Israeli income producing real estate company Melisron Ltd. (TASE: MLSR) is promoting a grandiose plan to triple the size of the Ramat Aviv Mall and the surrounding complex in North Tel Aviv, The Tel Aviv Municipality has confirmed. The project to expand the Ramat Aviv Mall area includes adding a third floor for stores in the mall itself and building four more high-rise towers.
According to the initial details, the first tower, which will have 15-floors for a hotel, will be built facing Einstein Street. Another 15-floor tower facing Brazil Street will be for residential apartments for sale and rent, while two 32-floor high-rises facing Brodetsky Street, will be built on the current car park outside of the mall. The plan also includes deepening the underground car park on Brazil Street with four more floors. The project is being planned and designed by the Moore Yaski Sivan (MYS) architects firm. The expansion of the Ramat Aviv mall and the new towers still need statutory approval and construction is likely to begin in five years time.
Melisron, which is controlled by Ofer Investments headed by Liora Ofer, owns 20 shopping malls and commercial centers around Israel through Ofer Malls. The company's best known assets, in addition to the Ramat Aviv Mall, are the Grand Canyon in Haifa, the Ofer Grand Mall in Petah Tikva, Ofer Kiryon to the north of Haifa Bay, and the IKEA building in Rishon Lezion.
The Ramat Aviv Mall area has become a more important asset for Melisron over the past year after it reported in December 2019 that it had paid Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL) NIS 425 million for its 26.6% stake in the property and land.
Land appraisers Barak Friedman Kapelner Shimkevitz & Co. (BFKS) valued the Ramat Aviv Mall at NIS 2.452 billion in September 2020 - NIS 100 million more than the value of Ofer Kiryon.
Economic consultants Czamanski & Ben Shahar CEO Tamir Ben Shahar explains that the Ramat Aviv Mall is one of Israel's most successful shopping malls with about 23,000 square meters of commercial space and income producing property generating average month rental revenue of NIS 488 per square meter. Above the mall there is an office tower with average monthly rental income of NIS 96 per square meter.
The reason for wanting to expand the asset, according to Ben Shahar, is the Covid-19 crisis. "The pandemic has brought about substantial change. The result of this is demand for new types of office towers and a different work environment, changes in the way office areas are set out, as well as an exodus from (central) Tel Aviv and demand for offices in the 'neighborhood' near 'home' in a mini WeWork format. This is the basis of Melisron's thinking in developing additional office towers."
Ben Shahar also thinks that there is much logic in building apartments for rent or hotels above the mall. "It provides a radius of 15 minutes in which you can live, work, learn, find leisure and shop and all in one place."
Tel Aviv Municipality backs the project
The Tel Aviv - Yafo Municpality will hold a zoom meeting with the public to discuss the Ramat Aviv Mall expansion project next Wednesday (January 6). Avital Zohar, chairman of the Movement for Renewal and Preservation of Ramat Aviv and Neve Avivim told "Globes" that he does not object in principle to expanding the mall but feels that the initial proposal is not proportional.
He said, "We have already known for some years that the mall wants to expand. A month ago they presented to us, the heads of the committees in the region, the plan that will be discussed next week. We understand that it is the municipality that is pushing the project. We think that to triple the area of this mall takes it above the capacity of the neighborhood. The light rail will already reduce the number of road lanes for cars and won't contribute to the number of parking spaces. There is currently in the neighborhood an enormous addition of housing units and so we think that only two more towers of 32 floors should be added."
The Tel Aviv - Yafo Municipality said, "As part of the process of consulting with the public, the plan for renewing and expanding the Ramat Aviv Mall that Melisron is promoting in coordination with the Tel Aviv - Yafo Municipality will soon be presented. The plan will transform the Ramat Aviv Mall into a mixed purpose center including commerce, offices, public institutions, hotels and apartments for rent as is appropriate for Einstein Street, which is a central road in northwest Tel Aviv, along which the light rail will run. The light rail will improve the connection between the mall and its surroundings by developing the mall towards Einstein Street and creating a bustling public space on Brazil Street. In terms of traffic, the plan provides preferential treatment to arriving on foot, bicycle or shared transport rather than using cars. Because of the central importance and scale of the project, the Tel Aviv - Yafo Municipality has demanded for the plan's developers to conduct consultations with the residents in a way that will allow them to relate to and influence the plan."
Published by Globes, Israel business news - en.globes.co.il - on December 31, 2020
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