"The Azrieli towers became the gateway to Tel Aviv in 2000. They were suitable for the times but now we need something new," said Amot Investments Ltd. (TASE: AMOT) chairman Natan Hetz, at the press conference together with Bayside Land Corp. Ltd. (Gav Yam) (TASE:BYSD1) to launch the ToHa2 project, at the corner of Yigal Alon Street and Derekh Hashalom. Hetz added, "The building will immediately become a milestone and symbol of the city of Tel Aviv for generations to come."
The investment
Above and beyond the architecture, there are many basic assumptions behind the huge NIS 3 billion investment in the new tower. This is a big investment even for such large companies - Bayside has a market cap of NIS 7.8 billion and Amot's market cap is NIS 10.6 billion.
Hetz added that even though they could have built commercial and residential floors, "which we could have sold for who knows what," they chose to focus on a tower exclusively for offices, and ensured that it will be of exceptional quality (90 second in the elevator from the ground floor to floors 6-70) and environmentally friendly with little parking and "showers for everyone who comes to work by bicycle."
Amot CEO Shimon Abudraham said, "It would have been easier to build four towers with a shopping mall," but despite that they chose to build a unique and huge office tower.
Amot and Bayside have yet to find an anchor tenant for the new tower, which is due to be completed in 2026 but stressed, "there is major belief in the Israeli economy," and that they are certain in their ability to fully market the project and in the plans of customers like large and medium-sized tech companies.
Like the adjacent ToHa1, the new tower will be based on very large floors with 2,500-3,000 square meters on each floor. This is aimed at companies needed expansive floor space. ToHa1, which is much smaller than ToHa2 will be is today fully occupied. Bayside CEO Avi Jacobovitz said that WeWork leases six floors in ToHa1 and did not hand back any of the space during the Covid pandemic crisis.
Israeli tech is currently booming with a surge in exits, raising capital and hiring employees but if there were to be a change of direction as happened when the dot.com bubble burst in 2000, Bayside and Amot will have their work cut out to lease 170,000 square meters of office space. This is more office space than the three Azrieli towers added together.
Nor is ToHa2 the only Tel Aviv office tower looking for tenants. Just on the other side of the Ayalon highway Azrieli Group (TASE: AZRG) is building the 91-floor, 350 meters high Spiral Tower, which will include office and commercial space, a hotel, and apartments. Construction of the Spiral Tower is due to be completed within five years at an overall investment of NIS 2.6 billion.
The Surroundings
Construction work has already begun and the underground parking takes into account that there will be two nearby metro stations with direct access to the tower. Also nearby is Israel Railways Hashalom Station.
Hetz also spoke about the plan to cover over the Ayalon Highway with a park and he shows a presentation of the ToHa2 tower on the edge of a green park rather than overlooking a major highway. "In another 20 years the Ayalon Highway will be covered over and there will be a park from here to the other side."
However, both the Metro and covering over the Ayalon are both projects that nobody can guarantee will be completed abd meanwhile Amot and Bayside must lease ToHa2 without the Metro and without the park.
Parking
ToHa2 will have 1,600 parking spaces - a small amount for a tower where 20,000 people will work. Here too Hetz is looking far ahead. "Today people are already realizing that there isn't 2,000 parking spaces for 50,000 square meters. Most people already come here on e-scooters and we have a lot of parking space for two-wheeled vehicles."
Hetz even speculates that 1,600 parking spaces will be too many after the Metro is built. "We will one day have to decide what to do with this space."
On this matter, ToHa2 won't be alone. Only last week the Tel Aviv District Planning and Building Committee approved a plan to build a 30-floor tower next to Apple's campus, which will be leased to Apple, with little parking. And there access to public transport will not be so very good although a light rail station on the Green Line is planned.
Published by Globes, Israel business news - en.globes.co.il - on October 26, 2021.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2021.