Tel Aviv office rent peaked in 4Q, research finds

Rents for offices in the Tel Aviv area peaked at the end of 2019 at NIS 103 per square meter, with a 95% occupancy rate, the report said.

By JERUSALEM POST STAFF
An aerial shot of a Tel Aviv beach (photo credit: BARAK BRINKER/TEL AVIV-YAFO MUNICIPALITY)
An aerial shot of a Tel Aviv beach
(photo credit: BARAK BRINKER/TEL AVIV-YAFO MUNICIPALITY)
Office space in the Tel Aviv area was in high demand by hi-tech, technology and international companies in the fourth quarter of 2019 and beginning of 2020, according to a CBRE Israel study.
Rents for offices in the Tel Aviv area peaked at the end of 2019 at NIS 103 per square meter, with a 95% occupancy rate, the report said.
The expectation in 2020 is for another 1,000,000 sq.m. of new office space in the Gush Dan area to be marketed, of which approximately 300,000 sq.m. will be in the Tel Aviv area, CBRE Israel chairman Jacky Mukmel said.
In 2019, large office rental deals closed in about 50% less time than the average over the last five years, which is the expectation for 2020, the report said.
The average return for offices in the fourth quarter of 2019 decreased 6%-6.75% compared with 2018.
Research on the office sector in the fourth quarter found a new phenomenon, especially for hi-tech, international public companies and start-ups, where senior employees determine where the offices will be located, i.e., in which city and which area. Many companies are opening branches according to the convenience and the desired area of senior employees, the study found.