OFFICE MARKET IN TURKEY
Istanbul, Izmir and Ankara are the major office markets in Turkey. However, the office market in Istanbul is more developed and more similar to international standards. Offices are generally classified as A, B or C class based on the price and location. The office market has been developing since 2002 as the number of multinational companies, foreign investments and large national companies has grown in Turkey.
Office stock in Istanbul has risen from 2002 to 2008 with a CAGR of 10.7%. The European side holds almost 75% of the office stock in Istanbul. Maslak, Levent, Beşiktaş and Şişli are the major business centres and the Airport zone (Güneşli Yeşilköy Topkapı) is the non business centre area on the European side. On the Asian side, Kozyatağı, Ataşehir and Ümraniye are the major office areas in Istanbul.
Based on the Colliers 2009 Real Estate Sector Report, A class office stock has been risen by 144,700 m2 in the first quarter of 2009. The report indicates that office supply will increase mostly in the Şişli, Levent, Kozyatağı and Ümraniye areas in the upcoming 2 3 years.
Figure 10 - (a) Istanbul A Class Office Market (4Q08) & (b) Istanbul B Class Office Market (4Q08)
Among the A and B class offices, Levent, Etiler and Maslak have the lowest vacancy rates and the highest rents per month. These areas are key business centres in Istanbul, and the rents vary between US$ 35 - US$ 45 per month.
The above picture has changed in 2009 with the recent developments. The average vacancy rate in the Istanbul office market has increased from 4.87% to 14% in the first half of 2009.19 The average A class rent per month has decreased by 10% in the first half of 2009. Colliers International estimated that the fundamentals of the office market will change in 2010 when the average vacancy rate may exceed 15%. Rents will be readjusted and lessees will gain more power over the conditions in rent contracts.
The retail part of the real estate sector has gained great significance in recent years with the increasing number of organized retailers (shopping centres). Based on revenue, the percentage of organized retailers in the total retail market has increased from 28% to 38% between 2002 and 2008. At the end of 2008, the total retail market has a total revenue of US$ 241 billion.20
As opposed to the office market, the retail property market has spread all over the country, not limited to the biggest cities. There are a total of 190 shopping centres built in Turkey since 1988, with the development peaking from 2000 to 2008 with CAGR of 20.1%.
The gross leaseable area (GLA) of the shopping centre market has reached 5.03 million m2 with an addition of 160,000m2 floor space in the first half of 2009.21 Compared to the past very rapid growth of GLA, there has been a considerable slowdown in 2009. Despite the slowdown, retail property is still growing due to the continuous development of the sector. In the pipeline league in Europe, Turkey occupies the leading position in front of countries such as Russia, France, Italy, Poland and Romania.22 Shopping centre completions in the Anatolian market represented 67% of the total shopping centre floor space added in the first half of 2009.
Gross leaseable area per thousand capita is a good indicator of the development and a comparison indicator for the retail market. This figure in Turkey has increased from 18 m2 to 61 m2 between 2000 and 2008. Ankara and Istanbul are the leading cities in GLA per 1,000 capita with 176 m2 and 150 m2, respectively.23
Average shopping centre provision per 1,000 habitants is still very low in Turkey with 61m2 compared to the EU-27 average of 214m2. Turkeys average is also below Central and East European countries such as Czech Republic, Poland, Slovakia and Hungary.