Commercial news from Israel - 17th February 2025

Commercial Real Estate: Ending a Disappointing Cycle, Starting a Promising One

Twice a month, I join video calls with colleagues from Central and Western Europe and North America to share insights and market updates. Here's what's becoming clear: while Israel faces its unique challenges, we're not operating in a bubble - global commercial real estate trends directly impact our market.

Right now, we're witnessing the end of a cycle. Recent years have seen significant value drops in commercial properties - quite different from what we've seen in residential real estate. This decline mainly stems from commercial real estate's sharp reaction to interest rate hikes, combined with the shift to remote work and other factors that have reduced occupancy rates across most sectors.

But here's the encouraging part: we're likely approaching the cycle's bottom, and recovery signals are emerging:

• Increased office leasing activity
• Positive net absorption in residential markets
• Growing industrial absorption
• Hospitality sector revival
• Booming data center market
• Retail stability (mainly due to space scarcity)

My hope? Once the war ends, and assuming the Bank of Israel's Monetary Committee moves toward interest rate cuts, we'll see similar positive trends in Israel's commercial real estate market

Commercial real estate in Israel

A subsidiary of the Hajj Yazom Real Estate Ltd. entered into an agreement for the sale of the Salama MOMA project in Tel Aviv for 150 million NIS.

The Hamat Group Ltd. decided to establish a logistics center in an area of approximately 25,000 square meters in the northern industrial zone of Ashdod.

Commercial real estate overseas

A subsidiary of Mishorim Real Estate Investments Ltd. completed an agreement for the sale of the Courtyard Tucson airport hotel in exchange for approximately 14.9 million US dollars.

A subsidiary of Medipower (Overseas) Public Co. Limited signed an agreement to purchase a commercial complex (the area of the buildings for rent is about 10.3 thousand square meters) in New Jersey, USA, for 37.5 million dollars.

Real estate in the headlines

Congratulations to Amichai Kilstein on his appointment as the head of income-generating assets at the Azrieli Group.

Shemen Real Estate buys a profitable industrial property in Samaria (the real estate center).

A realty fund purchased 50 dunams in the south of the capital for NIS 127 million (Real Estate Center).