Office Market Overview. Sofia I H Office Market Overview

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1 Office Market Overview Office Market Overview

2 Office Market Overview Total modern class A, B and C office space supply in Sofia recorded,000,000 m, equating to 4% growth. Total take-up in 017 reached its highest level since 009, above 00,000 m (a 55% increase on an annualised basis). Relocation and consolidation into a single office building, a trend witnessed since 016 in the outsourcing sector, continued. It retained its largest share, 53% in H 017, in all registered transaction types. 0% 14% 0% 5% Class A offices Class B offices 60% 61% DEMAND (MAIN SECTORS) INDICATORS (SOFIA) 798,000 m 948,000 m Under construction 383,000 m 6% 1% Rental level (m/month) Total take-up* H ,600 m 01,300 m % IT & Telecoms Net absorption** H ,500 m 14,000 m 15% Professional services LARGEST DEALS Tenant Area (m) Deal type Garitage Park FPI Business Hub Real Site VMware Teva SiteGround,90 7,00 5,400 Office Market Overview I H 017 I Colliers International 10% Life sciences

3 Central Business District The CBD saw a significant 16% supply growth, or 39,500 m in numbers. The completion of Telus Tower contributed the new stock. Companies in IT & Telecoms (58%) and Professional Services (38%) drove demand. Rental levels increased insignificantly. Selected office buildings above 5,000 m INDICATORS Rental level (m /month) 158,000 m 130,000 m 6% 5% А Under construction Total take-up* Net absorption** 6,400 m,000 m 43,000 m BUILDINGS UNDER CONSTRUCTION Investor Location GLA (m ) Office Park Central Central Forum Center 6,40 LARGEST DEALS Tenant Area (m ) Deal type Millenium Business Center Cargotec 4,000 New entry City Tower Vayant Tech 3,40 Relocationия Sofia 000 PwC,500 Renegotiationр Office Market Overview I H 017 I Colliers International 3

4 Broad Center District 11% supply increase in the Broad Center. Companies in IT & Telecoms (50%) and Life Sciences (46%) dominated demand. Hladilnika district maintained its rapid pace of development, with many buildings under construction or in the pipeline. Improved infrastructure increased its attractiveness. Rental levels remained stable. Selected office buildings above 5,000 m INDICATORS Rental levels (m/month) 161,000 m 39,000 m Under construction 3% 11% 13 Total take-up* 0,000 m 53,000 m 3,000 m Investor Location GLA (m) Business Center Srebarna - Art E Stroy Broad Center 9,40 Dastech Intco brands Broad Center 9,000 South Park Art E Stroy Broad Center 9,100 Tenant Area (m) Deal type FPI Business Hub Teva 7,00 South Park Dastech Accedia Fadata,660,350 LARGEST DEALS Office Market Overview I H 017 I Colliers International 10 Net absorption** BUILDINGS UNDER CONSTRUCTION 4

5 Suburbs This area absorbed the highest demand share or 61% of all signed leasing transactions. The Business Park Sofia area strengthened its position as an established office zone and continued expanding. 84% of all buildings under construction in the city are situated there. Companies in IT & Telecoms (81%), Professional Services (1%) and Retail (3%) determined demand. Rental levels chalked up a small increase. Selected office buildings above 5,000 m INDICATORS 478,000 m 578,000 m Under construction 7% Rental levels (m/month) 14% 13 Total take-up* 65,600 m 31,000 m 9 Net absorption** 18,500 m BUILDINGS UNDER CONSTRUCTION Investor Location GLA (m) Garitage park ph. 1 Garitage Investment Suburbs 55,000 Business Park Sofia bld. 15 Arco Capital Suburbs 0,800 Richhill Telelink & Richhill Suburbs 17,000 Tenant Area (m) Deal Type Garitage park VMware,90 Real Site Capital Fort SiteGround ScaleFocus LARGEST DEALS 5,400 4,000 Renegotiation Office Market Overview I H 017 I Colliers International 5

6 Most developed zones (MDZ) The three most dynamically developing office zones are 7-11 km on Tzarigradsko shosse, Business Park Sofia and Hladilnika. Their share in the total office market is: 17% of the total supply; 65% of the buildings under construction; 9% of the available space by the end of 017; 39% of total take-up. 0% 14% 0% 5% 60% 61% Class A offices Class B offices INDICATORS (MDZ) 350,000 m 5% 13 Rental levels (m /month) Under construction 54,000 m Total take-up* 79,000 m DEFINITIONS * Gross take-up the total floor space known to have been let or sold during the period and includes the following transactions: pre-leases, new leases, expansion, contract renewal/renegotiation, sub-leases, sale & leasebacks. ** Net absorption - the change in occupied stock during the period compared to the previous one. It refers only to existing office stock (not to the development pipeline). 6 Office Market Overview I H 017 I Colliers International

7 Forecast 158,000 m are planned for completion in 018; half of which is already leased out. The situation of insufficient supply of completed class A offices is likely to continue in the short term. This will most likely redirect companies to class B office buildings with good location and characteristics. The Outsourcing sector will continue to drive office demand in the capital and in secondary cities, such as Plovdiv, Varna and Burgas. Rental levels are likely to remain stable. Office Market Overview I H 017 I Colliers International 7

8 554 offices in 68 countries on 6 continents Verka Petkova Director Business Development verka.petkova@colliers.com Adriana Toncheva Senior Market Researcher adriana.toncheva@colliers.com.3 billion in annual revenue Colliers International Sofia European Trade Center 115K Tsarigradsko Shose Blvd. Build. B, 7th floor 1784 Sofia Bulgaria million square meters under management 15,000 professionals and staff About Colliers International Colliers International is a global leader in commercial real estate services, with over 15,000 professionals operating out of more than 554 offices in 68 countries. The company operates in Bulgaria since 1991 and delivers a full range of services to real estate users, owners and investors worldwide. Presently Colliers represents some of the most innovative and professionally planned projects in all market segments, including office, retail, logistics, industrial and residential. As of June 015, Colliers is an independently owned company. The common shares of Colliers International Group Inc. trade on the NASDAQ under the symbol CIGI and on the Toronto Stock Exchange under the symbol CIG. As part of the CEE Quality Awards 016 Colliers won for the fifth time in a row the Industrial agent of the year award. The latest annual survey by the Lipsey Company ranked Colliers International as the third-most recognized commercial real estate firm in the world. colliers.com Colliers International Bulgaria officemap.bg Copyright 018 Colliers International. 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. Accelerating success.