0 utside the Beirut Central District (BCD), the majority
of prime new office space is located in Hamra and
Ashrafieh, especially Charles Malek Avenue. New
secondary developments have also emerged in Furn el Chebak,
Badaro, Sin el Fil, Verdun and Tehwita.
Around the city, office centers need to be specialized and flexible
to resist the BCD’s demand-pull. New office buildings in
Ashrafieh and Hamra may still enjoy high occupancy, but
mixed locations – especially those with a preponderance of residential
units – might witness a decline in occupancy rates.
Until last year, prime locations such as Charles Malek avenue
(Ashrafieh) and Hamra were in high demand, with newly built
offices in those areas offering flexibility in size and excellent
amenities. Their location, near the BCD, Beirut’s future business
center, was also attractive to tenants.
In 1999, the market became inactive and investors looked more
closely at prices. The majority of prime locations had reached a
take-up rate of 60% to 70%. But with the stagnant market, the
rate remained constant. We should now expect a declining
occupancy rate in Hamra, Verdun and Charles Malek avenue as
companies relocate to the BCD.
BCD will provide a cross-section of external supporting services,
conforming to the requirements expected in today’s modern
offices. In time, the open spaces of BCD will prove important,
as any large office building will be attractive for big companies
or institutions. Large offices with open spaces can be partitioned
to fit the needs of particular companies. Building new
developments in prime locations outside the BCD is now difficult
because the areas are highly congested and land is scarce.
Hamra’s new developments attracted occupants between
1997 and 1999. The area offers such amenities as shops, bookstores
and retail convenience stores. Ashrafieh offers restaurants
and snack bars. Verdun is known for its upmarket shopping and
will remain a retail destination rather a potential office market.
The office market became very decentralized during the war,
spreading to secondary locations such as Dora, Sin el Fil and
Badaro. Take-up in these locations was also strong during the
early ’90s because of economic growth and delays in developing
more central locations. Major office buildings were constructed
in Furn el Chebak, attracting many companies even
though the area was primarily residential.
This phase of straightforward expansion is now over. As major
companies relocate to the BCD, small companies will move to secondary
locations. We expect few new office developments in these areas, at least for now. Ericsson, opposite the new Metropolitan
Palace hotel in Sin el Fil, is the only major new building.
The development of the Agora on the Damascus highway will
revive surrounding areas, such as Furn el Chebak, Hazmieh, Sin
el Fil and Horsh Tabet. The development of the Metropolitan
Palace Beirut hotel in Horsh Tabet, which is due to be completed
by 2001, may also stimulate demand for offices.
Some office buildings in the secondary locations enjoy a take-up
rate of 80% to 90% and others 50%. Office buildings that do well
– such as the ones in the Furn el Chebak region – have large floor
sizes and are located on the main highways. About 40% of space at
the Galaxy center in Chiah has been bought. With new infrastructure
being built in the area, there is great potential, especially since
the center will accommodate the Marriott Courtyard hotel next year.
During the past year, the pipeline has been concentrated in
Ashrafieh and Charles Helou avenue. Once completed, these
office buildings will attract local rather than international tenants.
Prices have fallen during the past two years. ln general, rental prices
in prime locations are as high as prices in the BCD -becween $200
to $250 perm’ per year. Pricing in secondruy locations vary from
$150 to $100 perm’ per year. Sale prices have also decreased by 25%
to 30%. There is no reason to expect any of these prices to rise in the
foreseeable future. We hope that we have hit the bottom of the market
and that we shall witness an upturn in the next 12 months.
