Category: Serviced Offices

The real estate agents are facing an improvement on the office market situation in Sofia in the last couple of years. This means increased demand for offices and reduced number of available offices spaces, as well as increased expenses for the tenant companies and less options on the labor force market. At the same time the companies have higher requirements concerning the Sofia offices they want to move in.

The companies do consider the rental price when they are searching for a new office to relocate and that rental price is the main factor that leads them. However, the companies are now also considering the location of the working area and the quality of the building and the facilities and services offered. Most of the companies who are working in Bulgaria or have outsourced their businesses to Sofia and the other big cities in the country plan to develop and in fact grow with 25 % and more, renting bigger and more spacious offices.

Almost 85 % of the outsourcing companies in Bulgaria have increased the number of their personnel, where a great deal of them (almost 65%) register a 25 % increase in the number of their employees in the last five years. This is especially valid for the sectors of the outsourcing, information technologies, professional services, finances, real estate. The same sectors are expected to offer many new jobs in Bulgaria in the years to come. Approximately 15 % of the companies that work in Bulgaria and already have an operating office in Sofia, plan to open a new office outside Sofia, while 13% of them have already opened new offices in other big cities of the country.

Many factors are taken into account and they have different significance depending on the needs and requirements of the different companies. Among the main factors are the expenditures, the professionals available, the facilities in the area, the technical characteristics of the building and the management of the building. The location of the building is also a factor of great importance. The competitive situation on the labor market in Sofia requires a wide range of tools not only to attract but also to retain talented employees, among which being the aggressive remuneration packages, additional health insurance, various teambuilding events, sports activities cards, free catering, etc. The most sought after business regions in Sofia remain the offices along Tsarigradsko Schousse Blvd., Business Park Mladost, Lozenets District offices, Bulgaria Blvd. Offices, and Sofia City Center.

Sofia Office Market today faces increasing demand for offices and lack of suitable available business premises, as well as a slow increase in the rental prices. Besides finding a suitable office in Sofia, the companies are in search of good employees as well. In fact, finding professionals that will want to work in the specific company is among the main challenges that the outsourcing companies face.

According to a market research among the companies renting in some of the largest office buildings in Sofia, the most important factors are the easily accessible location, the presence of large office premises, and the presence of many facilities. The competition among the tenants to attract and retain talented employees and keep in mind their standards in the selection of office space is a clear message to the building companies of Sofia offices that in addition to the financial costs, other factors are also increasing the potential of the building – the quality of the building, the standard of management, the flexibility, the facilities.

Sofia Office Market in 2016 is driven by the large rental deals. The average size of the rented offices exceeds 2000 sq.m compared to the office premises size of 1200 sq.m. in 2015. The negotiations of such large office rental deals in Sofia, however takes more time and efforts. The companies that are looking for such spacious office premises are operating in the IT and the outsourcing sphere. The main problem that they face is the insufficient number of suitable office premises.

According to the real estate agents, the office market in Sofia has approx. 3 % available office premises in the top 10 office buildings in Sofia, which is below the required market minimum. The great demand for offices of the highest class A and the insufficient supply resulted in an increase in the rental prices which now reached 13 Euro/sq.m. Looking to optimize their offices, many companies are now considering other models of working premise optimization such as activity based working and hot desking.

The holistic method of the investors and the companies, along with the desire of the young professionals to form strong connections and a great work team are now implemented in the search for office premises. The outsourcing and IT companies, as well as the companies working in the pharmaceutical sphere, which are among the main type of companies renting Sofia offices are using special software and applications that help them use their offices in a wise way and thus make most of the employees’ time while at work.

The various office projects in the capital are already in competition, as the investors are trying to offer the best conditions and to answer the needs of both the outsourcing companies and their employees. Currently, approximately 70 % of the deals signed are with companies from the outsourcing and the IT business.

The office premises are not just working space, but places for communication and meetings. The new Sofia offices that are coming on the market are part of complexes and not single office buildings. The companies today are looking for a combination between all elements in the building, looking to answer the needs and the requirements of their employees. These requirements include ergonomics of the working space, zone for relaxation, places for meeting colleagues, etc.

The new Sofia office projects are at different stages of their construction, but in the next couple of years are expected to bring 400 thousand sq.m of new office premises. The main requirements of the new outsourcing companies moving their business to Bulgaria are associated with the maximum effective usage of those premises and the time of the employees. In other words, they are looking for a combination of an office, home and café zone.

The tendency towards the reduced number of available offices in Sofia is remaining strong, confirming the overall need of new and more spacious office premises in the Bulgarian capital. The office projects that are under construction and expected to be completed in 2017 are around 110 thousand sq.m. Motivated by the positive tendency on the market, the investors have started several new projects, thus adding another 90 000 sq.m of office premises on the market.

The high-quality office buildings in the periphery of the city and the popular business zones are attracting many new tenants. At the same time, the options for increasing the number of the offices in the central zones of the city are reduced. This means that the rental levels there are about to go up. The main companies looking for offices come from the IT and the outsourcing sector and the rental levels for the offices of class A they are paying for are between 12 and 13 Euro/sq.m.

In the last few years it is the technology sector that runs the office market in Sofia city. The main clients that are renting the class A offices in Sofia are the companies from the outsourcing and the IT sector, as well as international companies for shared services. These companies participated in 45 % of the signed deals for rental of office premises in Sofia in 2015.

There is a serious demand for good offices with central location and proper facilities. At the same time however Sofia has only 12 % offices of class A and B that are still available. At the same time, the office buildings that have been put into usage since the beginning of 2016 are around 13 500 sq.m. The expectations are for another 50 000 sq.m of offices to be released in Sofia city in 2016, while in 2017 the number of newly built Sofia offices is expected to be around 110 000 sq.m.

More than 20 % of all deals for renting office premises in Sofia are done for offices that are located in business centers that are still under construction. This became a reality since there is a lack of proper office premises available for rent on the market. The rental levels of offices of class A are ranging between 12 and 14 Euro/sq.m.

The companies that drive the market are coming from the IT and the outsourcing sphere, as well as from the sphere of shared services. The prognosis are for an increased supply of offices in the years ahead. The office space in Sofia that is planned to be completed in 2016 is around 80 000 sq.m, while the planned office premises in Sofia, Plovdiv and Bourgas cities for 2017 are around 240 000 sq.m.

The quality office projects of class A in Sofia is well distinguished from the offices of the lower class B. These new office projects are the ones that are in the focus of the foreign investors.

The increase in demand of office space in Sofia in 2015 has been carried over into the first six months of 2016, which means that the office market is operating at a very high speed. The newly-formed companies in Sofia were and still are looking for an office space of 200 sq.m, while the companies that have been on the market for a while are in search of offices between 700 and 800 sq.m. The usual tenants are companies that operate in the financial, outsourcing, pharmacy and IT sectors, which mainly serve clients from abroad.

This increased demand for office space increased the occupancy levels in the office buildings, especially in those business centers with good location and excellent transportation links. Currently Sofia city has several high-class office projects that will soon to become operational and that will increase the supply of new offices in the city. The rental levels of the available office space of class A in Sofia are between 10 and 13 Euro/sq.m. Serious changes in the rent levels are not expected, as all landlords are willing to sign long-term deals. The prognosis of the real estate companies is for this high demand office tendency to continue in the months ahead. The office market in Sofia is expected to be quite busy in the next two years.