Aldar Properties' HQ building is providing an early test to the market for class A space.
Aldar works to secure tenants for its HQ
The coin-shaped Aldar headquarters on the outskirts of Abu Dhabi is perhaps one of the most eye-catching buildings in the capital but it is facing the more mundane task of renting office space in a depressed market. Aldar Properties will take up about 20 per cent of the 50,000 square metre building and it is in discussions with prospective tenants about leasing another 40 per cent, said Rami Nasser, the company's director of sales and commercial leasing.
"We have achieved commitments with various tenants and organisations and we're in advanced negotiations with others," Mr Nasser said, adding that these included "Abu Dhabi entities, Abu Dhabi-related entities and blue-chip companies". Mubadala Development, a strategic investment company owned by the Abu Dhabi Government, is among the companies that have signed up to lease space in the building. Most of Mubadala's 622 employees will remain at the Al Mamoura building, officials said.
The building is one of the first to be completed in the Al Raha Beach area, which is Aldar's large-scale development near the Abu Dhabi International Airport. As more of those buildings are completed, the building's prospects will improve, company officials note. For now, Aldar is working to convince would-be tenants that it is an attractive place to work. Mr Nasser said Aldar had already signed contracts for four restaurants and cafes, as well as one convenience store. The building also has two gyms, one for men and one for women. A tunnel will open at the end of the summer that will provide easy access to the hotels on Yas Island.
When Aldar first announced it would start taking enquiries from prospective tenants for space in the 23-storey circular building more than a year ago, it was oversubscribed, but the property recession coupled with increasing office space capacity have pushed prices and occupancy rates down across the city and the region as a whole. Aldar has the advantage of delivering the building months before many of the comparable office projects, such as Mubadala's Sowwah Square that is not likely to see its first tenants until next year.
Ultimately the success of Aldar's rental team will be a litmus test for the market in Abu Dhabi as a whole, which has continued declining, and, analysts say, is likely to fall further. Abu Dhabi commercial rents fell by 23.7 per cent last year to an average rate of Dh267 a sq foot, according to CB Richard Ellis (CBRE)'s global office rents survey released yesterday. Dubai fell by 24.6 per cent to Dh400 a sq ft. Abu Dhabi and Dubai are the 19th and ninth most expensive office markets in the world, respectively. Prices will face additional pressure as the amount of office space rises by 19 per cent this year to 2.13 million sq metres, analysts say.
Matthew Hooton, a property lawyer for the company Ashurst, said there was a growing interest in multi-year leases compared with the standard annual leases to guarantee income over a longer period. "We have been appointed by a number of landlords who now want to put in better leasing structures for their buildings," Mr Hooton said. email@example.com