Propin Property Investment Consultancy's 2010 Istanbul Office Market Report notes that the third quarter was a period in which the number of leases continued to rise without easing despite the usual deceleration effect of the summer holiday and the month of Ramadan.
New buildings are rented rapidly
In the CBD, the vacancy rate was observed at 11.5 % for Class A office buildings and 12.6% for Class B office buildings. Compared to the last quarter, Class B leasable office area rose 0.6%. In Out of CBD-Europe and Out of CBD-Asia, increases of nearly 3% were noted in both Class A and Class B vacancy rates. This growth in the third quarter resulted from the entry of new buildings on to the market and the discharge of completed buildings.
Propin reports that, although an office area of 14,000 m² was added to the stock in Out of CBD-Asia, the general vacancy rate of 14.5% in the previous quarter regressed to a level of 12.8% in the third quarter. The fall in the vacancy rate despite new office areas coming on to the market was caused by the large number of lease transactions performed in the last quarter.
Umraniye has remained the most popular office region Out of CBD in recent periods. As well as office buildings continuing to be built in the area, many new office project investments are also on the agenda. In Umraniye, the Class A office vacancy rate, which was 19.7% in the second quarter, decreased to 14.7% in this quarter. Instrumental in this fall were: the lease by Celebi Holding of an 8,000 m² office building and the lease by Nycomed Pharmaceutical Company of a 1,000 m² office building at Anel Business Centre located in Umraniye.
At the airport, Class A vacancy rates noted an increase of nearly %3 in the third quarter along with the entry of the new buildings.
Looking at the details of the emptied office areas, it was found that users leaving the city center tended to choose to move to Out of CBD locations, following firms from their respective sectors. Firms preferring to leave the center will be replaced by Class B office users who want to be close to the CBD due to the demand density.
The decrease experienced in the Class A vacancy rates in Out of CBD-Asia due to demand in the Umraniye district was also experienced in Class B buildings.
According to the report, the Class B building vacancy rate, which increased, even if only minimally, in the last quarter in Out Of CBD-Europe, showed a decrease by 3% due to leases realized in the airport, Sisli, Taksim-Nisantasý districts in the third quarter.
Highest prime rental rate in the Levent district
Historical rental prices for Class A and Class B office buildings in the CBD continued to increase also in the third quarter, as in the second quarter. For Class A office buildings historical rental prices grew to US $27.2/m²/month, an increase of US $0.7, and those for Class B was US $16.6/m²/month.
The Levent region, where historical prime rent is generally demanded, an increase of nearly US $3 over unit rent in the third quarter. Levent increased its average rental figure of US $55 in the quarter, maintaining its reputation of being the area where the highest prime rent figure is demanded.
Propin explains that in Out of CBD-Europe, no remarkable decrease was observed in historical rents of both Class A and Class B offices compared to the last quarter. In Out of CBD-Asia, Altunizade Class A office historical rents noted an interesting increase of US $3. The increase in the euroUS dollar exchange rate in the quarter was among the reasons for the rise in historical rents generally. Class A historical rents have stayed at similar levels during the last four quarters. In Class B general historical rents throughout Istanbul rises continued to be experienced also in this quarter.
Propin does not foresee any significant decrease or increase in general historical rents in the forthcoming quarter. Propin predicts that leases will continue at a similar speed until the end of the year and that therefore a decrease in vacancy rates