News

IT business moved the market for office space

27.07.2015

Rents for Class A buildings range from 10.5 to 12.5 euro / sq.m.

There is an increased demand for office space in the last half year in our market. The demand is mainly dominated by companies whose needs are for office space up to 500 square meters, but there are those who exceed this area, reaching approximately 1000 square meters.

The areas of activity of companies seeking office space are different, but in most cases are those that operate in the IT industry or are closely related, as the foundation stands in the great potential that Bulgaria has in this field. Some of the companies are also operating in the Outsourcing.

Over 60% of the demand for office space is driven by relocations of companies to consolidate and merge them under one roof. There are many cases in which companies that have several offices in different places want to join together in order to optimize costs and to improve communication between offices.

The rest of the demand in the country comes from companies that aim at opening a new office. About 80% of the inquiries are from companies that will begin work with up to 50 people, but they often say they have a potential to expand the activities beyond the originally intended ones. Some of the searches for office spaces are aiming at satisfying bigger needs from the beginning – this allows the setting up of 70-80 and even 100 people.

By the end of the year is expected the commissioning of several major projects, which will enable to meet larger searches of over 1 000 - 1500 sq.m. In Sofia the free office spaces Class A and B are about 15-16%, but in some of the newest and well managed office buildings the free office spaces are below 4-5%. There is a return of investor confidence in this market and therefore a defrost of some office projects is happening - such as City Tower in Sofia. There has been a hardening of positions on negotiating the final rental price with future tenants.

To the first quarter of 2015 asking rents vary in the following price ranges: for Class A buildings - 10,5-12,5 euro/sq.m./Month and maintenance fee – 2-3 euro/sq.m./month; for Class B buildings – 5-8 euro/sq.m./Month and maintenance fee – 1-2 euro/sq.m./month. In short term, rents are unlikely to achieve much higher levels than those up to date. Rather, the market reality currently determine a good market for office space within the next 12-18 months at least, according to the forecast.

Source: technews.bg

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