is for offices of the highest class with excellent location and large floor premises above 1000 sq.m, easy transport connections and easy access to the metro stations. The interest of the companies and the limited supply of such offices led to shortage of this kind of offices. And that led to new projects and start of the construction of new 66 000 sq.m of office premises in Sofia. That will result in a balance between the supply and the demand of offices and will keep the class A rental levels in Sofia reached between 10.5 – 12.5 Euro/sq.m.
In a recent interview for a leading media, the Deputy Prime Minister Meglena Kuneva stated that the Bulgarian services work at European level and are comparable to the level of the European partners of the company. That is why according to the Bulgarian Deputy Prime Minister must become part of the Schengen area. According to the Deputy Prime Minister, the importance of the Schengen border is serious, and thus Bulgaria must soon join the protected Schengen area as that will enable the country to exchange information so that to prevent dangerous people to enter the area under the cover of refugees.
Currently, the border control systems of the European Union are under serious pressure and unprecedented strain. The Schengen area, as we know, is a border-free zone that guarantees the free movement for more than 400 million citizens in the EU, yet this also allows other people who have entered the area to travel freely from Southern to Northern Europe. For that reason, the Deputy Prime Minister of Bulgaria stated that the European Union should take into account the wish of the country to protect Schengen, even if not a member yet.
Further she stated that she has no hesitation that Schengen enlargement with Bulgaria and Romania will make the Schengen policy and the Schengen as an area more secure and stable.
Leading real estate companies have registered a serious demand for office premises in the period January – September 2015. This tendency is accepted as a consequence from the expectations that the local and the outsourcing companies have in regards to their future development and also the economic situation ahead in Sofia, the country and the entire region. The serious demand is provoked by companies that need office premises in Sofia that are up to 500 sq.m. However, there are also enquiries for even greater office space. The companies that are demanding for such office space operate in different industries, yet most of them work in the IT sector and in the outsourcing industry.
More than 50 % of the office space demand comes from companies which are looking to consolidate their office space and they have several offices in the city of Sofia and are willing to place them under one roof to increase the productivity and to optimize the costs. The other 50 % of the demand comes from fresh companies that want to open a new office in Bulgaria. The current office rental levels are for 10 -13 Euro/sq.m. per month and the maintenance fee is 2-3 Euro/sq.m. per month.
On a meeting with Timo Soini, Finnish Minister for Foreign Affairs and Deputy Prime Minister, the Bulgarian Deputy Prime Minister for Coordination of European Policies and Institutional Affairs Meglena Kuneva stated that Bulgaria is an island of stability in Southeast Europe and in order to remain such should be applied the Schengen Area instrument. That happened on a two-day working visit of Meglena Kuneva to the capital Helsinki. The two Deputy Prime Ministers focused on the refugee situation and the possibility of Bulgaria to join the Schengen Area.
Bulgaria is technically ready for becoming a member state of the travel free Schengen area and all European institutions know that well. The Bulgarian Deputy Prime Minister stated that she is expecting a positive decision in October after the European Council sitting and the Justice and Home Affairs Council sitting. Bulgaria is already successfully guarding the EU’s external border using the 10-fingerprint biometric device in line with the latest Schengen Area standards. Jari Lindstrom and Meglena Kuneva further discussed the preparation of Bulgaria’s Presidency of the Council of the European Union in 2018. Finland will take over the presidency about a year later so the two talked about the consistency in European policies as well.
The outsourcing companies that are relocating their business to Sofia city are looking to rent more than 100 000 sq.m. of quality office premises. At the middle of the year that demand was for 70 000 sq.m but now it has increased. The companies from spheres such as IT, pharmacy, services that need to relocate as they are expanding their business, are in search of modern offices with all facilities needed, property maintenance service, and excellent location with easy access using the public transport, etc.
These companies are looking only for offices of the highest class A that answer all international standards and that have larger office premises that can reach up to 5000 sq.m. That is a brand new tendency as only a year ago the same companies were looking for offices of just 1400 sq.m max. This is a good sign as it speaks of the good place the economy is right now. At the same time, there is also an interest towards the offices closer to the city center and all the facilities there.
The High Representative of the European Union for Foreign Affairs and Security Policy and Vice-President of the European Commission Federica Mogherini attended the Annual Conference of Ambassadors to the Republic of Bulgaria in early September, hosted by the Foreign Minister of Bulgaria Daniel Mitov. During the even she stated that the international relations have been very intense in the past few years and that brought new challenges to all countries to face.
Federica Mogherini expressed her belief in the close links between all EU member states. She declared that she is aware of the challenges that stand before Bulgaria due to the country’s geographic location on the crossroad. Yet she stated that these are challenges that concern all European countries and that when united the European Union has the potential to be a strong world power. Federica Mogherini further stated that the European Union will never be complete in its integrity if the Western Balkan countries are not part of it.
Minister Mitov was asked whether the 2018 Bulgarian presidency of the EU will coincide with the possible membership of Bulgaria in the passport free Schengen area. According to him however, there are many comments on the matter and that the goal of Bulgaria is to join the Schengen area as quickly as possible.
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