Category: blog

The rental levels of Sofia offices from class A and B have been stable during the first six months of this year. This tendency is expected to remain the same until the end of the year. The serious demand for high-quality Sofia offices has led to a drop in the difference between the offer price and the contract price or in other words, the rental contracts for offices in Sofia are being signed at the asking price. Since there are no many new office projects that are waiting to be started, the number of the available offices of high class in Sofia is dropping. In the middle of 2013 the available office premises in Sofia were approximately 325 000 sq.m., most of them concentrated in the outskirts of the city, close to the ring road.

The available Sofia offices of class A are approximately 24 % of the market share, while the Sofia offices of class B – the lower standard of offices, are approximately 17% of the available office premises in Sofia. The companies that have been looking for offices in Sofia during the first six months of the year come from the IT sector and the outsourcing sector. These companies have rented more than 60% of the rented offices for that period of the year. The average rental levels for the high-class offices in Sofia in the very center of the city are around 16 Euro per sq.m. At the same time the average rental levels of the offices in the outskirts of Sofia are around 9 Euro/sq.m.

Leading real estate agencies from the capital of Bulgaria discussed the office market in the city of Sofia. Their research covered the first six months of the year and confirmed that a possible lack of modern offices could be expected in the near future. In the first half of the year many of the high-quality offices in Sofia have been rented out. Greatest interest provoked those offices, which answer the international standards for quality, location and extras. Almost 70% of the modern office buildings in Sofia are situated in the outskirts of the city, close to the ring road, namely around Mladost 4 District and the Business Park there, Tsarigradsko Schousse Blvd. and along Bulgaria Blvd. Approximately 20% of the available modern offices are placed in the central city area and 10 % are left for the offices in the rest of the good districts in Sofia.

No new office projects have started in the first six months of 2013, while at the same time many of the existing offices of high class in Sofia have been rented. At the beginning of the year were available 21% of these offices and in July the available offices of that type and standard were 14%. That is why the real estate agencies predict that at some point there will be a great demand for new and modern offices in Sofia. Most of the business companies are looking for offices of class A, which are characterized with excellent quality of the construction, adequate technical specifications, comfortable office layout and good location with perfect infrastructure and easy access with car and the means of the public transport.

In the past five years the tenants and the buyers of Sofia offices were the ones dictating the market for office space in the Bulgarian capital. This is expected to change in the near future, but why is this so? The answer is simple – the supply of office space in Sofia has increased just slightly in 2013 when only three business centers of class A have been completed. During the current year it is unlikely for significant office projects intended for rent to be completed. Some of those complexes that are currently under construction also slow a slight progress and the prognosis are that they will be delayed and will have 2015 as a completion date. The office space under construction may seem significant, but it is not certain that all projects will be completed as promised.

Five are the most sought after office centers in Sofia, where two of them are fully rented out or sold out. At the same time the vacant spaces in the other three are less than 10 %. The percentage of all office premises that are available in the top ten office complexes in Sofia are less than 14 %. This means that the large corporate companies will find it difficult to get office premises that correspond to their requirements for architecture of the building, location and transport connections. The rental levels have remain the same with the best and most prestigious offices being offered between 9 and 12 Euro/sq.m per month.

Sofia offices of the highest class A are the ones that are most sought after and their rental levels remain stable. At the same time the number of the available offices of that class is going down since not many investors are now starting new projects for luxurious office buildings. The stable rental and sales levels of these high-class Sofia offices will remain the same, according to the prognosis of the real estate agents. The demand for such offices is due to the outsourcing business, the IT companies that are based in Sofia, the pharmaceutical companies and the shared services call centers. All those companies and business representatives are looking for business centers of high class that have large office premises and convenient to use transport infrastructure.

Approximately 65 % of the available office premises in Sofia are based in the business districts outside the center of the Bulgarian capital, followed by 20 % office premises in the center of Sofia and 15 % in the other regions of the city such as Lozenets district, for example. Due to the increased demand for offices of class A and the lack of new projects the construction of which have started this year, real estate agents predict that there will be a shortage of quality offices in the near future, which will lead to a new niche for prime buildings construction with reasonable investment and a great location. In the next months to come shall be finished several new office projects that will meet to some extend the needs in that segment of the market.

The modern offices in Sofia that are part of high quality business buildings of class A are not that many and in the near future there might be a great demand for such top offices. This is so, as in the first six months of the year were rented or sold 44 % of the high-quality Sofia offices. These are offices with excellent location in Sofia, many facilities and extras, large parking zones and perfect business atmosphere. The available office premises in Sofia of that class are approximately 12% and their number is going down. Managers of top companies that have entered the market prefer the business districts and the Sofia office buildings of higher class where they can count on parking zone, lack of city noise, more green areas, security services and common parts management services.

Sofia city remains one of the most sought-after destinations in terms of good professionals, low expenses levels and great offices. That is why many foreign companies decide to invest in Sofia and relocate their entire business or just a part of it. It is no surprise that so many outsourcing companies are now coming to Sofia, renting offices in the business zone of Sofia and hiring local professionals.