Big owner-occupier deals drive Istanbul office market: C&W

Office take-up in Istanbul reached a record of 250,000 m2 last year, according to Cushman & Wakefield.

The property adviser's Annual Review & Outlook Turkey 2013/2014, indicates that 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.

Tugra Gönden, board member 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 m2 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.

The report stressed that the Ümraniye and Kagithane 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 Kagithane 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 Kagithane on the European side, they went down from 11% to 1% Ümraniye and from 18% to 6% in Kavacik on the Asian side. The prime unit price in office rentals in the CBD spanning Maslak, Levent and Zincirlikuyu was $44 per m2 per month and remained at the $24 per m2 per month mark on the Asian side.

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 m2 enjoyed the strongest demand. Offices between 2,000 m2 and 5,000 m2 constituted 30% of all deals.