Quarterly Report Qatar Q4 2020: Office Market Overview
Lusail’s Marina District attracts the majority of new office demand
Cushman and Wakefield estimate that overall office supply in Doha is approaching 5 million sq m, of which almost 50% is situated in the prime districts of Lusail, West Bay, and Msheireb.
The most significant increase in new office supply over the past year has been in Lusail, both in the Marina District and in Energy City. Office supply in Lusail now tops 600,000 sqm.
There has been a noticeable shift in corporate office demand towards Lusail over the past year, as more buildings complete and the area matures. The migration of government entities and ‘Q-companies’ to the new district and the relatively competitive rental levels on offer has also helped attract private-sector companies to high-quality multi-let buildings in the Marina District. Lusail’s Marina district can now offer tenants high specification office buildings, with greater access to parking than is currently available in West Bay.
Lease expiries have generated most of the office market activity throughout 2020, as companies relocate within the market. New demand from outside Qatar was subdued in 2020; however, this has been down, in part, to the impact of COVID-19 on the global economy and travel. As we move beyond the pandemic, the establishment of the Qatar Free Zone Authority is expected to help attract inward investment and boost demand for office space.
The combination of new supply, and a lack of new demand continued to put downward pressure on office rents in 2020. Prime office accommodation, such as ‘CAT A’ and ‘fitted’ office space in West Bay is typically available for between QAR 100 and QAR 140 per sqm per month exclusive of service charges. Prime office suites in Lusail remain available at lower rents that their equivalent in West Bay, although as absorption in Lusail increases, we expect this gap to close.
Shell-and-core offices are now available to lease for between QAR 70 and QAR 90 per sq m per month in West Bay. Shelland- core offices in secondary locations can be leased for as little as QAR 60 per sq m per month.
The reduced rents for ‘shell-and-core’ space reflect the fact that companies want to avoid the capital expenditure required for an office fit-out. Private sector demand for offices is almost exclusively concentrated on CAT A or fitted offices.
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