Category: Serviced Offices

Many international companies which are looking to relocate and outsource their business activities, as well as many local companies whih are expanding and are looking for more spacious office premises in Sofia, are driving the office market in the capital and largest city of Bulgaria. The demand for new, modern and perfectly organized office buildings in Sofia is serious, while at the same time the developing companies that are actually investing into such projects and constructing office premises are not many in number. It is a fact that the professional real estate companies warn about – the high-quality office premises in Bulgaria of the class A are almost sold or rented out, leaving not many available office premises in Sofia for the new international companies that are emerging on the market.

Since there are only several new office projects of that type, the real estate experts predict an increase in the rental prices in the office premise in Sofia city. In 2013 have been issued only 156 certificates for construction of business builidngs on the territory of the entire country, which is the lowest number of construction certificates issued from the start of the crises until that moment. In Sofia city, where is the largest market for such office premises now are being constructed only the office zone of Bulgaria Mall and the business building Capital Fort. All other office buildings that are being constructed in Sofia are small in number and are being built at the periphery of the capital city.

The rental levels of the offices in Bulgaria remain amongs the most affordable of all compared to the rest of the office markets in Europe. Other countries with affordable office rentals are Cypruss and Croatia, as well as Macedonia and Estonia. The yearly expeses for renting an office in the center of Sofia is approximately 223 Euro per sq.m. This sum includes not only the monthly rental per month which is approximately 12-13 Euro per sq.m, but also the other expenses for monthly bills and maintenance taxes. At the same time the rental of office in the most expensive business destination on the earth – London is estimated to be 2122 Euro/sq.m per year or 10 times more.

Bulgaria and especially Sofia is very attractive to the outsourcing companies for many reasons though and not just because of the low rental levels. Naturally, the low cost is very appealing to the intrentaional companies looking to outsource their business to Sofia. Yet, the managers in these companies are also taking into account the other expenses and bills, the local administration, the IT service, the financial planning, etc. These large international companies are also considering the fact that Bulgaria has one of the lowest corporate taxes in Europe and the fact that the wages in Sofia are among the lowest in the capitals of Europe. Naturally, the international companies looking to open offices in Sofia are searching for well-educated and trained employees and professionals, which they can find here.

Only 20% of the high-class offices in Sofia are currently available for rent. Most of the offices of the highest class A are situated in the central zone and in the business area of Sofia close to the ring road. The demand is for offices between 150 and 250 sq.m, as well as for larger office premises in Sofia above 500 sq.m of area. The large international companies that are looking to outsource their business to Sofia and the local office that are expanding and are in need to relocated their Sofia offices are looking for modern business centers with good transport locations and many extras.

The real estate agents confirm that approximately 60 000 sq.m of high-class office premises will be completed in Sofia by December 2014. According to them these office premises will not be available for too long on the market, as these premises are of great interest to many potential investors in the Sofia city office market.

The reports of the leading real estate agents show a tendency of increased number of rented offices in Sofia. The Sofia rented office premises increased with 12% and most of the offices were rented by companies working in the IT and the outsourcing sphere. It seems that the property market is recovering and it all started with the office market. The total number of the rented office premises in Sofia has recently exceeded 100 thousand sq.m, which happened for the first time since the start of the global financial crises.

The players on the property market, which are showing interest in the modern office buildings in Sofia are local and international companies. These companies are working mainly in the IT sphere and in the outsourcing sector and they make 40 % of all the companies that are currently renting offices in Sofia city. Since the beginning of 2014 the number of the available office premises in Sofia in the top ten business centers has decreased with 7.5 %. The prognosis are for 60 000 sq.m of office premises of class A in Sofia to be completed by the end of 2014. However, since the companies looking to rent offices in Sofia are quite active, the number of the available office premises will not increase permanently.

According to data presented by the National Statistics Institute that was released at the beginning of this year, the permits for the construction of new office buildings in Sofia city that were issued at the end of 2013 were few in number. At the same time these projects for office centers in Sofia were for larger buildings with more office premises. For example, in the last quarter of 2013 the Sofia authorities have issued building permits for 36 new Sofia office buildings. This marks a decrease of 36% compared to the permits issued during the previous quarter a decrease on a yearly basis of 25%. At the same time, these buildings feature a 100 % increase in the space or in other words the office buildings in Sofia are becoming much larger in size.

In general, the total area of the new office centers that are to be built in Sofia will be increased by 33 % percent compared to the office buildings in the middle of 2013. The companies which are outsourcing their business to Sofia city in search of well-educated employees are in search of modern office buildings of the highest class, with many extras and easily-accessible parking zone, as well as with good location close to the stops of the public transport.

The office market in Sofia city is not only recovered, but it is actually in a process of being very stable. According to the reports of leading real estate companies, since year 2013 the office property market in Sofia reached its highest level since 2008. During the last year and in the current year the office situation in Sofia has been very stable and for the first time since the crises, it has exceeded 100 000 sq.m. of newly constructed market space. The office premises in Sofia that have been bought for investment purposes has increased to 56 million Euros, though the number of the deals signed is not large.

The number of the available offices in Sofia city has dropped significantly as the international companies outsourcing their business to Bulgaria have been renting the existing offices of class A. That is why currently the office market in Sofia has a limited number of available high-class offices and the rental levels at the moment have reached 12 Euro/sq.m. a month. The modern office buildings of the highest class come with high occupancy. It is expected these rental levels of offices in Sofia to reach new, higher levels of occupancy.

Sofia office market showed signs of recovery, marking the path for the other property markets in the country to follow. The total number of rented offices in Sofia reached its highest peak since 2008 and for the first time in the last five years as the world financial crises have started exceeded 100 thousand sq.m. According to the real estate and financial experts, this is a very good indicator that there is movement in the economics, more activity from the investors and many international companies from the IT and the outsourcing sector willing to relocate their business to Sofia.

Year 2013 was very important for the office market in Sofia. Many foreign companies invested in office space in Sofia and outsourced some of their activities to Bulgaria. According to the realtors, 2013 was the year of the office market in Sofia. The available office premises in the top ten projects have been reduced with 7.5 % and the available offices at the end of 2013 were only 10 %. At the end of this year, the realtors expect for another 60 000 sq.m of class A office premises to be completed. In a result of the reduced number of available office premises in Sofia, the rental prices of Sofia offices have increased to 10-12 Euro/sq.m.

The affordable prices of the Sofia offices are attracting many new companies that wish to relocated entirely to Sofia or to outsource some of their business in Sofia city. In year 2013 one third of all available offices from the highest class A have been rented by large international companies according to the reports of the leading real estate agencies. This is so as Bulgaria remains stable and is among the attractive outsourcing destinations with a lot of well-educated professionals and competitive market.

The international companies which are looking for new offices in Sofia are in search of office premises of class A. The business centers in Sofia they wish to rent office premises at have easy to reach location, many facilities services, large parking zones, etc. Almost 60% of all new rental contracts signed in 2013 was with international companies willing to relocate to another office in Sofia. At the same time 15% of the relocations in new offices in Sofia were due to the expansion of the company and 15% for the rental of offices in Sofia by the companies that are entering the market now. The current rental levels of Sofia office premises are around 10-12 Euro/sq.m., where the offices of class A are definitely being rented at 12 Euro/sq.m compared to the 9 Euro/sq.m a few years ago. The real estate companies predict that soon the number of the available office buildings of the highest class A will further decrease.

The serious international companies that are planning to move their offices in Sofia or to expand their business and rent more spacious office premises in the Sofia are showing interest in the more luxurious office buildings. In general, the office market in Sofia was activated last year and the number of the rented office premises reached the levels from the years before the crisis. In fact, in 2013 the number of office premises that have been rented by new companies and existing companies that are outsourcing their business to Sofia has increased with 30 %. This led to a decreased number of available office premises in Sofia.

According to the real estate agents, the office market in Bulgaria is being driven by international companies, mainly in the IT business. Almost 15 % of all office rental contracts in Sofia that have been signed in 2013 were with new companies that are outsourcing their business to Bulgaria. The prognoses of the realtors are for more such companies to relocate their business to Sofia. The new companies that are looking for office premises in Sofia, as well as the already existing companies operating their business from their Sofia offices are looking towards offices of class A with central location and access to many facilities, which have the necessary capacity to welcome large international companies.

The companies that are outsourcing their business in Sofia are looking for good location with easy public transport links and large parking premises. Currently such office buildings are available in the periphery of the city which make 67 %, while the office projects in downtown Sofia are just 12 % of the total available office space, with 21 % concentrated in the central parts of Sofia. Currently, the office projects in Sofia that are under construction comprise of around 185 000 sq.m.

The office market in Sofia has been quiet in the recent years, however since last year there are optimistic signals, according to the real estate agents who have specialized in office sales. The number of office premises in Sofia that have been rented by companies which have outsourced their business in Bulgaria is increasing now. The total office premises that have been rented in 2013 for example, has reached 116 300 sq.m. The realtors state that 60 % of all deals with offices on the market in 2013 have become a fact due to the expansion and relocation of different companies to larger offices.

Which are the companies that are in search of more spacious offices in Sofia? These are new and existing companies on the Bulgarian market that have outsourced their business from abroad. These are mainly international companies from the IT industry, as well as companies dealing with data processing, financial activities, human resources, etc. The interest of the foreign companies in the office buildings of class A in Sofia provoked the start and completion of successful office centers in Sofia, which are equipped and are in the position to offer all facilities that the managers and the employees in these companies require.