Various companies from UK and Russia show interest towards Sofia offices market. They are opening new branches in the capital city of Bulgaria and are one of the numerous companies that are looking for new and larger office premises. Due to that many investors have stared new office building projects in 2016, choosing locations that are within easy reach to the already established office areas in Sofia.
The new companies that are in search of offices in Sofia are looking for 700 – 800 sq.m of usable area, in office buildings of class A, placed within easy reach to the central parts of the city. Those companies are usually outsourcing their business to Sofia, or are working in the spheres of communications, financial services, information technologies, etc. Often those companies are serving not the local Bulgarian markets but clients outside the territory of the country.
The new European border and coast guard control was launched in an official ceremony this autumn at the checkpoint Kapitan Andreevo, on the border between Turkey and Bulgaria. This border is also considered an external border of the European Union. The new task force was organized and built by the border management agency Frontex due to the overwhelming refugee situation.
The new European border and coast guard control will have new powers and more staff – approximately 1500 guards and technical equipment. In addition, liaison officers will be stationed in various states of the European Union that have external borders and will monitor the movements.
Until now Frontex was not able to offer effective control on the external borders of the European Union due to the lack of staff and the limited powers of the agency.
The rental levels of the Sofia offices vary in the price range between 10 and 13 Euro/sq.m, while the interest towards the new office projects remains high. These facts make many investors start planning new office buildings in preferred Sofia office locations in the next 12-18 months.
The newly founded companies in Bulgaria and those that are outsourcing their business in the capital city of Sofia are looking towards office premises of around 200-300 sq.m. There are also companies that are searching for office premises of 700-800 sq.m. The business situation in Bulgaria is changing and that is felt everywhere. In many cases the companies that are looking for offices in Sofia are serving markets and clients outside the country.
The office buildings with central location and good functional distribution of the office premises have been rented with approximately 5-10% availability only. The rental levels are between 10 and 13 Euro/sq.m. depending on the desire of the owners of those offices to make discounts.
The European border agency have been inaugurated at Kapitan Andreevo checkpoint between Bulgaria and Turkey border in October this year. The two countries are now separated with a razor wire and a metal fence. The European border agency aims to be the main frontier on land for the migrants that want to enter Europe but avoid the crossing of the Mediterranean Sea.
Approximately 1500 officers and 19 state members will be at the disposal of the European Border and Coast Guard Agency, who can be quickly mobilized if there is an emergency. Officials from the European Union hope that this will increase the security and will help the cooperation between the various member states that have been arguing in connection with the refugees.
It seems that the long-term goal is for lifting the border controls that are inside the block and for restoring the passport-free area of Schengen. The director of the EBCG, Fabrice Leggeri, stated that the new agency is well equipped and quite strong to cope with the security challenges and the migration situation.
According to Dimitris Avramopoulos, the EU Migration Commissioner, since the launching of the new European Border and Coast Guard Agency, the external border of Bulgaria becomes an external border of all member states. The agency will further be involved in the repatriation of those migrants that have been rejected from the asylum and are accepted as a threat to the security.
Outsourcing companies from neighboring countries, UK, Russia, Israel, etc. are looking for spacious offices of high class to set up their businesses in Bulgaria. That was a major tendency on the office market in Sofia in 2016. The newly formed outsourcing companies that enter Sofia market are looking for offices of 200 – 300 sq.m, with an option to rent more in the same building. In addition, more companies are now looking for 700 – 800 sq.m of office space. These companies are representatives of the IT, pharmacy, consulting and outsourcing business.
Those new players on the office market in Sofia are looking for high class services and convenient location. Yet, the demand is not always meeting the supply on the Sofia office scene. However, more and more new office projects are being completed and new ones are being planned to cover those needs. That trend on the office market in Sofia is expected to continue in 2017.
Bulgaria got a positive assessment by the Interior Minister of Poland Mariusz Blaszczak on a meeting he held with the Deputy Prime Minister and Minister of the Interior Rumiana Bachvarova. The Bulgarian Prime Minister stated that Bulgaria has a very important role in guarding the most sensitive external border of the European Union, making all efforts possible to limit the illegal immigration. Bulgaria has a good organization that restricts the crossing of the illegal migrants. Thanks to that organization, the immigrants are restricted to cross Bulgaria as they are detained entrance on the country’s territory. This is a very strong message to the migrants stating that Bulgaria is not easy to cross.
Bulgaria gets support from the European states and officers coming from other countries. Currently are being detained around 200 people each week, which is less than the same period in 2015. The Deputy Prime Minister also stated that Bulgaria makes everything possible to guard its external border, which is also an external border of the European Union. The Polish guest showed the strong support of Poland for the accession of Bulgaria in the Schengen zone.
Year 2016 brought a serious demand for office space in Sofia and this has been carried over into the entire 2016, setting a stage for very dynamic office market. The increased demand for office space have continued while new projects for office buildings in Sofia have entered the market. Some of these projects are in already established office locations and they provide office supply in response to the serious demand from the outsourcing companies. The offices with good location in Sofia and smart distribution of the area reach occupancy rates of 90 to 95%.
There is however a slight difference on the office market. In 2015 the newly opened companies were looking for office space of 200 to 300 sq.m, while in 2016 there was a demand for bigger offices in Sofia of 700 to 800 sq.m. The tenants for such office premises in Sofia are companies working in the outsourcing and IT business, as well as companies offering financial intermediation services. In many cases those companies working in Sofia do not serve the Bulgarian market but have clients abroad.
According to the reports, the Prime Minister of Bulgaria have sent a letter to the European Union Commission President Jean-Claude Juncker, where he brought up the issues of Bulgaria’s entry in the borderless Schengen area and the Eurozone. Sofia will be monitored under the Cooperation and Verification Mechanism, that is applied by Brussels.
The Prime Minister stated that the country will continue to work on the Cooperation and Verification Mechanism and the acceptance of Bulgaria in the Schengen zone. The country is also in ongoing talks for joining the Eurozone. According to the Prime Minister, once the three processes are completed successfully, the Bulgarian citizens will be happy to enjoy the benefits of the membership in the European Union and later also share the responsibilities.
The Prime Minister insisted that Bulgaria has fulfilled the Schengen criteria in 2011 and was blocked by the Netherlands and Finland. The official letter was intended as an act of gratitude for the decision of the Commission to launch the European Border and Coast Guard program.
The rental levels of the offices in Sofia city have increased with 4 % on an yearly basis, reaching up to 13 Euro per sq.m for occupying the offices of the highest class A. These are average levels for this type of office buildings in Sofia, which are characterized by convenient location, excellent working conditions, many facilities. Such offices of high class which however do not share such central location can be found for lower rental levels.
In general, Bulgaria remains a very attractive office destination in comparison with the other countries from Eastern Europe. In addition to the strategic location and the attractive rental levels, the country also provides low taxes and professionals with excellent knowledge and rich experience. The rental prices of the offices of class A in Sofia are lower compared to such destinations like Prague, Budapest, Warsaw. Bucharest, Belgrade, Skopje.
Officials from Bulgaria, Romania, Croatia, countries that are outside the Schengen zone, have met with several other officials from countries that are already part of the Schengen area. The meeting was held in September in the Polish capital of Warsaw. The members of countries that are part of the Schengen borderless area that were invited in the meeting were Denmark and Poland, Hungary and the Czech Republic. Switzerland, which is a non-EU member also send a delegate at the meeting.
The officials from Bulgaria, which was pushing for many years to join the passport free Schengen zone, are now feeling that Schengen is not that important for the country anymore. These statements of the Prime Minister of Bulgaria coincided with the remarks made by the Foreign Minister of Hungary who showed indications that Budapest will not necessarily support an entry by a Southeastern European nation into the Schengen zone.