Category: Offices for rent

The last three months of 2015 were very busy on the office market in Sofia. The demand for Sofia offices of class A was not only diminishing in the end of the year, but the interest was actually getting stronger. Several brand new office projects have also started. In the first nine months of the last year many new office projects in Sofia have started. According to the real estate agents that trend is about to proceed with the same pace.

The most important office project that was completed in Sofia in the last three months of the year is the completion of the Capital Fort project and the signing of the rental contract for the largest office space available – the one with Visteon company for 7300 sq.m. of office space in Sofia. In the last quarter of 2015 started the construction of the fourth phase of Expo 2000 complex, as well as the new Bernard Investments project on “Tsarigradsko Schousse” Blvd.

Besides the serious investment in new office complexes in Sofia, there is still a serious demand for offices in the capital of Bulgaria. According to the statistics, the planned office buildings up to 2018 will have total area of 450 000 sq.m. Currently the rental levels are stable and vary around 12.5 Euro/sq.m.

In the last 12 months Sofia office market became a witness of several new office building projects emerging on the market. The construction companies became confident enough to start investments in new office buildings due to the great demand for such office premises in Sofia and the stable rental levels.

In the capital Sofia has been completed the largest office project for 2015 – Capital Fort and was signed the largest rental deal for 7300 sq.m of office area. In the second half of the year started the construction of the fourth phase of Expo 200 and also the construction of the new project along Tsarigradsko Schousse Blvd . – Bernard Investments. This means that the planned office buildings the construction of which has already started and which will be completed by 2018, reach total area of 450 000 sq.m. The rental levels of Sofia offices remain around 12.5 Euro/sq.m. for the offices of class A.

The rental levels of Sofia offices are expected to go up in the next three years according to the association of the owners of business centers in Bulgaria. In a recent interview, the chairperson of the association stated that year 2015 was very active for the office market in Sofia with a serious demand for spacious office premises. That is so as the large international companies are not only staying in the country, but also they are enlarging their activities, hiring more employees and thus in need of more space.

The offices in Sofia that have been rented in 2015 were much larger than the ones rented 3-4 years ago. In 2015 there were deals signed for the rental of Sofia office of 7000 sq.m. Other serious deals signed were for 3500 sq.m in the Sofia Airport Center, as well as in the business centers Expo 2000, East Trace Center, etc. The fact is that when one company moves to a bigger office in Sofia, her former office is immediately taken by another company. This means that the market goes up and that there is positive development for it ahead of time. That is why several new projects for office buildings are being planned and are expected to be implemented. The current rental levels vary from 10.5 Euros to 13 Euros, but there is prognosis for increase in the rental levels to 14-16 Euros/sq.m in the recent years.

A growing number of international and local companies are now looking for offices of class A in new business centers that are still in the of-plan stage, waiting for the start of the construction. That is so, as there are not many large offices available in Sofia to meet the needs of the outsourcing companies that expand their business in Bulgaria. The office projects that were released in 2015 like Capital Fort and Trade Center Europe are already operating and a great percentage of their premises has been rented out.

On the grounds of that serious demand for offices of class A in Sofia, many new office projects have started and the office premises that will be ready by the end of 2015 are believed to reach 100 000 sq.m. The construction companies are stimulated to build new business centers in Sofia as many international companies are relocating their offices in search of larger and more spacious working premises. These outsourcing companies are looking for bigger offices of highest quality.

Currently, the available office space in the most sought after office buildings in Sofia is only 2 %. The rental levels remain the same, though there is a tendency for the rental price to go up.

The high-quality office premises in Sofia have been running out for quite some time and as a result, the rental prices started increasing reaching pre-crises levels. This means that the prices of the class A office premises in Sofia are heading towards the levels 14-16 Euro/sq.m. Due to the lack of supply, many companies are now ready to get offices in off-plan business centers and wait for them to be completed.

Throughout 2015, the office demand in Sofia has increased by 15-20 % with almost no supply at all in the center. According to the data, the number of the available offices in Sofia in the middle of 2015 has dropped to 25 % and to 2 % in the most sought after places in the capital of Bulgaria. Among the most desired business zones in Sofia are placed around the boulevards “Tsarigradsko Shosse”, “Cherni Vrah” and “Dragan Tsankov”.

The recently completed business center Capital Fort, which is also the tallest building in the country, is renting offices fast. These companies are mainly in the high technologies and the IT sectors, as well as the outsourcing. Under construction is the Trade Center Europe near Sofia Airport, where 50 % of the office premises are already rented out. The office market in Sofia is being driven by large companies looking for more spacious office premises of a class A quality.

The real estate agents have recently stated that around 250 000 sq.m of office premises are to enter the Sofia market by 2017. Approximately one third of these were planned to be opened until the end of this year. Serious activity is found at the projects for Sofia office buildings and many of them are under construction. The first six months of 2015 were characterized by very low levels of class A office availability in Sofia – less than 4 %.

The serious activity on the office market in Sofia is due to the great number of outsourcing companies that are moving their business to the capital of Bulgaria. Most of them are international companies working in the sphere of outsourcing and in the IT sector. These companies are paying between 10.5 and 12.5 Eur/sq.m for Sofia offices of class A and another 2 to 3 Euro/sq.m for the maintenance of these offices. The expectation of the real estate agents is for these levels to remain the same at the beginning of 2016.

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.

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.

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.

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.