Holon challenging Herzliya as tech office center

Azrieli Center Holon  / Photo: Guy Lieberman , Globes

Following in the footsteps of Azrieli, real estate developers are rushing to start projects in Holon.

Anyone traveling to the Holon industrial zone via Road 44 between Ramla and Jaffa will encounter old-fashioned workshops, garages, and used-car lots. The other part of the industrial zone closer to Jerusalem Boulevard and Peres Park looks like an enormous construction site, with many architecturally innovative buildings going up.

The Holon outline plan, which was deposited in 2016, made the city's neglected industrial zone an important development target. The idea was to create a source of revenue by bringing in "clean" business that would pay municipal property taxes. Many objections to this plan were filed. The planning mood has now shifted, and in an extraordinary action, the Holon municipality has stopped pushing the outline plan.

Architect Mimi Peleg, Holon's city engineer, explains that in recent years, Holon has realized that creating another industrial zone is not enough. "In the past, every industrial zone was the same: workshops and dirty industry. At a certain stage, the municipality decided to earmark the internal area, which contained quite a bit of available land, for clean business. This is where the Azrieli Center in Holon was built. The idea was that a ripple effect would bring more developers.

"A lot of changes took place in the past five years. We realized that we had to increase construction rights along the light rail and metro routes. You can't keep construction rates at 300-400%. We want to reach 360% for the industry and workshop areas and 700% for the clean business area, and up to 1,200% in places along the routes. The Planning Administration is talking about doubling the city's population. A city on this scale means more business. We also realized that it's necessary to create continuity between the city and the industrial zone."

"Thinking about micro-apartments for young people"

One of the innovations in Holon is putting housing in the industrial zone. "Everyone comes to work in Holon, but most Holon residents work elsewhere. Business in the city has been poor up until now. Our aim is for them to start working in Holon," Peleg says.

The municipality plans to allow construction of small apartments (assisted living facilities, student apartments, or rental apartments) within the industrial zone.

"Globes": What advantage does Holon's industrial zone have over other places?

Peleg: "First of all, accessibility is excellent. Secondly, we want to do things with public space. The Barcelona municipality decided that in order to get the Barcelona@22 area off the ground, they would take 25% of all the space for public use. There's a resting place on every street. We want public space along the main arteries.

"I'm giving developers 1,000% rights, and asking them to create green space (enjoyable private open space) and built-up public space: kindergartens, a school, and a senior citizens club. This way, everybody profits."

Mivne Group is one of the dominant developers operating in the rebuilt Holon industrial zone. The company owns two sections of land: a 59-dunam (14.75-acre) lot on Hapeled Street, on which a 14,000-square meter commercial building will be constructed with stores from Rami Levy, Max, Delta, and Adidas. The company plans to add a nine-floor 15,000-square meter building above the commercial center and four office buildings with 125,000 square meters of space. The second lot, with 40 dunam (ten acres), located on Hamerkava Street, contains industrial buildings with 100,000 square meters in construction rights.

Mivne Group CEO David Zvida says, "These land reserves are very large, so they can house large complexes and commerce, and we're also thinking about micro-apartments.

"In the long term, there will be demand for the number of offices in this area. The area has good transportation access and high parking standards. In our opinion, there is potential, but in stages. It won't happen all at once. The advantage of Hapeled Street is that construction on it can fit in with the Mifde Ezrahi neighborhood. On the west, you have the Mikveh Israel land, part of which I believe will be released for residences in the future."

Zvida believes in including small apartments in a business zone. "In the Herzliya Pituah industrial zone, we started with small apartments, not families with children. It depends a lot on what the industrial zone looks like - whether it creates life in the afternoon and evening. This creates a solution for people who want a young atmosphere with pubs and restaurants, not a neighborhood with parks. The Peled Street area is close to the residential neighborhood. In the long term, we envision entertainment areas being moved out of Holon into this area."

Last week, Amot Investments inaugurated the Amot campus tower on an 11-dunam (2.75-acre) lot on the corner of Jerusalem Boulevard and Hamelakha Street. This is a combination deal signed by the Holon municipality, which owns the lot. Amot's investment in the project is estimated at NIS 320 million.

Amot CEO Avi Mousler told "Globes," "Had I asked myself five years ago, I would have told you that this is the next place. Today, I say with certainty that it's the place. This area has become very accessible, and there is demand from leading companies. We're close to the light rail Green Line and to the metro station. In addition, we have a parking standard that is ahead of the new regulation. We have 1,000 parking spaces, which provide a complete solution for any tenant with a lot of customers. This is something that you can't get in the center. I think that years from now, it will be the southern Herzliya Pituah."

"Seven years from now at best"

Geocartography Knowledge Group co-owner Dr. Rina Degani does not think that the new buildings will be occupied quickly. "The main conclusion from our work on the entire Bat Yam, Holon, and Rishon Lezion area is that the economic viability of the new business areas is linked to mass transit systems, proximity to the regular railway stations, and especially the ability to decrease travel times for employees and employers.

"Successful marketing and occupancy of all the planned area requires the opening of the Green Line, and the projected opening date for it seven years from now at best, judging by the length of time that it took to open the Red Line. If a leading company like Azrieli took almost five years to market all of its space, including bringing existing tenants from Tel Aviv office space owned by Azrieli in Tel Aviv, it means that occupancy of what is planned in Holon will take at least a decade."

Lots of parking, low rents and municipal property tax

Until construction of the Green Line is completed, which is not expected before 2026, access to public transportation is not especially easy, and property owners and tenants benefit from the high parking standard in the area.

Doron Zander, CFO of Bonei Hatichon Civil Engineering & Infrastructures, which has been renting an office in the B building in the Azrieli Center for the past five years, praises the project, saying, "I don't feel like its an industrial zone. We feel like we're in a semi-entertainment zone. We have innumerable restaurants downstairs. There are holiday events, activities for children, markets, lunches, and laundromats. We see that they're building more office buildings around us. I wouldn't call this an industrial zone."

As far as Zander is concerned, the Holon industrial zone has only advantages. "Access to Tel Aviv is very good here, but we don't have to go to Tel Aviv in the morning. It gives us an option of going to new offices. We rented a black hole and did everything ourselves, so that we have something that we really like being in, and we have an underground parking lot here, which gives employees a feeling of security. When our guests come, they don't have to enter Tel Aviv. At the same time, they don't feel that they're in an industrial zone, and besides that, we did a calculation not long ago, and we're paying NIS 52 a meter."

In addition to Bonei Hatichon, Amidar, Taldor, Neta, Halman Aldubi, and others have moved their offices to the Azrieli Center in Holon. In addition to Amot Investments and Mivne, Azrieli Group is constructing another building, which will be occupied at the end of the year, and Bezeq has already rented 20,000 square meters. Eldar Investments is building two office buildings in the area.

"We worked very hard to get them to build an interchange"

Moti Sasson, Holon's perennial mayor, originated the idea of reconstructing the industrial zone. "I think that the most important thing for this industrial zone is accessibility. We worked very hard to get the Ministry of Transport to build the East Holon Interchange. Holon is located on Road 44, ten minutes from Ben Gurion Airport and Ashdod Port. There's no better location than ours; you don't have to enter Tel Aviv, with all of its traffic jams. It's a fact that more and more developers are entering here. Our biggest achievement was the entry of Azrieli. The lot belonged to the municipality, and we made a combination deal with Azrieli. It really reduced a lot of the risks that developers have to take. Our attitude attracted the developers here. Our municipal property tax for businesses is the cheapest in the greater Tel Aviv area. We don't count the shell as part of the area for tax purposes, which makes the tax 25% less. It's a fact that the great Azrieli came to Holon and invested nearly NIS 900 million, and is now building 300,000 square meters more. Other people see that it's good, so they're coming here."

Including residences in an industrial zone is unusual.

Sasson: "We want a lot of uses in the business zone. There are many companies that want to build housing, because it's a hit now; it's good for the developers. They'll build 500,000 square meters of business space in the coming years, so we'll have enough in municipal property taxes. We're amenable to all of the developers' ideas."

Full disclosure: "Globes" chair Alona Bar-On is a minority shareholder in Industrial Buildings.

Published by Globes, Israel business news - en.globes.co.il - on February 12, 2020

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

Azrieli Center Holon  / Photo: Guy Lieberman , Globes
Azrieli Center Holon / Photo: Guy Lieberman , Globes
Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018