May 18, 2020

Quarterly Report Qatar Q1 2020: Office Market Overview

The commercial office market is yet to be fully
affected by Covid-19

 

Except for a reduction in the number of new enquiries for office
accommodation since mid-March, the initial impact of Covid-19
on the commercial office market has been limited to date. That
is mainly due to activity in the sector being driven by lease
events such as lease expiries, which still need to be acted upon.

Occupier relocation projects that started before the Covid-19
measures were introduced are progressing as planned, though
in some cases they are subject to some delays. In general, the
lockdown has not affected the commercial office market as
much as the retail sector. Tenants are still able to access their
offices, subject to government guidelines of reduced staffing and
hours; therefore, there have not been multiple announcements
by landlords on rent relief.

Some prospective new office occupiers are now considering
serviced office options instead of conventional office
accommodation, as a short-term measure, while market
uncertainty prevails.

The total supply in the office market is now approx. 4.9 million
sqm, with the prime sector accounting for 49% of this space. The
vacancy rate has increased to over 30% in prime office districts,
largely due to the increase in new supply in Lusail and Msheireb
over the past 12 months.

Lusail’s infrastructure is now largely complete. In the Marina
District, Y Tower and Union Trust Tower were completed in Q1,
bringing the total supply in the district to just under 600,000 sqm.
While some landlords are looking to secure a single occupier,
smaller fitted office suites are increasingly available to lease in
Lusail – which have not always been readily available in West
Bay.

Q1 saw the arrival of new office supply in Energy City increase
the total stock to just under 60,000 sqm, of which approximately
80% of which has been leased.

Shell and core space in Marina District is typically available for
between QAR 80 and QAR 120 per sqm per month exclusive of
service charges. Fitted suites are being offered at rents from
QAR 120 per sqm per month, with a service charge and chilled
water also payable.

Google Cloud and Microsoft Azure announced the launch of a
proposed data centre projects in Doha under the Qatar Free
Zone Authority (QFZA), which means committing significant
investment to the country. Qatar has strict national data
sovereignty regulations in line with the other GCC countries and
it is hoped that this high-profile move will allow the public sector
and private companies, especially financial services, to become
more efficient compared to their global peers. Apart from the
indirect effect of attracting foreign investment, this initiative
should boost the IT sector and may result in a higher demand
for office space.

Cushman & Wakefield Quarterly Report Qatar Q1 2020

 

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