In recent weeks we learned about licenses being issued for the construction of new office towers in Tel-Aviv that will add hundreds of thousands of sq m and increase the office supply in Tel-Aviv by about half a million sq m. But has anyone at Tel-Aviv City Hall asked whether this space is actually needed? Has anyone checked the average take-up in recent years? Did they produce a master plan for the next ten years? Did they conduct a comprehensive survey of the need for office space in the city? Did they consider what will happen with the existing office space? I believe the answer is in the negative, as I have no logical explanation for the licenses that the city issued for new projects without any planning for the use of the new spaces and without knowing who the main users of this space will be.

At the end of the 1990s several large corporations began building office towers. These projects were completed in the early years of the new millennium. The high-tech crisis of 2002 resulted in four difficult years for income-producing property, during which the towers were half empty and rents dropped significantly. In 2006, with the beginning of the recovery, the construction of new office towers began once again, and for the past year these have been almost bereft of tenants, while office space in the periphery is also underutilized.

At present there are some 200,000 sq m of unoccupied office space in Tel-Aviv in new buildings such as those in Atidim (the Kardan building and the Elco Tower), in addition to 100,000 sq m of old office space. It is true that the last year was a difficult one for real estate both in Israel and abroad, and as a result of the crisis office occupancy in Tel-Aviv dropped 35%.

Our multi-year investigation reveals that Tel-Aviv uses on average 100,000 sq m of office space in periods of economic stability, less at times of crisis.

I am not opposed in principle to the construction of new office towers in Tel-Aviv, but it is important to plan ahead of time what to do with the existing space. In the U.S. and Europe, where we were involved in many large real estate deals, the planning that preceded the licensing phase was the most important and difficult part of the projects. We checked office occupancy over the years, during periods of crisis and expansion, the accessibility of the place, and the availability of transportation and parking. At the same time. the local authorities made sure that no excess supply is created, so that the office space remains occupied. In most cases the solution involved the conversion of old office towers into residential space (lofts), thereby improving supply in central areas and maintaining occupancy.

There are several strategically located office old buildings in Tel-Aviv, for example the Clal Building. If the city knew how to plan, check, and replace old with new, as they do in Europe and the U.S., I believe that both the residents and business owners in Tel-Aviv could benefit from it, and the city itself could gain from it financially. But Israel is Israel and Tel-Aviv remains Tel-Aviv, so it is quite likely that in times of economic expansion we will hear about the addition of one or two new office towers, for why bother to plan ahead?