The demand for office space continues to rise and in the first half of 2015 has registered its highest level after the crisis. For the period the tenant requests were for over 100 000 sqm in Sofia and the big cities, according to Forton, member of Cushman&Wakefield Alliance in Bulgaria and Macedonia with over 10 years of experience of commercial real estate advisory services.
This is 40% higher compared to the same period of 2014, when the demand totaled to around 70 000 sqm. Over 60% of the space in demand are for companies operating in the field of ITT and BPO.
"The companies from those sectors have been key tenants on the office market for more than a year. However, on the recent months not only the volume of demand is increasing but also the size of the searched offices – many companies are growing and need larger spaces", said Stanimira Pashova manager" Office space" in Forton.
According to her while the average size of rent transactions for the last year was 1000-1400 sqm, now demand for 3000-5000 sqm and up is registered. Most of the companies are looking for class A office buildings with excellent location, large floor space (over 1000 sqm) and easy transport access, situated alongside the main boulevards or near metro stations.
The limited supply of quality space and the stabilizing rents resulted in arousing development activity and in the recent months has been renewed or started the construction of nearly 66 000 sq m office buildings. Among the restarted projects are City Tower on Macedonia Square, SPS Tower on Bulgaria Blvd. and Blu Offices on Brussels Blvd.
According to Forton with the renewed construction of Blu Offices about 100 000 sq m are expected to be completed by the end of 2015. The total space of the projects under construction is 178 000 sq m and other 57 000 sq m are ready to be started.
This will restore the balance between supply and demand and will keep rents in the range of 10.5-12.5 euros/sqm/month for class A buildings in Sofia.
Although the Sofia market attracts about 90% of the demand, Forton register increasing tenant interest in other big cities such as Plovdiv, Burgas, Varna. Many companies in IT and BPO sectors are looking for establishing second office there due to the increasing competition and the shortage of skilled employees in the capital city. What they are looking for is the availability of well educated people with foreign-language skills. Main problem is the lack of suitable office space.
In response of the rising tenant activity over 20 000 sqm office space are currently under construction or reconstruction in Plovdiv. In Burgas the first business center class A – Smart Center, will be completed this autumn. The building will comprise 10 000 sqm office space and is designed for the needs of the outsourcing companies in the city.
Outside Sofia rents also remain stable with levels between 6 and 8 EUR/sqm/month in Plovdiv and around 6 EUR/sqm/month in Varna and Burgas.