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As per Asteco’s latest report, office sales in Abu Dhabi have flatlined due to a general lack of supply, but that some buildings still have office space available. These are Sky Tower and Infinity Tower on Reem Island. ADDAX Tower, also on Reem Island, is expected to add more space to the existing stock.
Overall though, supply continues to be stable with vacancy rates of up to 40% throughout the capital. It has been noted that companies choose to move towards better quality offices, with those in the business district more likely to attract better footfall. Meanwhile, low quality office towers have further decreased their rental rates to attract demand as more companies now choose to upgrade and move away from traditional areas.
In the initial quarter of 2015, the Asteco report pointed out that there would be no drastic changes in the office market scenario. There is a higher demand at the moment for bigger office space, giving an indication that businesses are working on expansion. There are also new entrants in the market.
It has likewise been observed that fitted office space in new buildings offering better quality finishes and more efficient space, with amenities such as covered parking, access to retail and amenities, continue to be the most in demand.
A CBRE report says that with the oil and gas sector in a period of decline, some companies are looking to downsize rather than upgrade their office space. The same report also echoes the fact that office rentals are not on the rise but are at a steady rate. Companies are now very careful as to where to set up base to reach their target market and be accessible to their peers. Most prefer a commercial arena with an open space, a casual work environment, restaurants and cafes.
With the limited new supply in the market, some companies are willing to make the initial investment even though it may seem a tad high as they consider it an investment for the future.
• Demand focusing on bigger, fitted office space in new buildings
• Businesses now prefer to set up base in better quality locations
• Low quality office towers reducing rental rates to attract demand
Source: Urmila Santosh, Special to Properties
The writer is a freelancer