Israeli website building company Wix.com Ltd. (Nasdaq: WIX) is offering to sublet 7,000 square meters of commercial space and offices at its campus at Glilot at rent significantly higher than it is paying for the space, sources close to the matter have told "Globes."
Information obtained by "Globes" reveals that Wix is paying NIS 90 per square meter and is looking to sublet the space that remain empty for between NIS 150-220 per square meter.
Flexible agreement adjusted to a changing market
Wix is looking to sublet 5,000 square meters of office space, with a little over 1,200 square meters on each of four floors for NIS 150 per square meter. In addition, Wix is offering 2,000 square meters of commercial space for various types of stores at NIS 220 per square meter.
Wix is only offering leases for two years to offer it greater flexibility. If the tech market returns to strong growth it will have space to expand while if the slowdown continues it can rent out the space again on another short term lease.
"Not easy to find tenants at these prices"
If Wix can find tenants at these prices it will be a major financial boost for the company but it is questionable whether there will be takers at these rents.
Itay Shafran, CEO getStatus real estate consultants said, "Glilot Junction where the campus is located, is the 'crossroads of the state', the most central place there is. The problem is that there is currently no accessibility to the campus, in the sense of mass transportation systems, and this is a very important aspect for offices, certainly today when we see the protests and roadblocks throughout the country. Although in a few years the light rail Green Line will pass nearby, at the moment the place is only accessible by car."
He added, "This means that finding tenants for the space now offered by Wix, certainly at the current rates, will not be easy. It should be remembered that in a year's time the Big Fashion Gillot complex will open nearby, and nearby is the Cinema City complex, which already has spaces offered for rent. The prices that Wix is asking are typical for northern area of Tel Aviv, which is the most sought after today, with high accessibility. The only advantage currently in the Wix project is the visibility towards the entire area, but for visibility alone, you don't get high prices today."
In 2019 Wix signed a 10-year lease with Canada-Israel for the new campus with three options to extend it. Canada-Israel is building the campus with its seven 10-floor buildings and five underground parking floors at a cost of NIS 1.5 billion.
In the first stage 30,000 square meters - three buildings - is being occupied, with the second stage due for completion in two years, when 1,600 employees will work on the campus.
Wix said in a statement, "Wix leased the office space at the shell level, and the pricing mentioned does not include the investment that the company made in the property, among other things in finishing work. The space for rent on a sub-lease is offered fully finished. In addition, the price mentioned is for the office space. The commercial space is offered for rent at higher prices, and therefore the cost of sub-leasing the commercial space is higher than for the office space. Wix is offering the office space for sub-leasing for a period of two to three years, and the commercial space for a longer period."
Published by Globes, Israel business news - en.globes.co.il - on July 20, 2023.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.