Quarterly Report Qatar Q2 2021: Office Market Overview
Activity remains sluggish as corporate occupiers take time before committing to new office leases
New leasing activity in the commercial office sector has remained slow in Q2, with many corporate occupiers taking their time in committing to new leases. One of the most notable tenancies in recent months saw Lusail University acquire an entire building in Lusail’s Energy City.
Cushman & Wakefield has seen an increase in companies looking to secure new office accommodation in recent months; however, this has been largely driven by lease expiries from companies within Qatar.
The majority of new demand is focussed on Lusail’s Marina District. Companies are being attracted to Lusail by the improved access, infrastructure provisions, car parking availability, rental prices, and the number of government entities locating in the area.
COVID-19 and the reduction in international travel continue to influence the pace at which international companies’ secure new office space. Cushman & Wakefield’s global clients are increasingly of the view that most employees will return to the office over the coming months, but new acquisition strategies continue to be put on hold in many cases.
Within Qatar, the successful take-up of vaccines has seen an increasing number of employees return to the office. Phase 2 of the lifting of lockdown restrictions, which was introduced in June, saw an increase in workplace capacities to 80%.
New office supply continues to reach the market in Qatar, most notably in Lusail, where supply has now surpassed 600,000 sq m. Overall office supply in Qatar will shortly surpass 5 million sq m. The increasing supply of office accommodation, and relatively slow take-up from new tenants, has seen a reduction in overall occupancy levels. Cushman and Wakefield estimate that approximately 20-25% of supply in West Bay and Lusail is now available to lease.
Office rents have fallen significantly since 2015, after a fall in oil prices saw a dramatic reduction in new demand from government entities and the oil and gas sector. Prime office rents in West Bay now range between QAR 100 and QAR 130 per sqm per month exclusive of service charges. Office spaces fitted to ‘shell and core’ command significantly lower rates as tenant’s look to avoid the significant capital expenditure involved with office fit-outs.
Office suites in Lusail usually command rents of between QAR 80 and QAR 120; however, we expect rents to match those in West Bay soon as occupancy rates increase in the area.
Office rents in Old Salata, Al Sadd and C-Ring Road are typically between QAR 60 and QAR 80 per sq m per month, with rent-free incentives also available to attract new tenants.
Cushman & Wakefield Quarterly Report Qatar Q2 2021
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