A series of recent large transactions involving offices in Tel Aviv and Ramat Gan clearly leads to the conclusion that price distinctions between the two cities and between different areas of Tel Aviv are becoming blurred. Rents in almost every modern building in both cities are stabilizing around $20 per sq.m. per month, with deviations of a few percent in either direction.
"Globes" today reports, for example on the following deals:
The investments unit of Migdal Insurance Co. will pay $20 per sq.m. in the Africa Tower, opposite the Shalom Tower.
Amot is asking $20 per sq.m. next to the Camp Rabin IDF general staff headquarters in Tel Aviv.
Terayon will pay $20-21 per sq.m. in the circular tower in the Azrieli Center, near the Ayalon Highway.
Real estate developer Adamov will pay about $20 per sq.m. in the President Tower in Ramat Gan.
Large differences in rents existed in the past between various areas of Tel Aviv, and certainly between Tel Aviv and Ramat Gan. The gaps are vanishing for several reasons: on the one hand, values in Ramat Gan have been rising, due to low municipal tax rates and easy access to the Ayalon Highway. On the other hand, prices in Tel Aviv have been coming down, due to large supply.
All the modern buildings are of similar quality, with almost identical parking, elevators, internal division, and services. There is another important reason: Tel Aviv has no current central focus of economic activity, as the "City" near the Tel Aviv Stock Exchange was in the past. Activity is spread between many secondary centers. Distances between these centers are relatively short. Ramat Gan is a little further, but the rapid roads are making it in effect part of the Tel Aviv system of office.
Published by Israel's Business Arena on April 30, 2000