Commercial news from Israel - 5th November 2024

This week, I took the light rail to a meeting at Mivne Group. As I got off at Shaul HaMelech station and walked toward Yigal Alon Street, I found myself doing a 360-degree turn, taking in the spectacular buildings surrounding me: ToHa 2, Azrieli Spiral, East Tower, and Mivne Hasollelim. All new. All designed to the highest standards, LEED-certified, equipped with the right amenities - restaurants, fitness centers, and more.

I couldn't help but wonder why these premium properties aren't significantly leased yet.

Even New York City, with its 538 million square feet of office space and annual new construction of approximately 32 million square feet, shows an 18% vacancy rate. However, a deeper analysis reveals an interesting contrast with Tel Aviv: while B and C class buildings struggle with high vacancy rates, Trophy buildings (Class AAA) maintain waiting lists.

Israel isn't operating in a bubble. Beyond the global factors affecting commercial real estate - including the ongoing Russia-Ukraine war, COVID-19's lasting impact on office spaces, Gen Z's preference for remote work, tech company valuations declining, and major technology giants reducing their footprint - we face additional local challenges. The extreme uncertainty we've experienced in recent years (COVID-19, judicial reform debates, the Iron Swords War) makes it particularly difficult for companies to commit to significant long-term decisions like office relocation ("Let's postpone it to next year...").

The mental state required for an office move decision is, first and foremost, optimism - a commodity that's been in short supply here in recent years. However, when the time comes to make this move, ensuring its success and optimal execution requires professional expertise.

Commercial real estate in Israel

Shemen Real Estate Maniv Ltd. has completed a transaction for the purchase and lease of half of the rights in the land and buildings in Dimona used by Elbad Mashuat Yitzhak Ltd.

A subsidiary of Rakah Pharmaceutical Industry Ltd. entered into an agreement for the sale of the company's property with a total area of approximately 5,065 square meters in Or Akiva, for NIS 29.75 million.

Commercial real estate overseas

Property and Construction Ltd. is negotiating to lease approximately 31,000 square meters to an international corporation in the HSBC building in New York, with an option to expand the rental space, for a long-term period.

A partner of Mishorim Real Estate Investments Ltd. in the USA entered into an agreement to purchase the Plaza Park Westland shopping center in Jacksonville, Florida, for approximately 13 million US dollars.

Real estate in the headlines

MGS together with Gav-Yam sold an office building in Holon to the Timora Foundation (Globes).

Paz sold 3 lots in the south for NIS 127 million (Calcalist).

Guy is sure: after the war ends there will be a "boom", and this is the sector that will be positively affected (Globes).