There is no time like the present for renting office space in Sofia
Issue 47-48, August-September 2010
by Gergana Manolova
"We are moving office to the other side of the city," a friend who works in a small Bulgarian company complained over a coffee. "Now I am going to have to commute for an hour and a half!" I sympathised, expecting that cutting costs would mean an inferior office. But it turned out the company was relocating to a better, new building with a reduction in rent.
The Sofia office space market represents a conundrum. The Western city model of business buildings in the centre and residential property on the outskirts is turned upside down. The city lacks a proper business district: instead, many of the new office buildings are springing up close to major road arteries, more often than not on the outskirts.
Sofia is a tempting spot for multinational companies – a capital city with close to two million inhabitants, lively developing markets and a centre of trade and state administration. These circumstances have created a steady flow in the last decade of companies wanting to rent office space. The rising demand necessitated large scale building projects to accommodate the newcomers and construction companies rode the market trend in the face of what seemed like minimal risk. When the economic crisis hit Bulgaria, one of the sectors to suffer the most was construction. The drying up of capital froze many projects, but enough of the large ones continued.
In the last year the buildings planned in the 2006-2008 period, when the country experienced an influx of foreign investors and companies eager to get into the Bulgarian market, have been finished. This adds up to more than 50,000 sq.m of office space alone completed in the second quarter of 2010, according to the report of real estate consulting company Elta Consult. Only 15 percent of it is in the centre of Sofia, which is consistent with the tendency to develop business activity in the outskirts. Over 200,000 sq.m are expected to be completed by the end of the year and 100,000 sq.m more up to the end of 2011.
The official statistics do not quite match up with the reality. About 110,000 sq.m of space have already been finished, but not on paper. Many companies have completed construction, yet are holding back the release date, thus saving on taxes. Some of them have filled less than 10 percent of their capacity, though prime location buildings are better off, with a 50-60 percent rate of occupation. Small and medium office spaces between 300 and 500 sq.m are in greatest demand.
70 years ago, on 10 March 1943, Bulgaria's pro-Nazi government decided to defy Berlin and halt the deportation of Bulgaria's 50.000 Jews. This was down to the actions of one man - Dimitar Peshev. Just two years later he faced Communist justice and found himself on trial for his life. His niece Kaluda Kiradjieva remembers