Demand for office space in Sofia continues to climb

Photo: Lauras Eye

Demand for office space in Sofia continues to climb.

Interest in office space in the Bulgarian capital grew last year, fuelled by growth in the IT sector and smaller business. Now, that momentum is continuing to build in 2016, according to Bulgarian Properties.

“The market is operating at a higher speed,” according to the agency, with demand fuelled by outsourcing, financial intermediation services and information technologies. Often, these companies do not serve the Bulgarian market and have their customers abroad.

“There is an increased demand in the country from companies that are now opening up their first offices in Bulgaria. It comes from companies from neighboring countries, as well as countries like Israel, UK, Russia and others,” adds the site.

Existing companies that have moved into Sofia before this year are also expanding, which often leads to relocations, further boosting activity and occupancy rates.

Indeed, occupancy rates are rising to 95 per cent or even 100 per cent in buildings with good locations and strong transport links. Some investors are already focusing on the construction of new office buildings, aiming to increase the supply in the city to meet demand and secure good deals early on in the process.

Rates are between 10 and 13 Euro/sq.m for Class A office space, with properties boasting high occupancy rates unlikely to negotiate discounts.

Bulgarian Properties’ Commercial Department predicts that this trend will continue in 2016.

Demand rises for Bulgarian office space

18th June 2016

Demand is rising for Bulgarian office space this year, as the economic outlook improves.

Research by Bulgarian Properties shows that demand for office space has risen in the first half of 2015, as companies become more confident in both the country’s financial outlook and their own future.

Demand is being driven by the IT sector, notes the site, although the outsourcing industry is also a significant player. Interest is also largely fuelled by smaller businesses looking for space lower than 500 square metres.

Over 60 per cent of demand for office space comes from companies with multiple offices that are looking to consolidate their space under one roof. The rest comes from companies looking to open a new office.

80 per cent of the enquiries come from companies that plan to start working with up to 50 people but often there is a potential expansion of these needs. Some of the enquiries aim at satisfying greater needs from the beginning and are looking for greater office space that would allow 70-80 and even 100 people to start working immediately.

While there is supply for smaller office space demand, though, there is a lack of supply of space bigger than 1,000 square metres.

However, several new deliveries of buildings are expected by the end of the year, which will help to improve supply.

Overall vacancy rates are around 15 per cent, although newer offices have vacancy rates of under 5 per cent.

“This shows that when the building is well-planned and managed low levels of vacancy rates are achievable and the return for investors is high,” says the report.”

“The market reality as of today – the increased demand for office space on the one hand, and the increased supply on the other – makes it possible to expect a stable office market in Bulgaria for at least the next 12-18 months.”