Rents for offices in Tel Aviv rose 2.3% in the second half of 2016 to NIS 101.5 per square meter, compared with NIS 99.2 per square meter in the first half of the year, according to a market survey by real estate consultants < href=http://www.inter-israel.co.il/ target=new>Inter Israel.
The survey is based upon 2.6 million square meters of office space in 153 prestige office towers in the Tel Aviv area (Gush Dan). The statistical analysis was based on a sample of 78 towers with aggregate space of 1.8 million square meters. Towers with one occupant or very few and in which there is no turnover of occupants were not included in the analysis.
Six main business districts were surveyed in Tel Aviv: Rothschild Boulevard; Shaul Hamelech Street; the beach strip; Menachem Begin Road; Yigal Alon Road; and Ramat Hahayal. The Diamond Exchange area of Ramat Gan and the BBC area in Bnei Brak were also surveyed.
In the second half of 2016, the net take-up of Class A offices in Tel Aviv business districts fell substantially in comparison with the first half, and totaled just 20,000 square meters. 21,000 square meters of Class A office space were added in the second half year, which means that almost all the additional space was taken up. This led to an improvement in the already high occupancy rate.
The occupancy rate reached 97.4% in the second half of 2016, including Bnei Brak and Ramat Hahayal, which compares with 97.1% in the first half.
Inter Israel co-managing partner Yoram Blumenthal said, "In early 2017, some 250,000 square meters of prestige office space will be added (and some 500,000 square meters in 2017 as a whole). The additional supply will have an effect on the average price, with existing towers having to compete harder against the new towers. At the same time, a clear distinction should be made between office space under construction under sole ownership (Azrieli Group, Bayside, Amot and so on) and space under multiple ownership (mainly buyer groups). We believe that there will be a decline in rents, but that it will be much more moderate in buildings under sole ownership."
Published by Globes [online], Israel business news - www.globes-online.com - on January 23, 2017
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