Category: Serviced Offices

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.

The outsourcing companies that are relocating their business to Sofia city are looking to rent more than 100 000 sq.m. of quality office premises. At the middle of the year that demand was for 70 000 sq.m but now it has increased. The companies from spheres such as IT, pharmacy, services that need to relocate as they are expanding their business, are in search of modern offices with all facilities needed, property maintenance service, and excellent location with easy access using the public transport, etc.

These companies are looking only for offices of the highest class A that answer all international standards and that have larger office premises that can reach up to 5000 sq.m. That is a brand new tendency as only a year ago the same companies were looking for offices of just 1400 sq.m max. This is a good sign as it speaks of the good place the economy is right now. At the same time, there is also an interest towards the offices closer to the city center and all the facilities there.

There is a serious increase in the demand for offices in Sofia and in fact approximately 50 % more office premises have been rented or purchased by the local and the outsourcing companies in the first nine months of the year compared to the entire twelve months of the last year. The main players on the office market in Sofia come from the IT, service and the outsourcing sectors and that demand for offices have led to a renewal of postponed projects for office buildings in Sofia with capacity of 66 000 sq.m.

Another aspect that the real estate agents are pointing out is the fact that the companies are looking for larger and larger office premises as they are hiring a growing number of employees. In other words, if in 2014 the companies were looking for office premises in Sofia of 1000 – 1400 sq.m, now there is a demand for 3000 – 5000 sq.m. The companies that are most active on the Sofia business centers market are the ones that are expanding their business and those that are now outsourcing their activities in Sofia.

All these companies are looking for offices of the highest class AA with excellent location, large office premises and easy access with the available public transport. The rental levels remain the same and they are in between 10 and 13 Euros/sq.m. for the offices of class A in Sofia.

The first nine months of the year marked a serious activity on the office market in Sofia. Many outsourcing companies opened offices and others relocated their offices in Sofia and their number is around 25 % higher compared to the same period last year. According to the real estate agents the key deals were signed with companies from the IT sector including Gameloft, IBM, Scale Focus and Apcom.

Due to the limited number of office premises in Sofia that are available, many projects for office buildings that have been postponed for years are now back in the game. This is valid for the City Tower projection Macedonia Square, for example, which once completed will offer 49 000 sq.m. The prognosis is for another 90 000 sq.m of office buildings of class A and B to be completed by the end of this year. Half of these office premises will be part of Capital Fort Business Center.

There is another tendency on Sofia office market that should be pointed out and that is the growing demand for offices in the center of Sofia. There is a serious interest towards the Millennium Center and the City Tower, which enjoy very central location with excellent transport connections and number of many facilities nearby.

The companies from the IT and the outsourcing industry, which are looking to rent or to buy office premises in Sofia, have specific needs which with they need to comply with. A great deal of the old office buildings in Sofia are not answering the needs of these modern companies. Yet, the new office projects in Sofia of the highest AA class do provide the right offices, location and facilities needed. The outsourcing companies which are already operating in Bulgaria require 5-7 sq.m on the average for each of their employees working in the call centers. This means a higher capacity of all systems in the office building including better ventilation, more powerful air-conditioning system, more toilets, more places for dining, and of course more parking lots.

The outsourcing companies are paying more attention now to the maintenance of the office, the expenses they have for heating and cooling of the office premises they are renting, the bills for internet, electricity, etc. The other parameters of the building are also of great importance for these companies and they include fast access to the public transport, pleasant working environment, etc. Usually the employees of these outsourcing companies are young people with dynamic life. That is why the offices in Sofia that the companies are looking for should be in communicative areas where they can have social contacts.

In 2015 only one office building in Sofia opened doors and that is the office project Capital Fort on Tsarigradsko Schousse Blvd. With the opening of the new business center, the capital Sofia will get 42 000 sq.m. of office premises to be used by the outsourcing companies. Currently under construction is also the second phase of the Infinity Tower Building next to Bulgaria Mall, placed on Bulgaria Blvd. This new office premise is to be completed in 2016. At the same time several other projects are to be completed. These projects are not new but they have been postponed until now, waiting for better time to come. Among them is the City Tower Building on Macedonia Square, which is to be completed in 2017. The same is valid for the Millennium Center close to the National Palace of Culture. This building will feature residential premises, trade zones and offices.

The real estate agents believe that the total area of the new office buildings in Sofia to be released on the market is 72 000 sq.m, which is the amount of office premises that is being rented by the outsourcing companies for a period of 6 months approximately. This means that there is a serious demand for the construction of many other such office projects in Sofia. Currently, the rental levels of the Sofia office premises are stable and the offices are being rented for 10-13 Euro/sq.m, with no increase planned for in the next two years. Besides the rent however, the companies that are renting offices in Sofia also need to cover various maintenance taxes and other expenses.