Istanbul Office Stocks Expected to Increase by a Further 3 Million Sqm

According to the “2013 3rd Quarter Istanbul Office Market Sector Report” published by Eva Gayrimenkul Değerleme (real estate appraisal consultancy), one of the leading organizations in the valuation sector, due to continued construction work, the office stock in Istanbul is expected to approximately double within 3 years. That is equivalent to an increase of a further 3 million square meters of office space in Istanbul.

istanbul office stockThe report divides buildings into categories A and B, based on the age, location and unit rental value of the building, and analyzes the rental, stock and occupancy rates of the offices, determining the point which the sector has reached in Istanbul, and identifying the best opportunities for investors. According to the report, office space which is newly being developed, and is in the process of being built is currently at 3 million m2, and together with the current stock of 3,5 million m2 of office space, this is expected to increase to above approximately 6,5 million m2 in 3 years. This figure includes the approximate 1 million m2 of office projects to be built in the Istanbul Finance Center.

Levent – Etiler region is the engine of the European Side

The report, which was prepared in order to set out the state of the office market in Istanbul, shows that the region with the highest occupancy rates of category A offices on the European side is the Levent – Etiler axis. The region also stands out as the one with the highest unit rental values. On the other hand, the offices situated in the airport region, Güneşli and Halkalı, which are defined as the western region, are shown to possess the lowest unit rental values on the European side. The report claims that while there are exceptions in category A offices on the European side, in general the unit rental value per m2 is around 15 -33 USD/m2 per month. However, the prices in some special projects and buildings can rise to as high as 45/m2 per month. In category B offices, the lowest prices can be found in the airport western region. Again, while there are exceptions, the weighted average of rents in this region is around 8-10 USD/m2. For category B offices, the prices in the Maslak region are 18-20 USD/m2 per month.

The top areas on the Anatolan side are Altunizade in terms of occupancy and Ümraniye and Kozyatağı in terms of unit rental values.

While the fact that the Altunizade region has the highest occupancy rates among category A offices on the Anatolian side stands out, it is also seen that the highest unit rental values are in the Ümraniye and Kadıköy – Kozyatağı regions. On the other hand, the Kartal – Maltepe region, which is still a new office development area, currently has the lowest unit rental values for m2 of office space, but the report does emphasize that it is a developing region.

As a result, the weighted average in category A offices on the Anatolian side reach 20-30 USD/m2 per month in the Ümraniye and Kozyatağı regions, and this is below the top values achieved on the European side. In particular, the difference between rental contracts entered into five years ago in the Ümraniye – Kozyatağı regions, and those entered into this year are quite high, which is the result of the increase in both the demand and the values in these regions. In category B offices on the Anatolian side, the lowest weighted average unit rental price per m2 is between 11-15 USD/m2 per month.

istanbul office stock

According to the data obtained as a result of the study, at the end of 2017 there will be a total of 6,5 million m2 of office space stock in Istanbul.

The report states that there is currently 1 million m2 more office space on the European side when compared with the Asian side. And when taking into account future office projects, it can be seen that, with the impact of the Finance Center project on the Anatolian side, there will be a development which is more or less equivalent to that of the European side. Should the planned developments and constructed projects be completed, the existing 3,5 million m2 of office space will reach 6,5 million m2 by the end of 2017. Approximately 1 million m2 of the additional stock of 3 million m2 of office space, which is either currently being planned or being constructed, is at the Istanbul Finance Center project.

An increase in demand is expected in the Kağıthane – Seyrantepe and Kartal – Maltepe regions, which are only just coming into the ascendancy.

 The report also signals that the concept of centrally located places of work will move to various different centers of the city together with these newly developing property projects. According to the report, an increase in demand is expected in the Kağıthane – Seyrantepe and Kartal – Maltepe regions, which are only just coming into the ascendancy. It is also foreseen that Maslak will continue its development as the Central Business Location of Istanbul, and that combined use and concept projects will be veered towards in terms of office types.

The report also points out that a part of the property projects which were mostly built for rental purposes by developers are now including a purchase option in recent periods.