Technip, the French engineering giant, has taken a lease on an entire office building under construction in Abu Dhabi.
It is the first part of an expected wave of consolidation and deal making in the capital's office market.
The deal is one of the largest private office transactions to have been signed in Abu Dhabi in the past few years, local leasing agents said.
Technip signed a more than five-year contract for 20,300 square metres of office space in the Guardian Towers complex in Danet, the collection of residential and office towers under construction on Airport Road. The company is scheduled to move into the new building in March.
Technip currently leases space in several other buildings in Abu Dhabi, including eight floors in the National Bank of Abu Dhabi building on Khalifa Street.
Technip is paying Dh1,250 (US$340) per sq metre for the new space, well below current market rates, leasing agents said. The average rental rate is about Dh1,800 a sq metre, according to a recent report by the estate agent CB Richard Ellis (CBRE).
Two years ago Abu Dhabi was among the most expensive office markets in the world, with rates averaging Dh4,750 a sq metre.
"It's a good sign that Abu Dhabi landlords are starting to recognise that they need to offer good rents to attract tenants," said David Quinn, the head of UAE operations for Cushman & Wakefield.
Analysts expect several companies to move their offices in the next few months. More than 1.1 million sq metres of office space is scheduled for completion in the next two years, including towers in Sowwah Square and Capital Centre.
The current supply totals about 2.15 million sq metres, according to CBRE.
"We're going to see a lot of companies moving from dowdy buildings," said Rupert Bowen-Jones, a senior surveyor for CBRE. "Everybody has been waiting for good-quality stock to come on the market."
Few of those companies will be as large as Technip, however. Most of the big occupiers in Abu Dhabi are either government entities or banks locked into their respective contracts.
The vast majority of companies will be looking for less than 5,000 sq metres, agents predicted. But there will be a "definite shift" in the next few months as companies look for new space at more favourable rates, Mr Quinn said.
The Technip deal suggests the power in the market is shifting from landlords to tenants. The rates secured by Technip are closer in line with Dubai, where there is far more office space available.
"What it does mean is that large occupiers have the pick of the buildings [in Abu Dhabi]," Mr Quinn said. "When the market is tenant-centric and has large occupiers you see deals like that."
The Danet development, which includes the already completed Holiday Inn, is planned to eventually feature 37 towers on a 191,000 sq metre land parcel. Most of the towers will be residential; only six are expected to be offices.
Guardian Towers consists of two 17-storey towers connected by a two-storey retail complex. One of the towers is dedicated to one-bedroom and two-bedroom residential apartments, which are expected to be leased from Dh135,000 to Dh170,000 a year. Technip will take over the other tower.
The property services company Jones Lang LaSalle advised Technip on the deal. A spokesman for the French company declined to comment.
The new space "will allow [the company] to gather in one place more than 1,200 people working for Technip in Abu Dhabi, for better communication and improved productivity", said Bruno Moriou, the company's project control director.