Key Takeaways from the Special Edition of ВаlRЕасt #Асtіоn іn Crіѕіѕ

Our team took part in the special edition of ВаlRЕасt #Асtіоn in Crіѕіѕ organized by the City Media Group. The conference took place on June 16 with studio discussions and live online broadcasts.

The Deputy Mayor for Digitalization, Innovation, and Economic Development of Sofia Mr. Vladimir Danailov joined the opening session: Macro Trend Bulgaria and the Economic Challenges. The panel was also attended by experts from the Bulgarian Chamber of Commerce, the Bulgarian Outsourcing Association (AIBEST), the Bulgarian Association of Software Companies (BASSCOM), and UniCredit Bulbank.

Our wish and what the business ecosystem would strive to do is sustain what we have achieved in the last 6-8 years. In our dialogue with the companies in recent months, we reached a joint agreement to work together in different industries, to attract and keep the talent pool, to retain most of the investors and companies considering relocation, said Vladimir Danailov in the opening session.

The event provided an opportunity for analysis of the current social, economic, financial, and market challenges. It allowed for forecasts about what lies ahead in the housing and office space market and what the future of workspaces is.

Here are some of the key takeaways from the ВаlRЕасt #Асtіоn in Crіѕіѕ conference:

Due to the timely measures, Bulgaria remained on the periphery of the pandemic and met the lockdown of economic activities with a strong fiscal position and without accumulating economic imbalances. We expect a deep but short-lived recession this year. UniCredit Bulbank forecasts a serious decline in the economy in the second half of the year – a 7.2% annual drop in GDP in Bulgaria, followed by a relatively fast recovery in 2021.

The IT sector was not severely affected and given its strong export orientation towards Western Europe and the USA, the effect will depend on the state of the foreign markets. Bulgaria already positioned itself in a higher segment like Israel and Ireland, unlike India and Vietnam, but there are risks concerning the insufficient human resource and the eventual changes in the tax framework, said Georgi Brashnarov from BASSCOM.

Bulgaria has the unique chance to position itself as a stable location at a time when alternatives to Asia are on the agenda. More than 70% of the employed in IT and outsourcing companies wish for workplace flexibility, so the role of office spaces will be redefined, emphasized Iliya Krastev from AIBEST.

The pandemic imposed changes in the projects for office areas currently under construction. These include “entrance to the desk” access redesign without touching surfaces, the introduction of new materials, filters and air conditioning systems, etc. There will be an even greater focus in Bulgaria on high added value business and the country will take advantage in all segments, commented Asen Lisev, managing director at Вrаvо Рrореrtу Fund RЕІТ.

In retail space, there is already a recovery with up to 70% traffic recovery, commented Mihaela Lashova from Forton | Suhman & Wakefield. The company estimates that up to 50% of the tenants will return to the offices in September, 30% in June, and the rest – by the end of the year.

According to Adina Welsh, Executive Director of RРНІ, office tenants look at different business models depending on the industry. Pharmaceutical tenants are not interested in open space areas; outsourcing companies expect growth, online gaming, betting industries, and merchandise are developing explosively. The home-office model is not always an option, and not everyone works in the IT industry. We still need office spaces, but the way communities reside there will change. The work-life balance remains at the forefront again due to the crisis. The opening of kindergartens on the first floors of residential and office buildings becomes an increasingly valuable opportunity providing exceptional convenience for owners and tenants.

About 50% of the tenants will keep the current space, 30% will reduce the rented area, and 86% of all will stay in the same area, but will seek space and rent optimization. These are the results of a research, announced by Anton Slavchev, asset manager of Serdika Offices. According to him, the number and the ratio of the people and the office spaces will change to help using the workspaces as efficiently as possible.

Companies need to assess the long-term impact of the home office model strategy. Offices will probably reduce the number of workplaces, but the areas of interaction will increase. Working from home showed that everyday life could be more convenient. In the future, the tenants will expect even more benefits, said Stanimira Pashova, partner, office spaces manager in СW Fоrtоn.

Video recording of all the event sessions is available to watch on the website of the City Media Group.