Redefining work to impact real estate ROI in Israel
While developers plan to bring over 2m m2 of office space online in Israel's capital, Tel Aviv, over the next few years, demand for space is only expected to be around 1.1m m2. A rise in unoccupied office space means real estate investors are likely to face a sharp decline in expected return on investment. While there is a trend toward co-working companies, such as WeWork, which has four centres in Israel, there is also a growing trend toward telecommuting, where jobs that were formerly done in an office are done from home. 

By Dror Halavi

YERUSHALAYIM —

Like many other places, Israel is undergoing a revolution in redefining what “work” means, with more workers than ever telecommuting. As the economy grows, many workers will be doing jobs that were formally done in an office at home – to the extent that over the next few years, according to a real-estate industry study.

With that, there is a need for more office space – about 1.1 million square meters over the next three years. The problem is that major office construction projects in recent years, especially in Tel Aviv, will be bringing over 2 million square meters of space on-line during that period – meaning that investors in commercial real estate will likely see their properties fetch much less money than they expected.

Besides telecommuting, work centers for tech companies has become fashionable. Office space – or simply a desk – is available at the growing number of work centers, such as WeWork, which now has four centers in Israel, as well as many similar workspaces. According to the industry study cited in Globes, tech companies can be expected to supply office space to just 50-60 percent of their employees in the coming years, as employees themselves eschew the traffic and hassle that comes with commuting, preferring to work at home and come into the office for weekly staff meetings.

Currently, there are between 23 and 25 million meters of office space in Israel, used by approximately 1.3 million workers, the study showed.