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tel aviv real estate 88 .(Photo by: Ariel Jerozolimski)
Developers target Tel Aviv area for more office space
JOHN BENZAQUEN
05/01/2008
Experts believe that by the end of the year there will be a shortage of 400,000 meters of office space in the Tel Aviv metropolitan area.
During the past year there has been a flurry of activity in office real estate. Many developers are starting new projects or busily finishing others. In the Azrieli compound, the new square tower, the last of a trio, is going up. A 70-story office/residential tower is planned where the Elite factory used to be, while more high-rise buildings are being built, or being planned, along the Ayalon highway in the Petah Tikva Industrial Zone and in the Herzliya hi-tech industrial area. But despite the flurry of activity experts believe that by the end of the year there will be a shortage of 400,000 meters of office space in the Tel Aviv metropolitan area. In a interview with The Jerusalem Post, Chen Hogi, vice president and general counselor of Hogi Construction and Development Company, said: "By the end of the year there will be a shortage of approximately 400,000 square meters of office space in the metropolitan area of Tel Aviv. This is the economic powerhouse of Israel and has the highest number of office buildings in the country. Lack of office space may have negative repercussions on continued economic growth". Your company is building a 21-story office tower block in the Ramat Gan Diamond Exchange industrial area. Could you explain why you chose that particular area? The answer is simple; we happened to own land in that area. But let me add that we would have tried to acquire land in that area, because in our opinion it will soon become Israel's most important business center. In the past, the major business centers of this country were located first in the area around Rothschild Boulevard and Lilenblum Street. It was there that the large financial institutions were located - the banks, the insurance companies, the stock exchange, the investment companies. It was the Israeli equivalent of the City of London. Later there were talks of converting the Manshiah area - that part of town opposite the sea and bordering on old Jaffa - into the new financial area, and in the 1960s it was dubbed as the new city, the new financial center of Tel Aviv, and in consequence Israel. But these areas are 'no go.' The Manshiah area never got off its feet and there are talks of converting the few office buildings into residential apartment blocks or even hotels. The area is very suitable for that particular brand of real estate because it faces the sea. It is suitable for hotels and it is a prime location for high-end apartment blocks. The old business center in the Rothschild-Lilenblum area developed fast up to the 1990s, but since then it has been losing ground, mainly because getting there and especially getting out is a nightmare. The streets in the area are highly congested and one can be stuck in the areas perennial traffic jams for a long time. Today a successful business has to have a high degree of mobility. Therefore the preferred location for an office is one with easy access to the main transport arteries, to the national highway grid. For those in the Tel Aviv metropolitan area this means easy access to the Ayalon Highway, which in terms of location means the Ramat Gan Diamond Exchange area, the area of Yigal Alon Street, the area around the Tel Aviv Museum, the area around the old central bus station, the Ramat Hahayal Industrial Park, the Petah Tikva Industrial Park and the Herzliya Pituach Industrial Park. And that's about it. Could you explain the reason for the 400,000-sq.-m. shortage of office space. Is it bad planning on the part of the municipal authorities? It has nothing to do with bad planning. In the aftermath of the hi-tech bubble in 2000, Israel, whose economy was and is very hi-tech oriented, went into a deep economic crisis. As a result there was a nearly 30 percent vacancy rate in office space. In these circumstances, no new office building projects were started and that is what is causing the shortage today. It takes about three years to complete an office tower block, provided that one has all the necessary building permits. The plans for Hogi Tower show it is a very luxurious office building with large marble lobbies and a lot of public space. In fact, most, if not all, office buildings are built like that. Who decides quality and style in these matters? The architects in London and New York. The local economy is very integrated in the global economy. Many local executives make frequent trips to New York, London, Singapore, Hong Kong. As a result, they see office styles and decorations overseas and they want something similar.
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