Offices in Istanbul reach 12-year peak in occupancy rate

The commercial real estate market in Istanbul is experiencing its highest office occupancy rate in over a decade, according to recent reports. As of June, the total office supply in the city has reached 7.12 million square metres, with an impressive 89.7% of this space now occupied. This marks the highest occupancy level seen in the past 12 years, reflecting a robust demand for office spaces across the city.

Levent Leads in Top Office Rents

The report, which highlights key trends across various sectors including office, retail, industrial, and residential real estate, shows that property owners have been major beneficiaries of these trends. The office market in particular has seen a significant increase in rental prices, with rents in some districts surging by as much as 77% in the second quarter of 2024 compared to the same period last year.

Levent, one of Istanbul’s premier business districts, continues to command the highest office rents in the city, with rates reaching $42 USD per square metre per month. The Anatolian side of Istanbul follows closely behind, with rents averaging $35 USD per square metre, while other prominent business areas such as Esentepe-Gayrettepe and Maslak see rents at $32 USD and $30 USD respectively. Outside of Istanbul, office rents in Izmir and Ankara remain more affordable, at $18 USD per square metre.

Flexible Office Spaces on the Rise

The trend towards flexible office spaces, which offer companies greater cost efficiency and adaptability, has continued to grow in Istanbul. While traditionally preferred by smaller start-ups, larger corporations are now increasingly opting for flexible offices as a way to manage operational costs while providing diverse working environments for their employees. This shift emphasises the growing importance of flexibility in the modern business world.

International Financial Centre Spurs Growth

The total volume of office leasing transactions in Istanbul during the first half of the year amounted to 138,597 square metres, representing a 32.9% increase in leased space compared to the same period in 2023. The completion and full operational opening of the Istanbul International Financial Centre has further stimulated growth in the market, with expectations of increased supply and investment in the near future.

Stable Rents in the Retail Sector

In contrast to the booming office and industrial markets, the retail sector has remained relatively stable, with rental prices on main shopping streets and in major shopping centres holding steady at last year’s levels. The highest retail rents were recorded in Istanbul at $250 USD per square metre per month, followed by Ankara at $105 USD and Izmir at $100 USD.

The surge in office occupancy and rents, alongside the rise of flexible office spaces, signals a dynamic and evolving commercial real estate market in Istanbul. With the city’s strategic positioning and continued infrastructure development, the outlook remains positive for investors in the near term.