MARKETBEAT
OFFICE SNAPSHOT
BULGARIA
Q1 2015
A Cushman & Wakefield | Forton Research Publication
OVERVIEW
SOFIA OFFICE MARKET HIGHLIGHTS
With the restart of City tower (48,900 sqm), a project situated
on Macedonia Square, the pipeline mounted up to 179,373
sqm in the first quarter. This trend continued from 2014 based
on the strong occupier demand and the increasing confidence
in the market.
Despite of these restarts the supply remains weak because of
the distant deadline of the most projects. However, this
picture will improve in the second half of 2015 when Capital
Fort with 43,000 sqm office space is expected to come into
operation.
New office projects were started also in Plovdiv as a response
to IT and BPO sectors’ appetite for expansion to the big cities.
The most notable development is Office park Plovdiv – a
complex on Svoboda Blvd., consisting of two buildings with
total leasable area of 15,400 sqm and completion date in
2016 for the first one.
DEMAND
In confirmation of our forecasts, the take-up continued to grow
in the first quarter reaching 25,903 sqm – up 10% compared
to the same period in 2014.
The major players remained IT companies with some of the
largest leases recorded for the period such as the relocation
of Gameloft on 3,200 sqm in TZUM and the expansion of IBM
with 3,600 sqm in Sofia Airport Center.
Due to the lack of quality office space, pre-leasing
agreements were also evident – the most notable of them with
Scale Focus for 2,500 sqm in Capital Fort.
1,709,153
Pipeline in sqm
179,373
Prime rent (€/sqm/month)
€12.50
sqm, thousands
SOFIA OFFICE COMPLETIONS
60
50
40
30
20
10
0
2011
2012
2013
2014
2015
Source: Cushman & Wakefield / Forton. All data as of Q1 of the respective year
unless otherwise stated
SOFIA OFFICE STOCK & PIPELINE
sqm, thousands
SUPPLY
The total stock expanded by 18,606 sqm reaching 1.709
million sqm in class A and B towards the end of the first
quarter. The increase is based on the completion of two
projects and the refurbishment of part of TZUM shopping
center converted into office space.
Stock in sqm
2 000
1 500
1 000
500
0
2011
2012
STOCK
2013
2014
2015 Q1
ACTIVE PIPELINE
Source: Cushman & Wakefield / Forton
SOFIA OFFICE TAKE-UP
sqm, thousands
The office market retained its momentum
from the end of 2014 supported by strong
occupier and investment demand. While
there was a limited number of new
completions the take-up figures continued
to increase, driven mainly by companies of IT and outsourcing
sectors. Although most of them are looking also for expansion
in other big cities such as Plovdiv, Burgas and Varna, there
were not significant leases outside of Sofia for the period.
40
35
30
25
20
15
10
5
0
2011
2012
2013
2014
2015
Source: Cushman & Wakefield / Forton. All data as of Q1 of the respective year
unless otherwise stated
Forton
Polygraphia Office Centre
47A Tsarigradsko Shose Blvd.
1124 Sofia, Bulgaria
www.forton.bg
For more information, contact:
Radostina Markova,
Research Department
+359 88 326 03 33
[email protected]
This report has been produced by Forton AD for use by those with an interest in commercial property
solely for information purposes. It is not intended to be a complete description of the markets or
developments to which it refers. The report uses information obtained from public sources which Forton
AD believe to be reliable, but we have not verified such information and cannot guarantee that it is
accurate and complete. No warranty or representation, express or implied, is made as to the accuracy or
completeness of any of the information contained herein and Forton AD shall not be liable to any reader
of this report or any third party in any way whatsoever. All expressions of opinion are subject to change.
Our prior written consent is required before this report can be reproduced in whole or in part. Should you
not wish to receive information from Forton AD or any related company, please email [email protected]
with your details in the body of your email as they appear on this communication and head it
“Unsubscribe”. ©2014 Forton AD All rights reserved.
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MARKETBEAT
OFFICE SNAPSHOT
BULGARIA
Q1 2015
A Cushman & Wakefield | Forton Research Publication
SOFIA OFFICE VACANCY
sqm, thousands
Aside from that, the healthcare sector was also active. The
largest leases was this of Neohealth for 1,900 sqm in former
headquarters of Allianz Bank.
The office vacancy rate marked a new drop to around 25.6%
in the beginning of 2015 against 29.7% for the same period in
2014. The decline was mostly driven by class A office
requirements from expanding and relocating multinational
firms.
The vacancy level for higher class buildings continued to
decrease reaching 24% in the first quarter, while those one for
class B stayed above 27%. The reason was relocation to a
higher class office buildings followed by insignificant increase
of the availability in class B segment. The top 10 office
projects vacancy decreased to 3.7 per cent in the first quarter,
reflecting the lack of available space in the top tier of the
market.
However, with large developments such as restarted City
Tower and Millenium Center, adjacent to National Palace of
Culture, the pipeline in the CBD almost doubled in the first
quarter. Projects under construction totaled 77,000 sqm and
with their completion the city center is expected to attract
again the attention of the big tenants over the next three
years. Rental levels for class B premises are stable in the
range of EUR 6-8/sqm.
INVESTMENT FOCUS
The acquisition of small office building on Cherni Vrah Blvd.
was the single deal in the segment for the last quarter.
1 500
1 000
500
0
2011
2012
2013
OCCUPIED
2014
2015
VACANT
Source: Cushman & Wakefield / Forton. All data as of Q1 of the respective year
unless otherwise stated
SOFIA PRIME OFFICE RENTS AND YIELDS
€/sqm/month
RENTS
The prime headline monthly rents in the class A segment of
the market remained in the range EUR 10.50-12.50 /sqm with
highest levels in CBD submarket.
A slight increase of the rental prices was seen in non-CBD
area as a result of the occupier demand for quality spaces
and the concentration of high class projects alongside of the
main boulevards. Due to the lack of quality supply this trend is
expected to continue over the next quarters with most part of
class A rents approaching the upper level of the market
segment range.
2 000
12,50
10,50%
12,25
10,00%
12,00
9,50%
11,75
9,00%
11,50
8,50%
2011
2012
RENT
2013
2014
2015
YIELD
Source: Cushman & Wakefield / Forton. All data as of Q1 of the respective year
unless otherwise stated
TRENDS AND FORECASTS
●
Frozen office projects are coming back to the pipeline
due to the strong occupier demand
●
Vacancy in the class A segment continues to go down,
more so in the prime segment
●
With a number of projects under construction the CBD
area is expected to attract again the attention of big
tenants over next three years
In the first quarter the market was dominated by local
investors who were looking mostly for deals with distressed
assets with potential for repositioning. International buyers are
interested mostly in acquisitions of fully rented income
generating office projects class A in Sofia and deals are
expected over next quarters.
Forton
Polygraphia Office Centre
47A Tsarigradsko Shose Blvd.
1124 Sofia, Bulgaria
www.forton.bg
For more information, contact:
Radostina Markova,
Research Department
+359 88 326 03 33
[email protected]
This report has been produced by Forton AD for use by those with an interest in commercial property
solely for information purposes. It is not intended to be a complete description of the markets or
developments to which it refers. The report uses information obtained from public sources which Forton
AD believe to be reliable, but we have not verified such information and cannot guarantee that it is
accurate and complete. No warranty or representation, express or implied, is made as to the accuracy or
completeness of any of the information contained herein and Forton AD shall not be liable to any reader
of this report or any third party in any way whatsoever. All expressions of opinion are subject to change.
Our prior written consent is required before this report can be reproduced in whole or in part. Should you
not wish to receive information from Forton AD or any related company, please email [email protected]
with your details in the body of your email as they appear on this communication and head it
“Unsubscribe”. ©2014 Forton AD All rights reserved.
2