The second piece of the BIG Fashion Glilot puzzle is set to be occupied soon. The Allied Cities office tower built by Allied Real Estate is expected to receive approval for tenant to occupy the premises at the start of next month. 25% of the office tower will be occupied as soon as it opens.
The 44-floor tower with 80,000 square meters of office space rises above its partner BIG Shopping Centers (TASE: BIG), the country's biggest shopping center, which opened last week. BIG and Allied received a building permit to build two office towers although only one of them has been built.
Israel's office market has recently suffered from significantly lower demand, and a decline in rents, especially in areas outside Tel Aviv. This is attributed to the tech industry crisis, and higher interest rates.
But the office market woes do not see to have adversely affected Allied's office tower. Allied has already managed to market 63% of the space - over 50,000 square meters. According to data obtained by "Globes", there are signed drafts for additional contracts, which will increase the proportion of marketed areas to 70% of the tower's office space. Final work is currently being done on the tower, including finishing work in offices where contracts were already signed some time ago. Estimates are that it will be possible to reach occupancy of at least 85% by the end of the year.
Prices: NIS 135 per square meter for offices with finishing
According to data obtained by "Globes", the office space in the Allied Tower is being marketed at a price ranging from NIS 90 to NIS 110 per square meter, before finishing work and interior design of the office. These prices are far from the peak prices of the office sector in Tel Aviv during the post-Covid boom, when prices reached NIS 200 per square meter, and are even lower than the current prices in Tel Aviv's most in-demand areas, which range from NIS 130 to NIS 150 per square meter. In Google's giant deal in the ToHa2 Tower in central Tel Aviv, for example, the price tag was NIS 160 per square meter, for an area of 60,000 square meters.
Nevertheless, rents in the Allied Tower are higher than current rents for office space in the circles outside Tel Aviv - and Big Fashion Glilot, between Tel Aviv and Herzliya was located for those who do not want to enter the big city. Estimates are that rents in Allied Tower are NIS 135 per square meter, after finishing work and other additions.
Most of the tenants in the tower are large enterprises, which will occupy several floors in the tower. Each floor covers up to 2,100 square meters gross, and among the companies that have already signed leases in the tower are fintech company Payoneer, which has rented 12,000 square meters on six floors, and spyware company NSO, which has rented about 7,500 square meters.
Other tenants who have signed leases for space in the tower include Fattal's Rooms co-working space, non-banking finance company Nawi Brothers Group, real estate company Baitvegag, as well as BIG itself, Allied's partner in the project, and its subsidiary AFI Properties.
The tower will offer, among other things, a fitness center, lounge and lobby (to be managed by Fattal), a conference room for up to 150 people, an area of 900 square meters for for corporate events, an open roof overlooking the sea, bicycle rooms, scooter charging stations, and more.
The additional tower will not be promoted at this time
The occupancy numbers for the Allied Tower are impressive, and come in contrast to the prevailing negative trend in the office market. In most new projects in the office sector at present, developers are struggling to market all of the space.
But although a plan has been approved that allows for additional rights, including the construction of a second office tower in the project BIG has reported it does not intend to build it at this stage but rather at a later date, when market conditions are considered to have improved.
Published by Globes, Israel business news - en.globes.co.il - on March 9, 2025.
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