Office tower parking prices in Tel Aviv continued to rise in the first half of 2023, even though rents for those offices fell, Newmark Natam Real Estate Services reports, and even though the Tel Aviv light rail Red Line was due to start in 2023.
The most glaring example of this was a 30% rise in parking prices in Tel Aviv's Ramat Hahayal district over the past three years, although this is far from the Red Line.
The average rent for a parking space in a Grade A office tower in Tel Aviv in the first half of this year reached NIS 1,118 per month, up 3% compared with the first half of last year and 5% up from the first half of 2020. While office rental prices have decreased 11% compared with 2022, and increased by about 20% compared with 2020 (the year of the Covid pandemic, which was a low year for office rents).
In the first half of 2023, office tenants in Tel Aviv knew that the light rail Red Line was due to start operating in the second half of the year, so in many places in the city the parking prices should in theory have decreased. However, the reality is a little more complex.
"The Red Line is only relevant to workers who come from Petah Tikva or from Bat Yam. It is not relevant for those who come from Herzliya, for example. For the light rail to have a greater effect, we must wait for the Green Line," says Newmark Natam VP real estate services Or Ben Zvi Klein.
Ramat Hahayal is a district that is cut off from the city in general and the light rail in particular. The severe lack of parking encourages the office tower owners to raise parking prices there at rates that exceed anywhere else in the city.
But why do the office tower owners prefer to rent the parking spaces under the towers to companies, and not allow the general public to park there, for NIS 30 an hour or more?
Real Estate Appraiser's Bureau Nechama Bugin said, "The contribution of parking to the value of the office is much higher than its hourly or daily cost. If an office markets without parking, its price drops accordingly."
Published by Globes, Israel business news - en.globes.co.il - on September 13, 2023.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.