Office towers outside Tel Aviv struggle to find tenants

One office tower on the outskirts of Tel Aviv in the northern business district of Bnei Brak, reflects the current office market crunch, which is affecting mainly offices outside the high-demand areas ofcentral Tel Aviv.

Park tower, which is being built by Amot Investments and Allied Real Estate (50%-50%), opposite the Ayalon Mall in Ramat Gan and near Ramat HaHayal in Tel Aviv, has 100,000 square meters of space. The tower has 45 floors of offices above three commercial floors.

The commercial space has already been leased to tenants and the stores have already opened. According to Amot’s financial report, the office tower will receive an occupancy form in the fourth quarter of 2025. However, so far, no leases have been officially closed in the tower. Market sources confirm that advanced negotiations are underway for large areas in the building, with several companies from various fields, but no leases have been signed.

Market brokers estimate that the difficult situation of the new tower stems from a problematic combination of an unattractive location, together with excess supply of office space, a slowdown in the tech sector that is reducing demand, and public transport that has not yet caught up with the pace of construction of new projects. All of this makes leasing out a building like Amot and Allied’s particularly challenging.

The cities filled with half-empty towers

While office occupancy rates remain high and stable in core areas such as Tel Aviv, the Ramat Gan Diamond Exchange district, and Herzliya Pituah, office developments in the second circle of the Tel aviv metropolitan region continue to struggle to find tenants. Cities like Bnei Brak, Holon, and Rishon LeZion suffer from an oversupply of projects, and the result is that new towers stand half-empty, despite huge investments in planning, construction, and marketing.

One of the main factors in choosing the location of office space is where it will be easiest to hire employees. According to Yoram Kaner, who has been involved in commercial real estate brokerage for decades, “The answer usually points to the ‘Scooter Square’ in central Tel Aviv, or areas immediately adjacent to it, such as the Ramat Gan Diamond Exchange district. On the other hand, more distant areas, even if they offer new space and affordable prices, have difficulty breaking the barrier of accessibility and employment attractiveness.”

In Bnei Brak, distance meets a large supply of office towers. Kaner stresses that in addition to the excess supply and the decline in demand, the location of the building makes it difficult to lease it, “In an area that is neither meat nor milk – neither Bnei Brak nor Tel Aviv.” He explains that the area suffers from traffic difficulties, and this is actually one of the main considerations of office tenants. “In fact, this is a widespread problem in the area, with the office buildings in Ramat HaHayal, not far away, also suffering from a decline in demand for a similar reason.”

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Amot is aware of the weak demand in the office market. In its second quarter financial report, the company estimated that the trend will continue in which “The new areas in the core markets will continue to be almost fully occupied, while in secondary markets such as Petah Tikva, Bnei Brak, and Holon, there is still some difficulty in leasing properties and keeping rents up to the rate of inflation.”

Real estate consulting firm Colliers Israel CEO Sarit Itzhakov also notes that “The tower in question is located in an area that is perceived as less attractive. It is located next to Dan Design, and the entire area caters to furniture, home design, construction and ceramics stores, and has not yet developed into an office area.”

Transport difficulty: In the future, the Green Line will run nearby

But despite the problematic location, Itzhakov is optimistic about the future. “This is one of the most impressive buildings in the area, and despite the transport difficulties, the building is five minutes from the railway station.” The light rail’s Green Line will also run nearby in a few years.

Yitzhakov adds that there is already some recovery in demand for offices in Tel Aviv’s second ring. According to data from Colliers’ research department, the occupancy rate in Tel Aviv is currently 98%, in the Ramat Gan Diamond Exchange district 94%, Ramat HaChayal 90%, Bnei Brak 87% and Kiryat Aryeh (Petah Tikva) 83%. In her assessment, the recovery trend in the office market is expected to continue, partly due to the fact that more and more employers are choosing to require employees to work from the office.

Published by Globes, Israel business news – en.globes.co.il – on September 18, 2025.

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