market overview - park lane · plovdiv plaza is a mixed-use development, comprising retail and...

OFFICE MARKET OVERVIEW

SOFIA

H2 | 2019

Living the future

2, Dame Gruev Str., Burgas

CONCEPTbased on three pillars

PARK

CREATING BUSINESS LIFESTYLE ECOSYSTEM

RESIDENTIAL• Three high rise buildings

• 690 apartments

• 61 116 sqm

• Two and three bedroom

apartments

• 690 parking lots

• Visitor parking

RETAIL• Fitness & spa centre

• Shopping places

• Restaurants & cafes

• Night club

• Dry cleaning

• Children daycare centre

OFFICES• Class A offices

• 3 buildings

• 39, 486 sqm

• 4,200 workstations

• Conference hall with flexible layouts

• 500 underground car park-ing lots

• Bicycle parking

• Visitor parking

• Use of renewable energy and passive technologies for lighting, heating and cooling

• Reduced carbon emissions • Electrical vehicles charging stations

SUSTAINABILITY

• Botanical & zen garden • IT Academy and coworking space• Road and social infrastructure

enhancement

SOCIAL IMPACT

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FIG. 1: OFFICE SUPPLY CLASS A AND B (SQM)

Клас А Клас В

2016

1,000,000

900,000

800,000

700,000

600,000

500,000

400,000

300,000

200,000

100,000

02017 2018 2019

Class А Class В

15% 14%

19% 27%

66% 59%

CLASS A CLASS B

For more information: Officemap.bg

Souce: Colliers International

H2 2019 | Sofia O

ffice M

arket Overview

| Colliers International 5

• Modern class A, B and C office space in Sofia reached a total of 2,282,700 sqm equating to 4% growth in supply in the second half of 2019. There was a slight predominance of the class A volume share over the class B.(Fig.1)

• Total take-up** for the second half of 2019 was 109,260 sqm and for the whole year - 175,680 sqm, results similar to those in 2018.

• The main demand drivers were companies from the following sectors: IT & outsourcing (55%), Professional services (21%), Trade (8%), Banks,

insurance and investments (7%) and other (9%). (Fig.3)

• Net absorption* for the second half of 2019 was 55,600 sqm and for the whole year - 135,400 sqm.

• Average vacancy rates on the market were 11% - registering a slight increase. (Fig.2)

• Average asking rental levels*** remained unchanged - for class A -13.5 euro per sqm and for class B - 10 euro per sqm.

• 396,000 sqm office space was under active construction, due for completion in 2020-2022.

SOFIA

FIG. 2: AVAILABLE OFFICE SPACE CLASS A AND B

FIG. 3: DEMAND BY SECTORS

Class А Class В

8%

6% 6%8%

14%

12%10%

9%

2016 2017 2018 2019

Professional services

Banks, Insurance & Investment

Other

21% 8% 7% 9%IT & outsourcing Trade

55%


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2016

160,000

140,000

120,000

100,000

80,000

60,000

40,000

20,000

0

2017 2018 2019

Class А Class В

Selected office buildings above 5,000 sqmFor more information: Officemap.bg


H2 2019 | Sofia O

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CENTRAL BUSINESS DISTRICT


Class А Class В

15%

6%

4%3%3%

9%

5% 5%

2016 2017 2018 2019


Banks, Insurance & Investment

Other

35% 19% 12%IT & outsourcing

34%


• Supply in CBD remained at its levels from first half of 2019 - 303,700 sqm. (Fig. 4)

• Total take-up** in the second half of 2019 was 3,900 sqm and for the whole year – 7,500 sqm, consistent with 2018 volume of 7,400 sqm.

• Demand during the period was driven by the following sectors:

Professional services (35%) and IT & outsourcing (34%). (Fig. 5)

• Average asking rents*** maintained their levels, class A – 15 euro per sqm and for class B -10 euro per sqm.

• Only 14,300 sqm of office space were under active construction.


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2016

300,000

250,000

200,000

150,000

100,000

50,000

0

2017 2018 2019

Class А Class В



H2 2019 | Sofia O

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• 5% growth in supply of office space class A, B and C in Broad Center was registered, reaching 492,000 sqm, due to the completed office buildings in Hladilnika area. (Fig.7)

• Total take-up** for the second half of 2019 was 20,150 sqm, and for the whole year – 31,500 sqm. This metric amounted to 28,700 sqm in 2018.

• Demand was driven by Professional services (55%) and IT & outsourcing sectors (25%). (Fig. 8)

• Average asking rents*** remained stable for class A – 13 euro per sqm and for class B – 10 euro per sqm.

• 93,000 sqm of office space were under active construction.

BROAD CENTER DISTRICT


Class А Class В

7%

3% 3%

4%

8%

11%

13%12%

2016 2017 2018 2019


Other

55% 14%IT & outsourcing

25% 6%Trade



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• The three most rapidly developing office zones continue to be 7–11 km on Tzarigradsko shosse, Business Park Sofia and Hladilnika. This was evidenced by their growing aggregate share of the entire market, which was:

» 35% of the total office space in the capital, which doubles their share in 2017;

» 71% of the buildings under construction, compared to 65% in 2017;

» 25% of the available space on the market;

» 62% of all completed deals on the market for 2019 versus 39% in 2017.

• Average asking rents*** were in the range of 13–14 euro per sqm per month.

MOST DEVELOPED ZONES

15% 14%

19% 27%

66% 59%

CLASS A CLASS B

For more information: Officemap.bg

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2016

700,000

600,000

500,000

400,000

300,000

200,000

100,000

0

2017 2018

Class А Class В



2019

H2 2019 | Sofia O

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• The supply of class A, B and C office space in the Suburbs registered a 5% increase and reached 1,487,000 sqm. (Fig. 10)

• Total take-up** for the second half of 2019 was 85,190 sqm, and for the whole year – 136,500 sqm, for comparison in 2018 this figure was 146,150 sqm.

• IT & outsourcing (63%) was the indisputable driver of

demand in this area during the period, followed by Professional Services (13%). (Fig. 11)

• Average asking rents*** remained unchanged – for class A – 13 euro per sqm and for class B – 9 euro per sqm.

• 288,000 sqm of office space were in the construction stage.

SUBURBS


Class А Class В

6% 6%

8%9%

18%

14%

11%10%

2016 2017 2018 2019


Bank, Insurance & Investment

Other

13% 8% 16%IT & outsourcing

63%

FIG. 11: DEMAND BY SECTOR


PLOVDIV PLAZA is a mixed-use development, comprising retail and class A office space. It is located in Plovdiv, the second biggest city in Bulgaria. PLOVDIV PLAZA was built in 2010, renovated in 2016 – 2017 and open in 2018.

PLOVDIV PLAZA | 3, Georgi Stranski Str., 4000 Plovdiv, Bulgaria | +35 932 396 601 | [email protected]

Nearby residential neighbourhood

Multiple parking lot choices

Easy transportation and convenient location

Class A offices

Variety of services, retail brands, dining and entertainment offers

Adjacent retail hub

H2 2019 | Sofia O

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arket Overview


• Office market development in Sofia will continue its trend in 2020 with stable demand levels for quality modern space in the established business locations.

• Pre-leasing will proceed, due to the active construction, with new business zones shaping up.

• 132,000 sqm of class A and B office space are expected to be released on the market in 2020, 23% of them in Sofia Tech Park.

• The IT & outsourcing sector will remain the market demand driver.

• New entries to Bulgaria will consider launching operations

in the capital, as well as in other major cities such as Plovdiv, Burgas and Varna.

• The high competition for talent and the strive to boost work efficiency motivates companies to improve their focus on the quality of the office environment. This is reflected in the list of office search criteria, where in addition to the traditional good location, accessibility and proximity to surrounding amenities, tenants have added more requirements regarding the common areas of the buildings and the workspace.

FORECAST

Definitions:* Net Absorption - Net Absorption refers to the change in occupied stock from one period to the next. It refers only to existing stock (not the development pipeline).

** Total Take-up - Total Occupational Market Activity is the total floorspace known to have been let or sold as one of the following activity types during the period: Pre-lets, New Occupation/Lease, Expansion, Renewal/Renegotiation, Sub-lease and Sale & Leaseback.

*** Without VAT

FOR MORE INFORMATION

Colliers International | SofiaEuropean Trade Center115K Tsarigradsko Shose Blvd.Build. B, 7th floor | 1784 Sofiaphone: +359 2 976 9 976

colliers.com

The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.

Copyright © 2020 Colliers International. Colliers International | Bulgaria

Verka PetkovaPartner | Director | Business Developmentphone: +359 2 976 9 [email protected]

Adriana TonchevaSenior Market Researcher phone: +359 2 976 9 [email protected]

officemap.bg

market overview - park lane · plovdiv plaza is a mixed-use development, comprising retail and...

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