What will the office market look like in 2021 in light of high-tech recruitment on the one hand, and beyond work from home on the other?
The high-tech industry is the index
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The office market in Israel is greatly influenced by the high-tech world and its affiliates.
They are the leading locomotive in the occupancy of the offices and especially in the emphasis on the new and prestigious office towers and buildings.
Only high-tech companies can in a short time increase their areas by hundreds of percent and move, for example, a surface of 100-200 square meters to large offices of about 1,000 square meters and north.
In my opinion, the state of the high-tech industry and its affiliated industries is, first and foremost, an indicator of the direction in which the office market is heading.
According to data from research companies that specialize in the subject, despite the corona crisis, the high-tech recruitment of companies working in Israel amounted to about $ 10 billion, a record of 5 years, and a growth of about 30% from 2019. The largest volume was in the first and last quarter, with recruitments Of about $ 2.7 billion per quarter.
On the other side of the coin, despite these impressive figures we are witnessing a change in the working habits of companies.
A large proportion of employees have moved to work from home, a factor that brings great savings.
Rent, management fees, property taxes for authorities, parking spaces for employees, vehicles, cleaning, security - these are significant expenses for any company.
Of course, company executives are aware of the issue, and if they maintain revenue and in the same breath save money on expenses, the final profit line will go up.
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If we add the expected unemployment data of about 10% in 2021, compared to about 3% before the corona, in addition to postponing decisions to rent areas until it becomes clear whether the corona era is stabilizing due to vaccines, we will understand why we are witnessing a certain stop in the population.
From the other side there is also encouraging news.
Increasing the area of work spaces, the so-called WEWORK companies, in addition to growth in areas such as medical services, hotels, conversion to living spaces and other sectors and industries that developed during the Corona period - will increase demand.
On the eve of Corona the office market was at its peak, with many construction starts.
The landlords of the rental property set the tone.
Today the tenants are returned by the landlords, who try not to give up any deal and harness the tenants to their properties.
This situation led to an average decrease of about 8% in the annual rents of the companies.
Despite this, my assessment for 2021 is optimistic.
As long as the vaccines manage to maintain medical stability, we will return to pre-corona prices, and even more.
The writer is
CEO and owner of the Real Estate Forum Group, Chairman of the Association of Managers and Commercial Real Estate Agents in Israel and CEO of the Commercial Business Division Keller Williams Israel
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