Offices

The Azrieli Group has dropped residential plans for its 91-story Spiral Tower in Tel Aviv, converting the space entirely to offices amid a luxury housing glut.

A massive wave of corporate relocations to ultra-modern towers in Israel is leaving vacant spaces in older office buildings, creating new market challenges.

Modern office towers face rising gross-to-net ratios, climbing from 15% in the 1990s to 27% today, as developers incorporate extensive shared amenities to attract corporate tenants.

The relocation of major firms from Airport City to newer business parks highlights rising vacancy rates and rental pressures in outer Tel Aviv office markets, contrasting with strong logistics demand.

A Natam report for the first half of the year points to a change in the demand map for offices: software and gaming companies are reducing space, while defense-tech, cyber, and defense industry companies are becoming the growth engine. In Tel Aviv, occupancy in prime towers is approaching 99% and rent is climbing; but outside of it, there has been a decrease in occupancy and prices.

REIT 1 has made progress in leasing office space at the Infinity complex, but occupancy rates remain below targets. Amid moderate growth in operating income, the fund was forced to revise its annual performance forecast downward.

Following advanced negotiations to lease approximately 4,500 square meters at the Wix campus in Glilot, the deal has been canceled. Fiverr, whose current lease in Tel Aviv is nearing expiration, had been seeking larger office space, but its future plans remain uncertain.