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Istanbul office market hits record level

Istanbul’s office market registered a record high for total occupier transactions (including owner-occupiers) as nearly 250,000 sq m of deals completed last year, according to Cushman & Wakefield’s Annual Review & Outlook Turkey 2013/2014, published today.

The market was dominated by large owner-occupier deals, while new development schemes offered attractive pre-lease and pre-sale alternatives to both occupiers and investors.

Tuğra Gönden, Member of the Board at Cushman & Wakefield in Turkey, said: “2013 was a record year for the overall volume of office deals completed. Interestingly, nearly half of all office transactions in Istanbul last year were for owner-occupiers. Some larger corporations, on the other hand, preferred to meet their need for space by renting prime Class B office stock, which brought about nearly 50,000 sq m of new rental deals.”

Giving an overview of the Turkish economy, the report shows that economic growth in the second and third quarters of 2013 was stronger than expected. Unemployment increased from 9.5% to 9.9%, while the industrial and services sectors gained share in total employment, whereas that of the construction and agricultural sectors decreased. The report foresees that the main engine for growth this year will be exports because of the weak Turkish Lira and rising international demand.

Ümraniye and Kağıthane became the rising stars of the office market

The report stressed that the Ümraniye and Kağıthane districts in particular continued to be alternatives for the office market. According to the report, 15% of all deals in the last two years occurred in the attractive Ümraniye district. Similarly, the Kağıthane district stood out as one of the most interesting and flourishing submarkets on the European side of Istanbul.

While vacancy rates in office stock dropped from 65% to 40% in Kağıthane on the European side, they went down from 11% to 1% Ümraniye and from 18% to 6% in Kavacık on the Asian side. The prime unit price in office rentals in the CBD spanning Maslak, Levent and Zincirlikuyu was US$44 per sq m per month and remained at the US$24 per sq m per month mark on the Asian side.

The banking industry was the most active industry in office rentals and purchases

Most of the demand arose from the banking, insurance, technology and consumer services industries, and almost 42% of total rental and purchasing deals took place in the banking and finance industries alone.

Because of large-scale user operations that made up half of the office deals in 2013, office spaces larger than 10,000 sq m enjoyed the strongest demand. Furthermore, offices between 2,000 sq m and 5,000 sq m constituted 30% of all deals.

Shopping centre space per capita increased with Ankara leading the trend

The review also presented some striking figures on the retail sector, particularly on the development of shopping centres. According to the report, in 2013 the total volume of investment in shopping centers reached almost US$310 million. At the same time, as at the end of 2013, the gross shopping centre space per 1,000 in Turkey increased to 122 sq m. Ankara became the city with the largest shopping centre space per 1,000 with its 260 sq m while Istanbul followed the capital with 243 sq m.

The number of shopping centres will reach 440 in five years

Making some additional projections on the future of shopping centres, the review suggests that the number of shopping centres will reach 440 in five years, once investments planned by the retail industry are realised – total shopping centre supply will exceed 12 million sq m by then.

Shopping centre space will be 160 sq m per 1,000 in 2018

In his assessment of the report, Toğrul Gönden, Managing Partner of Cushman & Wakefield in Turkey, said: “The total area of shopping centres reached 9.4 million sq m in 2013, with an annual increase of 10%. Although some of the bigger openings were postponed to 2014, around 1 million sq m of space was supplied to the market throughout the year. A year-over-year comparison shows that the volume of new openings almost doubled. In line with the increase in supply, it is expected that shopping centre space per 1,000 in Turkey will reach 160 sq m in 2018.”



Ola Jacobsson

Ola Jacobsson


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