Apple boosts Haifa's tech credentials

Matam Towers East - impression / Photo: View Point

The US giant's massive expansion confirms Matam High Tech Park as the place to be in Israel for global companies' R&D.

Moments after announcing it was cutting ties with Intel, Apple has moved to consolidate its operations in Haifa. It is actually setting up near Intel, which is also expanding its presence in the city.

Yesterday (Tuesday) Apple announced that it would lease a 28,000-square-meter building from Bayside Land Corp. Ltd.(Gav Yam) (TASE: BYSD1) in the Matam High Tech and Business Park, for which it will pay NIS 210 million over the next seven years. This makes Haifa's old industrial zone a significant arena for high-tech giants.

Apple's move was "hidden" in a statement issued by Bayside, which is controlled by Discount Investment Corporation, that it would lease a 28,000 square meter building to an unnamed high-tech company. Within a short time, it became apparent that this was Apple.

"On November 16, 2020, Matam subsidiary, Matam - Scientific Industries Center Haifa Ltd. signed a lease agreement ("the lease agreement") with a leading international high-tech company ("the lessee"), for the lease of 28,000 square meters above ground and 620 underground parking spaces, at the Matam High Tech and Business Park, Haifa," the announcement said.

Bayside's announcement continued, "Under the agreement, the lessee will rent the entire area of the first stage of the new project currently under construction at the Matam Park - Matam Towers East - for seven years (with an extension option) for NIS 30 million a year. The lease period will begin when the first stage of the project is built. This is expected to happen in the third quarter of 2022."

"Globes" enquiries reveal that the building is being designed by Yashar Architects.

Bayside did not confirm that this refers to Apple, nor did the multinational offer any details. It is believed that, in the light of its maneuvers vis-a-vis Intel, Apple intends to expand its development activities in Israel.

Growing competition to hire engineers

The soubriquet "Silicon Wadi" has never been more apt for Haifa’s old industrial zone. In the silicon, or semiconductor, industry, various hardware components are developed, such as CPUs and memory, with many of the technology giants in the field maintaining development centers in Israel. Intel is the largest and most unusual of these, because it also owns a fabrication plant in Israel. But most of Intel's employees in Israel are developers - almost double the number of those working in production - working mainly at the company's development center in Haifa, where they design Intel's processors for personal computers and data centers all over the world.

The Haifa park where Google is

It’s not just Intel. Other companies operating in the park include Israeli semiconductor startup Annapurna Labs, which was acquired by Amazon, and develops artificial intelligence chips, along with Google, IBM, and Yahoo, that focus mainly on software research.

It’s very likely that Apple intends to use the park as a center for expanding its Israeli operations, which are based on several companies: Israeli startup Anobit Technologies, acquired by Apple in 2012, which develops flash memory controllers (and whose drive component is also integrated in the iPhone), PrimeSense, which operates in the field of 3D sensors, and another company in the field of digital imaging called LinX Imaging. Another possibility is that, unrelated to these acquired startups, Apple will expand its semiconductor activity - which it is now highlighting at the global level - specifically in Israel. Given the size of the property leased by Apple, it could employ about 1,500-2,000 employees at the Haifa industrial zone.

An old park with a bright future

How did this industrial park become so attractive to these companies? The Matam High Tech and Business Park is one of the oldest and best-known in the country. It was founded in 1968 by the Haifa Municipality and veteran high-tech company Elron. The vision, spearheaded by Elron founder Uzia Galil, was to establish an enclosed complex for the high-tech industry to take advantage of its proximity to the Technion Institute of Technology.

Indeed, the park initially housed companies that were then considered leaders in the field in Israel, chiefly Elbit and Elron. Over the last few decades, it has also incorporated, as mentioned, research and development branches of the world's leading companies. Today, these constitute the majority of tenants. In recent years, the high-tech industry has migrated toward Israel’s central region, but Matam is still considered one of the most prominent R&D zones in the country.

The park’s big secret was, and still is, its location, which is close to the Technion. Over the years, however, the park has gained cachet and advantages thanks to its corporate inhabitants. Apparently, the deal with Apple is due to these benefits: the location - between Highways 2 and 4, adjacent to the Sammy Ofer Stadium, and near the train station - enables easy access, even for non-Haifa residents, and there is shuttle service from the station to the park.

The park, which is currently jointly owned by Bayside and the Haifa Economic Corporation, covers 224 dunams (56 acres) , including 25 buildings with a total built area of approximately 272,000 square meters, of which 173,000 square meters are main areas and parking lots, and service areas covering 99,000 square meters. Currently, about 11,000 people work at the park.

In addition to Intel, Amazon and Apple, Google, Microsoft, ZIM, Yahoo, Elbit Systems, and Qualcomm also maintain a presence at the park. Apple currently leases only a few thousand square meters at Matam; these operations will move to Matam Towers East once the deal is completed.

Last year, Matam completed the construction of the Matam-Yam project on an area of approximately 12,000 square meter, which was leased to Amazon. These days, Matam is building Matam Towers East, on a 27,700 square meter plot, that is apparently the area to be leased to Apple, and other companies in the project.

The fair value of the park, as stated in Bayside's financial reports, is NIS 1.83 billion, and it yields revenue of about NIS 142 million a year. The average rent per square meter in contracts signed last year was NIS 62, plus NIS 15 per square meter management fees.

"This is a really nice achievement for Matam, Bayside, and Haifa," says Tamir Ben Shachar, CEO of consulting company Czemanski Ben Shahar. "Over the past decade, 10,000-15,000 square meters per year in high-tech properties have been added to Haifa, which is nothing in Tel Aviv terms, and only about 10% of all construction for high-tech and R&D in Israel. Today, concurrent with construction of Matam Towers East, Mivne is constructing two more buildings at the Haifa Life Sciences Park on the other side of Highway 4. So, this is real momentum of the sort Haifa hasn’t seen in a long time. Apple's decision to locate in Matam is another victory in the competition this park is waging against parks in the center of the country."

Haifa Mayor Einat Kalisch-Rotem also commented on Apple's move, saying, "This technology giant stands alongside other global technology giants in expressing confidence in Haifa. The expansion of Apple's activity in the city is in line with the municipality's efforts to develop knowledge-intensive industries as an important economic anchor and as a source of quality employment and livelihood for thousands of Haifa residents."

Published by Globes, Israel business news - en.globes.co.il - on November 19, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Matam Towers East - impression / Photo: View Point
Matam Towers East - impression / Photo: View Point
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