Quarterly Report Qatar Q2 2023: Office Market Overview
Private sector growth is required to increase office demand and reduce current vacancy rates
Leasing activity in the commercial office sector in Doha has been subdued throughout the first half 2023 following a post-COVID recovery in activity in 2022.
The most significant announcement in recent months has been the confirmation that TotalEnergies will move to Msheireb Downtown, joining Microsoft and Google Cloud in the new mixed-use district. Cushman & Wakefield understands that TotalEnergies will occupy approx. 4,500 sq m of gross leasable area.
Q2 also saw the official launch of new offices for VISA in West Bay and the expansion of Boston Consulting Group’s presence in Tower 121 at The Pearl Island.
Over the past two years, office activity has been dominated by the oil and gas sector and the government sector, with relocations to Lusail featuring heavily in new deals.
As Qatar emerges from a period of activity fueled by the hosting of the World Cup, the diversification of the economy and nonhydrocarbon economic growth will be vital to creating new demand for office space in Qatar.
Without an increase in new demand, the current oversupply of office space in Qatar will continue to be a drag on office rents, which have been declining since 2015. The supply of purpose-built office accommodation in Qatar has now surpassed 5.3 million sq m., with an estimated 1.3 – 1.5 million sq m of vacant space available.
The most recent addition to the office market is the iconic mixed-use Burj Al Mana on West Bay’s Corniche. Eleven office floors in the 56-storey building have increased supply in Qatar’s largest office district to approx.1.85 million sq m.
While higher specification offices in Doha have secured high occupancy, much of the vacant office space is of basic quality with limited tenant demand. Increasingly attractive lease terms are available for shell-and-core space, where tenants are responsible for the internal fit-outs; however, there is little appetite for this accommodation at present as tenants look to avoid the capex required for expensive internal fit-outs.
Grade A stock is now typically available to lease for between QAR 100 and QAR 120 per sqm per month, exclusive of service charges. Office spaces leased as ‘shell and core’ can be secured for QAR 55 – 60 per sq m per month in some of Doha’s main office districts.
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