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2021-02-17T09:43:59.282Z


Whoever eulogized the office market, probably did so too soon. How much can you work with pajamas while the kids are shouting around? | Real Estate Magazine


Whoever eulogized the office market, probably did so too soon.

How much can you work with pajamas while the kids are shouting around?

  • Soprin Weiss' ONYX project in Kiryat Ono

    Photo: 

    Imaging: 3Dvision

Produced by the Department of Special Supplements

At the beginning of the Corona crisis, the office market came to a complete standstill.

Gloomy predictions revolved around his untimely death.

Workers moved to work from home, and demand for offices declined.

Already after the second closure, and especially after the third closure and the reports of the vaccination campaign, there was a sharp increase in the number of transactions.

Companies have found that zoom calls do not replace personal interaction, and employees do not want to work from home in full-time pajamas in front of screaming children, but rather combine work from the office.

When will the office market recover?

Is it already possible to expect the first signs of recovery?

Today's real estate inspection, with the assistance of Prof. Danny Chamansky and Tamir Ben Shachar, analyzes the yielding market ahead of the exit from the crisis.

Whoever eulogized the office market, apparently did so too soon.

True, the market today is at a difficult crossroads.

Millions of square meters of offices stand empty as an irreversible stone, in the midst of the construction of additional millions of square meters of offices throughout the country, especially in the expanded Gush Dan.

True, a high percentage of those who have worked in the office so far have moved to work from home, and many of them are reducing space.

But the question is: until when.

On the face of it, the corona landed on the office branch by surprise.

The social distance and the first closure that followed led to a crisis in the market.

Many companies have sent their employees to continue working from home, and office occupancy has dropped dramatically by about 20 percent in various cities in areas of demand.

Many of the companies are taking advantage of the situation to reduce space and spend some of it on subleases.

A survey conducted about a month ago by the international firm BDO, which included 100 CFOs in technology companies, revealed optimism about what is expected in the coming year.

54% of participants estimated that they would increase sales and profitability, and 65% expected a recovery of the global economy.

 CFOs were asked about organizational measures to be taken.

25% said they would downsize real estate and merge offices against the backdrop of remote work, which is expected to continue in part in the coming years.

At the beginning of the year, moving to work from home seems like a reality that will stay with us for a long time.

But alongside the benefits of working from home, recent polls reveal that organizations and companies are also experiencing the downsides.

Many employees and managers feel they lack personal interaction with colleagues and hallway conversations that yield creative sparks.

"Man is a social creature, and the corona will not be able to change that either," says Sabata Maslov, chief psychologist at the Philatelic Institute.

"Working from home harms the employees' sense of belonging to the organization. Employees should be provided with conditions that will strengthen the sense of security."

Interestingly, when they started talking about vaccines, Zoom stock and home-made complementary products plunged by tens of percent.

Today, experts are talking about hybrid work, which combines work from the office and from home.

Many employees are begging to return to the work environment to which they have become accustomed over the years.

"In the perspective of nearly a year of working from home, it is clear that there is no substitute for social interaction, and this has led to a resurgence in the office market," says Keren Maoz, VP of Marketing and Business Development at Best Group.

"Working from home has shown its many advantages, but also its disadvantages," notes Prof. David Pasig, a futures researcher and head of the Virtual Reality Laboratory at Bar Ilan University.

"I do not believe that we will give up the offices easily, but we will combine the two. The smells, the electrochemical waves in the brain that pass in a frontal session, are not reflected in technology."

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"The office market will not be erased"

A number of large companies in the economy have signed large and small deals, out of a desire to take advantage of the decline in demand and rush to close deals on commercial terms that benefit the tenant.

Various studies show a decrease in productivity following work from home.

Many workers, even in the high-tech field (which accounts for 10% of the labor market) are not satisfied with working remotely due to inadequate home infrastructure.

"I believe that in the next six months we will see a return to work in the office, combined with work from home in much smaller volumes," Maoz estimates.

"The companies will adapt the existing areas to hybrid areas that combine the same support system and services for the employee with a dynamic seating configuration. Part of the reduction of areas will be caused by outsourcing some services, such as catering, gyms, operating areas for leasing vehicles. But will only be transferred to external suppliers. '

Tamar Avidan, VP of Marketing for Red Bynet Properties of the Red Bynet Group, agrees that "the office market will not be deleted, it will change and be adapted to new work habits.

We see at Beit Bynet on Mount Hotzvim in Jerusalem the speed with which workers returned to offices after the closure, faster than Tel Aviv or other employment areas.

Parents have difficulty working from home for long periods of time.

When the children arrive at noon, the boundary between home and work blurs, and it is difficult to maintain a work routine like this. "

Uri Fleischman, VP of Marketing at the Levinstein Group: "In recent weeks, we have seen a significant recovery in the field of income-producing real estate and offices. Along with small and medium-sized companies, quite a few inquiries are received from large companies. "I attribute the recovery to the fact that we are almost a year from the beginning of the crisis, and everyone has understood the importance of working in the office alongside working from home. I estimate that in the coming months we will see how the office market returns to us in full force."

Significant transactions

The office market relies heavily on high-tech companies, which lease large areas and also affect the employment market.

The back-to-office trend is being bolstered by a huge deal recently signed in the United States - technology giant Alphabet, Google's parent company, has announced the construction of a new campus near Seattle, Washington, which spans 40 acres.

Significant deals were also recorded in Israel, when Microsoft launched its new campus in Herzliya Pituach, which covers 46,000 square meters, and Riskipade, a provider of payment solutions in e-commerce, leased offices in Europe in Tel Aviv with a total area of ​​7,200 square meters for the period Of 10 years at an estimated cost of about NIS 12 million.

Veteran employment areas in Gush Dan continue to develop, despite the corona.

Petah Tikva is one of the cities where the most employment areas have been added in recent years, with more than half a million square meters of employment space in the years 2017 to 2019, according to the CBS.

The Sofrin Group and the Weiss Group began building the Basel Park project in the Kiryat Arieh employment area.

This is a 27-story office and commercial tower, costing about NIS 350 million.

On the eve of the third closure, Gev-Yam signed a significant lease agreement with the car technology giant GENERAL MOTORS on an area of ​​approximately 9,000 square meters in the center of Gev-Yam in Herzliya, for a period of 5 years, for a total consideration of approximately NIS 63 million.

In addition, Gev-Yam has signed lease agreements with Microsoft and Zarto companies, so that all the areas that Microsoft will vacate in the Gev-Yam center in Herzliya, with the move to its new campus, have been marketed and leased in advance.

"We are experiencing very strong demand these days in the Gev-Yam complexes in Herzliya Pituach, which include about 250,000 square meters," reports Avi Jakubowicz, CEO of Gev-Yam.

"The company is promoting a master plan for an addition of about 30,000 square meters in Herzliya."

At the same time, many companies are preparing the ground for the future.

Acro Real Estate and Canada Israel have in recent weeks purchased an employment plot in Herzliya Pituach for NIS 65 million, for the construction of a 6,200-square-meter office project.

The companies that win the bidding already own the nearby Microsoft campus, and are increasing their holdings in the supply of offices in the area.

Ziv Yaakobi, CEO of the Acro Group: "In every crisis there are also business opportunities, and some of our efforts in the current period are directed at locating and realizing these opportunities."

Not only in the cities of the center has there been a dramatic awakening in the shadow of the corona.

Apple announced that it has signed a contract to rent offices for a period of 7 years in Matam Park in Haifa. The new offices cover 28,000 square meters at a cost of NIS 30 million per year.

Clal Insurance and Finance enters as a partner in an office project that Levinstein is building in the heart of the main business center in Be'er Sheva, which includes two office towers with an estimated financial value of NIS 260 million with office space and 31,000 square meters of retail space.

Investments have not diminished either.

Haifa Science and High-Tech Park is expected to expand right now.

About a month ago, the mayor of Haifa and the management of the economic company approved the construction of two additional office buildings, at a cost of NIS 270 million, funded by the Haifa Economic Company and a building company.

"Demand for knowledge-intensive industries in Haifa is growing," said Haifa Mayor Einat Klish Rotem.

"We are making progress without putting the economic society on economic adventures."

According to Asi Levitin Ben Amram, VP of Marketing and Business Development at Dan Real Estate, "There is optimism in the markets, and we are seeing a lot of interest and deals closing.

They want to establish themselves and understand the opportunity that has been created.

Whoever sits on the fence and waits for developments will probably find himself at a disadvantage in relation to competitors. '

Leaving the center of Tel Aviv

Beyond the change in the method of work, the Corona has accelerated a process that began even before the departure of offices from the center of Tel Aviv and Ramat Gan.

Working from home has emphasized the significant benefit of saving time, and workers want to continue to avoid endless traffic jams and parking searches.

Tanya Zore Markowitz, owner of the Zore Markowitz accounting firm, moved with her family to Moshav Talmei Menashe.

For years she worked far from home and had to spend long hours on the road.

"I realized I wanted to improve my quality of life, to make time for my childhood and the sports I love to do," she says.

She purchased a new office in the Zrifin complex, and until the construction of the new office was completed, Tanya and her husband moved to work in the office located about a quarter of an hour from their home.

"The transition has contributed to my productivity. I come to work fresh and relaxed. It is a good distance to maintain a separation between home and work, but close enough to be available to all," she concludes.

"The trend of offices near the place of residence began even before the Corona and only intensified during this period. Employees are looking for a quality of life, without standing in traffic jams for hours," emphasizes (Brigadier General Res.) Eitan Levy, one of the owners of the real estate company Ayala Agam. The first offices in the Zrifin complex, Ayala Towers. "We are seeing more and more people whose work is close to home with high priority.

"People do not want to continue working full-time in their pajamas, but to work close to home."

Tzachi Sofrin, owner of the Sofrin Group, adds: "Managers understand the importance of being close to home during this period. The aim is to make the work area more comfortable for employees, while increasing the hours the employee is in the office and not on the roads.

"Some companies have decided to move the offices outside Tel Aviv, and thus also enjoy lower rents. The amount of rent may reach half price in the second circle of Tel Aviv, to a level of 55 to 70 shekels per square meter, while in Tel Aviv also during the Corona period rental prices They stand at an average of NIS 110 per square meter.

Contractors are already preparing for change today.

Roni Mizrahi, president of the Chamber of Contractors and owners of Mizrahi and Sons, says: "For those hundreds of thousands of Israelis who choose to continue working from home, we are already adapting, with the help of the team of architects and interior designers available to us, the apartment design.

To this end, we have created a design of apartments in which one room will be designated in advance to be an office.

"For example, in the Park Towers and Atlantis projects in Bat Yam, we have created a situation where even if there is no additional room, it will be possible to incorporate as intimate a work area as possible at the entrance to the house or another room, containing 2-3 work stations for children as well."

The hot table method

With the help of the Research and Counseling Center of Prof. Daniel Czemanski and Tamir Ben Shachar, Real Estate Today analyzed the future of the office market.

"Recent transactions show that the market has not frozen and continues to operate," explains Tamir Ben-Shahar.

So what is really expected in the market in terms of demand, locations, prices and the new and innovative design required in buildings and offices?

We will start in the office market until the corona crisis.

There are huge areas of 23-25 ​​million square meters gross for offices, used by 1.2 to 1.3 million employed people. About 50% of them are concentrated in the Tel Aviv metropolitan area. Since 1995, an average of 413,000 square meters of regular office space has been built in Israel every year. .

7 out of 10 cities with the largest supply of office space in Israel are located in the Tel Aviv metropolitan area.

In Czemanski Ben Shahar it is estimated that the average annual demand for high-tech offices will be 150 to 170 thousand square meters.

Outside Tel Aviv, new locations are being created that attract activities from Tel Aviv and are an alternative to it - banking, finance, insurance and high-tech.

In the long run, after the corona, a new world of employment will be created - "Hai-Tech" (a concept invented by Adv. Shraga Biran). "We will live where we work and work where there is life," he said.

This will create new urbanity and demand for new products in other locations.

A mix of apartment uses will be created - a bed with a table, studio, loft, clinic, rooms for rent, combined units.

40% of employees can work from home.

20% -10% will also realize this.

Will 2.5 to 5 million square meters of existing supply become redundant?

The companies will reduce office space and manage an efficient set of desks.

For example, in the Deloitte Amsterdam building, there are 1,000 tables for 2,500 employees.

Some employees will work at least part of the time from home, using the hot table method.

(Similar to a warm bed).

Technology will be used to maximize profit from each table.

The concept of an office as a meeting place, networking and interactions between people will continue to exist because man is a social animal.

It is possible that young people in particular will want to return to routine more quickly.

Produced by the Department of Special Supplements

Source: israelhayom

All news articles on 2021-02-17

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