Bank Hapoalim today (Thursday) acquired the office project "Rubinstein Towers" in Harakevet Street at the corner of Petah Tikva Road in Tel Aviv, in a deal the total volume of which is $60 million. This is the largest real estate deal in recent years. The overall area of the project is 23,000 sq. m., in 13 storey tower blocks. The building also has 464 underground parking spaces.
The bank acquired two thirds of the area, 15,500 sq. m., for $2,700 per sq. m., amounting to $41 million. In addition, the bank signed a lease contract on the rest of the project, 7,500 sq. m., on lease terms of $19 per sq. m. per month. The developers gave Bank Hapoalim an option to purchase this area in future, at a similar price, meaning another $20 million.
The vendors are a group composed of the Avraham Rubinstein company (50%), Ofir Holdings (33%) and Granit Hacarmel (17%). Ofir Holdings is a subsidiary of Amot Investments, controlled by the Histadrut Pension Funds. Granit Hacarmel is controlled by the Koor and Clal groups.
The developers had previously conducted negotiations to lease 50% of the project to the Government Accommodation Administration, but negotiations were broken off after Bank Hapoalim made a better offer to purchase the entire project.
Bank Hapoalim will transfer to the building all non-Head Office departments, which today are scattered in dozens of buildings in Tel Aviv. This is part of the efficiency and cost-cutting drive which the bank’s management launched last year.
Inter alia, the bank will relocate its provident funds to the new building. At present they reside in the Dizengoff Centre. Many other offices dispersed around Rothschild Boulevard, Nahmani and Pinsker Streets, and other places, will also move there. The bank will take up occupancy at the new building when construction is complete, in about a year’s time.
The Bank Hapoalim - Rubinstein deal has far reaching implications for commercial real estate in Tel Aviv. Within a year, Bank Hapoalim will vacate dozens of small buildings, most of them old or rehabilitated, and they will be offered for sale or lease, thus increasing the supply of office space in Tel Aviv.
Also now coming onto the leasing market are the vacant areas in Embassy House. In real estate circles it is thought that a genuine watershed has been reached in the Tel Aviv office sector, and as early as the next few months a significant fall in prices is likely to follow.