Rising Demand for Office Space in Istanbul Boosts Turkey’s Commercial Real Estate Market”

JLL Turkey announced the data on the Turkish Commercial Real Estate Market. The report includes assessments of the real estate investment market, as well as the retail, office, logistics, and hotel markets, and interesting information on the prospects for 2023.

According to the report of JLL Turkey, which provides professional services and investment management consultancy in the field of commercial real estate, the retail market continues to grow. Despite high inflation in 2022, consumers’ appetite for spending remained strong. Shopping center turnover increased by 26 percent in real terms in the second half of last year. On the other hand, the retail market benefited from heavy consumer demand in 2022 despite high inflation and fluctuations in consumer confidence. The market’s growth-related activities, accelerated by the lifting of pandemic restrictions in 2021, accelerated as many retailers reported revenue growth. As a reflection of the rise in domestic visitor mobility, the proliferation of tourists in big cities supported this performance of retailers. Occupancy rates in both main streets and shopping malls reached the highest levels, while rent increases were also experienced after the pandemic.

Office rents are increasing

JLL Turkey Co-CEO Tarkan Ander made the following assessment on the subject based on his statistics: “While the housing sector in Turkey proved its resilience in the face of economic difficulties, the relatively stable course of the Turkish lira increased the returns on a foreign currency basis and increased the interest in commercial real estate investments. The increase in demand for quality spaces for offices, while driving rents up; The robust outlook for supply and demand dynamics in logistics warehouses, rental income, and investor interest continues to be supported. In commercial real estate, the price difference between the buyer and seller continues to limit transactions in primary assets in 2022. On the other hand, the capital’s orientation to safe havens in assets that offer purchase opportunities and added value opportunities maintains the expectation of mobility in investment transactions in the coming periods for shopping and hotels under selling pressure by banks.”

3PL Companies Took the Largest Share in Leasing Transactions

The report shows that Turkey is one of the main markets that stand out with its high potential of increasing reshoring practices due to its strategic position in 2022. As the supply-demand imbalance continues in the market, restructuring activities are beginning to gain momentum. Demand that could not be met due to lack of supply continued to put pressure on transactions last year, with 3PL companies accounting for the highest share of leasing transactions at 60 percent. In the face of cost-based risks, Turkey stands out with its high potential in terms of restructuring activities accelerated by the addition of facilities and suppliers closer to Europe.

Class A Offices on the Rise

Referring to the fact that the hybrid and remote working model continued in 2022 during the pandemic period, JLL Turkey Co-CEO Tarkan Ander stated in his evaluation of the office sector, it is observed that in the second half of 2022, the weight of working from home in line with the hybrid working model is reduced and the return to the office accelerates. It is noted that serviced offices continue to be in high demand by users since they require low investment costs by being more flexible in leasing agreements. The decrease in vacancy rates in offices accelerates rent increases. In addition, while the intense demand of users for quality office space continues, vacancy rates from the CBD region have fallen to 12.4 percent, the lowest level since 2014. Therefore, instead of expanding their office space, companies are concentrating on the characteristics of the space they use. Class A offices show superior performance compared to their peers in parallel with the increasing demand with the orientation to quality offices.


Turkey Is Becoming One of Europe’s Most Popular Destinations

Based on the report, in addition to the improvements made in hotel assets during the pandemic period, it is observed that hotel openings have gained momentum with the announcement of expansion plans and brand entries by operators. This situation increases the popularity of Antalya, Bodrum, and Dalaman beaches and Istanbul’s unique historical and cultural accumulation. With performance indicators catching up with pre-pandemic levels and some even surpassing 2019 levels, the tourism market is experiencing a significant recovery. In the resort and resort areas, as well as in urban markets, visitors are concentrated. While 67 percent of these people prefer Turkey for travel and entertainment purposes, it is seen that the number of those who prefer it for health and shopping purposes has increased by 80 percent and 39 percent, respectively, compared to 2019.

A Total of 51.4 Million Tourists Visited Turkey in 2022

In addition, the following information was obtained from the report: A total of 51.4 million tourists visited Turkey in 2022. While the rate of foreign visitors was 86.3 percent, the rate of citizen visitors residing abroad was recorded as 13.7 percent. While the total number of visitors, which increased by 75 percent compared to last year, remained only 1 percent below the pre-pandemic period, the hotel market in Turkey showed a strong performance in 2022. Nationwide, occupancy rates increased by 28.3 percent year-on-year, above the European average of 64.6 percent. In this case, tourism market agencies in Turkey are preparing for a historic record year in terms of the number of foreign visitors and tourism revenues with a positive situation in early booking levels.


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