Category: Serviced Offices

Typically, the property market is not very active during the summer season and this is valid for the market for sale and rent of offices in Sofia. During the last few months, the office market in Sofia faced no big changes. The situation in the Bulgarian capital shows that there are many office buildings and the tenants still have a good choice of office premises. The companies are looking for more extras and better location of the Sofia offices, while at the same time they are trying to get them at lower prices.

According to the real estate agents, the modern offices that are part of office buildings of class A are rented out in the price levels 8-11 Euro/sq.m. However offices in Sofia could also be rented at 5 Euro/sq.m if the location is not that good and in case the office is not part of a modern business center.

The expectations of the real estate companies are that there will be a higher and more serious demand for offices in September, when many companies will decide to get a new, bigger office in Sofia and relocate before the winter season. Thus, the agencies predict that some of the modern office buildings will get new tenants soon and the Sofia office market will enter a new phase.

The number of available offices in Sofia has dropped, since the interest towards them is serious for the first time after the start of the global financial crises. The Sofia offices that are now available are around 20% from the total number of offices in Sofia or around 350 000 sq.m. Around 70% of the available office premises in Sofia are positioned in business buildings outside the center of the capital. Since the beginning of the year have been rented almost 76 000 sq.m of office premises which is an increase with 150% compared to the first half of 2012. The companies which are in search of offices in Sofia come from the outsourcing sector mainly. These are large international companies that are coming to Sofia for the low rental levels, the easy process of company registration in Bulgaria and the low taxes. These companies are renting the offices of class A, which offer many facilities and modern extras.

According to the real estate specialists, there are 18 office centers in Sofia of the highest class, which correspond to the international requirements for the quality of construction, the easy access with automobiles and public transport, etc. The offices that the investors like most are set along “Tsarigradsko Schousse” Blvd. and “Bulgaria” Blvd., as well as near the Sofia Airport and the ring road. The rental of Sofia offices varies from 9 to 12 Euro/sq.m depending on the location.

According to real estate company Colliers, in the first six months of the year were rented more than 75 000 sq.m. of office premises. This means that the number of the available offices in Sofia is decreasing and has dropped with 12% for that period. Currently, the available office premises in Sofia are around 348 000 sq.m. The research shows that there is a serious interest by many international companies and outsourcing companies which are looking for offices of high class in Sofia city. At the same time, year 2013 started with low level of activity in the construction of new office premises. The Sofia office buildings that were completed in the first half of the year had total area of 34 000 sq.m. and at the same time no new office projects were started. Currently are being constructed 190 000 sq.m of office premises, which will be completed next year. These offices will be part of two office centers – Bulgaria Tower on “Bulgaria” Blvd. and Capital Fort on “Tsarigradscko Schousse” Blvd.

Sofia offices that are on demand are those with good location, placed in office centers and business centers with many extras. The companies which are looking for offices in Sofia city work in the sphere of software, pharmacy, trade, call centers. The two large companies that entered the office market in Sofia are Covance Medical in Bulgaria House office center and Servantes Institute in Sveta Sofia business center.

According to a research organized by the International company for management of trade and office premises Tishman International, there is a demand for business premises and offices for rent in Sofia, the capital of Bulgaria. The potential investors in Sofia office buildings come from all parts of the world, being intrigued and attracted by the flat income tax and the well-educated staff with good knowledge of foreign languages. Jullian Edwards, the managing director of Tishman International confirmed that and talked about the region's prospects in the online based forum for international real estate and investment RINFOR.

According to Mr. Edwards, the company he presents had several inquiries from global financial institutions, pharmaceutical and insurance companies, call centers, and also manufacturers who are interested in the opportunities that are offered by Bulgaria. He further stated that Sofia city is attracting major companies with worldwide reputation and this is despite the current political situation. Tishman International company confirms that the available office premises of the highest class A in Sofia city are not many and they hope that the new office projects in Sofia that are about to be completed soon will give more opportunities to the prospective investors.

As part of the Central European office market, the offices in Sofia are in demand. The investments made in business properties in Central and Eastern Europe has reached 3.7 milliard Euro for the first five months of the year which marks 30 % increase compared to the first half of the last year. These data was provided by the consultancy company CBRE and were presented by Investor.bg website. The increase in the sales of offices in Sofia and the rest of Europe, as well as the increase of the rental of Sofia offices are due to the strong market in Russia. The Russian investors are heading towards the business properties and the office premises in Sofia and in the other capitals in Eastern and Central Europe. Still valid is the tendency according to which the investors are looking for high-class office premises with many extras and facilities.

The companies in Sofia which are looking for office premises show interest in the modern business centers, however they are also interested in the small individual offices in the very center of Sofia city. The prognosis are that once the situation in Bulgaria allows for more investments to be made these companies will move towards the new office buildings in Sofia, even though they are outside the very center of the capital. The companies are attracted by the office centers in Sofia which have parking area, 24-hour security service, management and service team and other comforts.

The “green” office buildings in Sofia are quite competitive according to the real estate agents and property managers. According to them the successful management of the business buildings in Sofia depend on many factors. They include not only the effective management policies, but also the usage of innovations. The office building A2, which is part of Sofia Airport Center is an example of such successful practices. That is why it was won the prize “Office building for 2012” in the categories “Green Building” and “Public buildings with business functions”. The office building of Sofia Airport Center corresponds to all the requirements applied in the construction of “green buildings”. The process starts right from the planning and requires the building to be constructed in such way as to protect the environment. The systems used in the green buildings are innovative and ensure a healthy environment for all the employees, despite that they are also energy efficient.

The green office space in Sofia is characterized with healthy environment and microclimate and more effective work of the employees. Further, the costs that the tenants need to pay are much less than in the regular offices in Sofia city. There are indications from some of the foreign investors that they need certified green buildings for their Sofia offices, once they register a company in Bulgaria. They consider this an important factor in their decision to enter the market of the country. The rental prices of the “green office centers” are determined by the market, but in general they require affordable rent and save money on monthly costs.

The new business building Serdika Offices in the city of Sofia was awarded the prize “Green office building of the year in Southeastern Europe”. That happened during the international competition for real estate properties known as SEE Real Estate Awards. The office center is owned by an Austrian company and was nominated in the category “Green buildings” thanks to the innovations made in the building for energy efficiency. The prestige competition is organized for an eight consecutive year by EuropaProperty and this year the closing ceremony took place in the city of Bucharest. The office projects and residential buildings were evaluated by representatives from 26 real estate and construction companies, as well as finance and investment companies.

The project of Serdika Offices won the prize for many reasons. Due to the large green zones on the roof, the building allows for the absorption of larger quantities of rainwater, improves the quality of the water and absorbs the pollution. In addition, the windows and the sun protection devices have double glazing and are made of laminated safety glass that further improves the energy efficiency. This Sofia office building uses a building management system that controls the lighting in the common areas and the parking zones, the heating and ventilation, as well as the programming of the elevators.

The office market in Sofia will be characterized with a lot of activities and a growth, thanks to the increased number of investors in the area. The investments made in the Sofia city offices rose during the first quarter of the year according to the company Cushman & Wakefield. The activity on the office market in Sofia is further supported by the strengthening of the debt financing and the supply of business buildings of the highest class. Moreover, the rental levels of the Sofia offices are the lowest in Europe – approximately 9 Euros / sq.m, compared to 57 Euros / sq.m. for the offices in Paris – the city that has the most expensive offices on the continent. Many investors are now looking for an alternative and they find it in Bulgaria and its capital Sofia. In this city they can find modern Sofia offices, highly-educated professionals and higher return on the money invested, so they decide to outsource their business here.

According to the real estate agents, the tendency for the offices in Sofia from the first months of the year will affect the rest of the year. It is expected that many investors will head towards interesting new markets in Central and Eastern Europe, as they will be ready to register a company in Bulgaria, Sofia and the rest of the capitals of these countries. The offices remain the most preferred asset for the companies investors in Sofia city, both international and local.

Leading real estate companies predict a difficult year for the sales and rental office market in Europe. The companies comment that many offices in Europe stay available. In the first three months of the year the interest of the companies in the European countries has dropped to its lowest levels since year 2009. An increase in the interest of offices is seen in the countries of Central and Eastern Europe. The office markets there are welcoming new office and business projects, since many international companies are showing interest to register companies in Bulgaria and to open their own offices there. Bulgaria and especially Sofia is a good example of that trend. Many companies are outsourcing their businesses to Sofia, since the rental levels are quite low and there are many good office buildings of the highest class A.

It is expected that by the end of this year and in 2014, on the European markets will be presented more new office projects. Many of them will be located in important new markets in Central and Western Europe. As for the rental levels of the offices in Europe – they are expected to remain the same due to the ongoing recession. The Sofia offices rental levels remain lowest and are expected to keep that even after the slight growth in the rental levels of the European offices that is expected to happen in 2014.

The offices for rent in Sofia, as well as the offices for sale in Sofia are among the cheapest on the old continent. The average rent per square meter per month for the offices of the highest class A is approximately 9 Euros / sq.m. At the same time, the office for rent in the neighboring capitals of Belgrade, Budapest and Tirana are around 15 Euro/ sq.m. The offices in Bratislava could be rented for 11 Euros per sq.m. and those in the cities of Athens and Zagreb are available for rent for 12 Euros per sq.m. A contrast could be made with the rental levels for the offices in Paris for example reach 57 Euros / sq.m. and these are the most expensive rentals of offices. The rental levels of Paris offices are followed by the ones of London office premises.

The low rental levels of Sofia offices and the affordable sales of the offices in Sofia are among the reasons why so many foreign companies show interest in the Bulgarian capital. These international companies are outsourcing their business towards Sofia or are looking to position their production in or near Sofia, where they can find well-educated professional managers. The foreign companies like Sofia as an outsourcing destination for yet another reason – the low wages paid in the country.