Istanbul Office Market has released its report.

PROPIN is known as a firm providing office investment consultancy services in the commercial real estate sector, and has released the “Istanbul Office Market” report covering the last quarter of 2022. According to the report, property owners have started to rent their offices in dollars by taking advantage of the exceptions in the Turkish Lira Protection Law. While the number of office rentals in Turkish Lira (TL) has increased, the average square meter rent in class A office buildings in the Central Business District (CBD) has risen to the level of $19.4, and the vacancy rate in class A office buildings has decreased to 23.4%. In 2022, transactions were made in a total of 267,000 square meters of office space, and leasing and corporate purchase transactions were made in approximately 83,000 square meters of office space.

PROPIN is known as a firm offering boutique services in the real estate sector, and regularly informs industry followers with its expertise focused on the office market in particular. The “Istanbul Office Market Report for the Fourth Quarter of 2022” by PROPIN, which publishes office-focused reports every quarter, includes many data ranging from office rentals to rentable qualified office supply in Istanbul.

Aydan Bozkurt: Dollar-Based Rentals are Becoming More Common in Istanbul’s Office Market

Aydan Bozkurt, the co-founder of PROPIN, evaluated their “Istanbul Office Market” report and stated that the office market in Istanbul was characterized as a “landlord market” in 2022. Bozkurt emphasized that despite economic fluctuations, many office rental transactions took place and the increase in demand reduced the supply of qualified office buildings. In addition, she expressed that companies that switched to a hybrid work model after the pandemic reduced their office spaces and moved to offices designed according to their new working arrangements.

Bozkurt said that property owners have started to declare rental amounts in US dollars, especially for class A office spaces, and the number of those who rent their offices in dollars is increasing. However, she noted that the rental amounts declared in Turkish Lira by property owners increase every month, and the gap between the requested rental amounts and the rental amounts paid by existing tenants has significantly widened.

Ebru Ersöz: Average Square Meter Rent Rose to 19.4 Dollars

Ebru Ersöz: The average rent per square meter has reached the level of 19.4 dollars. Ebru Ersöz, the Co-Founder of PROPIN, stated that the rise in office rental averages towards the end of 2022 due to increasing demand for offices and inflation has been remarkable. Pointing out that the average rent per square meter in Class A office buildings located in the Central Business Area (CBA) has reached 19.4 dollars as of the end of 2022, Ersöz shared the following information: “The global pandemic has changed working conditions. As a result, there was a general expectation in the market that offices would be vacated. Contrary to expectations, demand for Class A offices has been on the rise throughout the year.” Ersöz also added that the number of users who want to benefit from our “Tailor-Made Project Development Consultancy” service provided by PROPIN has increased.

67,000 square meters of office space have been transacted.

According to PROPIN’s Istanbul Office Market data for the fourth quarter of 2022, the vacancy rate in Class A office buildings in CBA decreased to 23.4%, while in Non-CBA Asia, it dropped to 14.8%. Despite the post-pandemic effects, there was an increase in office leasing and corporate purchases in 2022, with transactions taking place in 267,000 square meters of office space. Approximately 83,000 square meters of office space were leased and purchased due to ongoing demand in CBA in 2022.

The report also examined office leasing trends in some districts on the Anatolian side. It was noted that in Kartal and Maltepe districts, the existing stock is generally composed of small floor area and very high-rise buildings. However, it was observed that users prefer offices with large floor areas and high efficiency.

It is predicted that the Class A office stock will reach 7.6 million square meters in 2025

According to the Istanbul Office Market report, there has been a period of stagnation in office development over the past three years. Despite an increase in demand for offices, there has not been a trend towards the construction of new offices. However, it was noted that the contraction in office supply has led large-scale office users to seek out special projects.

According to PROPIN’s end-of-2022 calculations, it is estimated that the A-class office stock in the Istanbul Office Market will be approximately 7.6 million square meters by the end of 2025. A significant portion of this stock will be created by the Istanbul Finance Center (IFC), which is scheduled to open its first stages in 2023.

The report states that the Istanbul Office Market entered a positive period for office owners in 2022, and this situation seems to continue for a while. While a general slowdown is expected during the election period, it is predicted that users who want to turn uncertainty into opportunity will turn to new transactions.