Vacancy rates at offices in Istanbul, having a supply of 4.5 million square meters of category A offices, are highest in Kağıthane with 43 percent, while vacancy rates in Maslak are at 20 percent and in Levent at 14 percent. According to experts, the office market is developing fast, but giving signals of danger with high rates of vacancy.
While the office market develops and grows on one hand, it is giving signals of danger on the other. While it does vary by district, the vacancy rates of offices in the first half of the year range from 6 to 43 percent. According to Tuğra Gönden, a Managing Partner in the real estate consultancy company Cushman & Wakefield, the office market is divided into two branches. The first is the traditional model of building it like a house and selling it, while the other is the offices developed by corporate investors and either kept in their portfolios by letting them, or sold collectively. Stating that the traditional office market brings risks with it, Gönden says, “25 percent of the offices in Istanbul are like this, and so are 40 percent of those still being built. The risk is this: a corporate company wants a large office area. It does not want to enter into separate agreements with tens of people in an area which is sold piece by piece. Additionally, the multi-owner structure causes problems for any improvements in the building.” Gönden also draws attention to an increased number of vacancies in the districts where these types of offices are high in number.
Güneşli is Filling Up
Stating that the highest vacancy rate in Istanbul is in Kağıthane, with 43 percent, Gönden says that the district needs time. Adding that more than 150 thousand square meters of offices have been completed in the region in close to 4 years, he says, “The high amount of supply within a very short period has damaged the demand – supply balance in the region. As a location it is advantageous. However, unfortunately, the majority of the offices here are also being developed with the build and sell model, which is causing risks.” Vacancy rates in Maslak are 20 percent and 14 percent in Levent. However, Gönden says it would not be correct to say that these areas are risky. Gönden states that offices were completed in the first half of the year, and that this is the reason behind the high vacancy rates, which would improve in a short time. He states that existing buildings in Levent are in demand as there is nowhere for a new project there. Gönden, adds that vacancy rates in Güneşli Basın Ekspres have fallen from around 20 percent to 8 percent, saying the price advantage was an effective factor here.
Ataşehir will Develop
According to Gönden, Kozyatağı and Ataşehir will be the center of attraction on Anatolian side. Stating that corporate firms are displaying a high demand in Kozyatağı, Gönden says that Ataşehir will develop too, with the Istanbul Finance Center. He states that with projects coming thick and fast, the vacancy rates in Ataşehir have risen, but also believes that this rate will fall, stage by stage over the coming years. Gönden, who says that the average vacancy rate in Istanbul is 15.6 percent, points out that risks begin to rise on both sides of the city, as you move away from the central business regions.
Secret Demand is for Apartment Blocks
Tuğra Gönden, who states that most of the office users in Istanbul are in units in apartment blocks in regions such as Mecidiyeköy, Şişli and Beşiktaş, says, “The secret demand in the market is for units in apartment blocks. Those with 3-5 staff, and those which are not corporate prefer this. The licenses required for places of business are not possessed by these units. It is not legal to open offices in a residential unit, but it is widespread.”
Personal Investment Can Be Risky
Gönden responds to the question, ‘Should personal investment choose homes rather than offices?’ as follows: “Consider an office of between 80-100 square meters. The cost of such a place in a new office building would be 2 thousand dollars. There would also be monthly contributions of 500 dollars. However, if a person goes to a unit in an apartment block he / she will pay 2 thousand liras, and no monthly contributions. Evaluate that if you are someone buying offices and waiting for the rental income. Would the user go to your 2 thousand 500 dollar office or go to a unit in an apartment block. And if your office is vacant, you will have to pay the monthly contribution too. Someone waiting for rental income should think again when choosing an office. But there is no problem if he / she is the user.”