Tel Aviv parking space prices skyrocket
7 November 2019 - globes
The price of parking spaces in class A buildings in central Tel Aviv have risen 30% in the past year.
Parking prices in Tel Aviv office buildings are skyrocketing, according to a biannual report produced by Natam Asset Management's research department. The report reviews parking prices in offices in commercial properties and their occupancy rates.
The steepest rises in parking prices were in class A buildings in central Tel Aviv, including Ibn Gvirol Street, Ben Yehuda Street, and Dizengoff Street. A parking space in these locations cost an average of NIS 1,000 a month in the first half of 2018 and NIS 1,300 a month in the first half of 2019. This makes the price of parking in towers in Tel Aviv the same as in the main Tel Aviv business district (Rothchild Boulevard, Ahad Ha'am Street, and the surrounding area).
Natam attributes this exceptional rise to technology companies and organizations with many employees, such as Kupat Holim Meuhedet, renting many parking places in the area, in addition to shared workspace companies.
Price increases all over Tel Aviv
Along the Menachem Begin Street traffic artery, which contains the towers north of the Azrieli Center, parking space prices rose 9% to NIS 1,140 a month. In the main Tel Aviv business district (Rothschild Boulevard), parking place prices were up nearly 6% to NIS 1,300. In the Yigal Allon Street area, parking space prices were up 2% to NIS 975 per month. A similar increase took place in the area of the Ramat Gan Diamond Exchange. The only area in which parking space prices fell was in the vicinity of the Tel Aviv Courthouse. Natam says that this decrease is technical - a result of commercial discounts received by large tenants, not a decrease due to values in the area. "The entrance to modern class A towers, such as Allon Towers, ToHA, Azrieli Sarona, and others, is gradually pushing old towers on this level down to class B, but is also contributing to higher prices in the city," says Natam VP real estate Or Ben Zvi Klein.
Parking prices also rose in class B buildings in the city center. This usually refers to small buildings of 5,000 square meters with medium or better finishing. Parking spaces in such buildings cost an average NIS 800 per month in the first half of 2018 and NIS 950 per month in the first half of 2019.
The trend in parking space prices in class B buildings in the rest of Tel Aviv was mixed, with lower average prices along the Menachem Begin traffic artery, in Ramat Hahayal, and the Tel Aviv Courthouse area, while prices increased in the main Tel Aviv business district, Yigal Allon, and the Ramat Gan Diamond Exchange. Prices of parking spaces were lowered in old office buildings in various places in the city. Klein believes that the reason was an attempt to tempt potential tenants into renting space in the buildings without lowering the rent for the offices themselves.
Will the light rail lower prices?
Natam attributes the rise in parking space prices to many new office buildings being occupied, combined with a reduction in space available for parking because of the new parking standards.
Land appraiser and Mekdan Management & Maintenance CEO Gil Maayan explains, "The upward trend in prices indicates a boom, the end of which is already in sight. I think that the day is not far off when entry to Tel Aviv will be completely blocked off or substantially reduced, which will render the huge parking basements in the office towers superfluous. In the short term, parking renters are groaning because of the high price, and developers are happy about their fine returns, but in the long term, the two parties will probably have to think about other ways of getting to work and substitute uses for hundreds of thousands of parking places buried deep underground."
Summing up, Klein says, "In a few years from now, when the light rail starts operating in Tel Aviv, I expect reductions in prices. In the end, parking is a source of revenue for owners of the building, and demand for parking spaces will fall. Until then, I predict that parking space prices will continue rising, or at least maintain their high levels."