Industrial areas, offices, retail areas in Bulgaria: trends and conclusions

Industrial areas

Like all the other sectors the industrial space sector was not spared by the global crisis but the tone during the discussion was optimistic because this is a sector that is yet to be developed in Bulgaria and that has great potential. The speakers in the panel were unanimous that time and a facilitated procedure are the crucial factors for attracting investors.

While the brokers are still worried by the high prices of land and whether they are not hindering the investors in the industrial sector the foreign developers place greater importance on security and transparency of administrative services.

“There are many investors who would invest in Bulgaria but only if the conditions are good. Find the right client and convince them to invest in Bulgaria but give them the security and guarantee that the process is under control”, one of the speakers said.

Another speaker stated that there will be an outflow of investors but it won’t be significant and that those investors who are yet to come will be of much better to work with.

The general conclusions are that the investors are hesitant when they are not offered security and guarantees and that currently there is high demand of industrial space but little supply.

Office space

Participants in this panel agreed that the lessees of business space must not count on the prices in the sector to decrease in mid-term plan but that this is true only for the quality projects. Some of the other conclusions which the speakers reached are as follows:

• The effect of the global crisis will be seen in the smaller amount of concluded deals.
• Part of the investors whose main activity is not related to office space will withdraw from the market.
• The crisis on the office space market has a healing effect as it will sift out the quality sites with good location and price.
• The clients of office space will have a wide choice but they will have to pay for that choice.
• The office buildings are already rented out at a later stage of their construction.
• The stable economic situation in Bulgaria is one of the most positive things that will attract the future buyers/lessees of office space.
• The prices will retain their levels but there will not be an oversaturation of the sector because part of the projects will not be realized.

Retail areas

In the last few years Bulgaria started witnessing the mushrooming of malls. There are a few that are already built and functioning (in the big cities) and a few more are being constructed at the moments or are on the drawing board.

The main topics the panelists discussed were related to the successful formula for the construction of a trade center, whether the crisis has left a mark on this sector and which are the main criteria for the lessees when choosing retail areas.

The experts who took part in the discussion agreed that the main questions when planning retail areas are where and when the project should be built, whether there is sufficient purchasing power in the city and whether there will be support on the part of the municipality and the state.

On the topic whether the global crisis has reached the retail space sector the speakers said that there will be developers who will not manage to construct their projects due to a number of reasons, that the developers will be sifted out and that a great number of the projects in the towns may never be realized.

Together the speakers managed to formulate a set of criteria which are crucial for the lessees when choosing retail areas: location, concept, investor’s experience, price and lessee mix. The representatives of the retail business who took part in the discussion said that without those criteria they do not even start discussing the rental agreement.

The discussion ended on an optimistic note as the speakers came to the conclusion that it is a matter of time the investors to come back and they may expect a much higher quality of the sites and the services.