Finance House is moving from the Corniche to its own building in the Capital Centre in a sign of the stirrings in the commercial market that could lead to lower rents.
Finance House to relocate to offices in Capital Centre
Finance House, an Abu Dhabi commercial and retail financial company, is moving its headquarters from an ageing tower near the Corniche to the Capital Centre in what analysts say could be the beginning of a number of company office relocations over the next two years.
The company is moving into a new 22-storey tower that it will own and which will accommodate all of its subsidiaries and related companies. A Dh123 million (US$33.4m) contract was recently awarded to Benyan Development to build it.
Finance House is currently based in the Orjowan Tower.
Piers Barttelot, a leasing director at the property consultancy Jones Lang LaSalle, said the move was among the first major relocations to come as Abu Dhabi erects dozens of high-rises.
"It adds to the story of Abu Dhabi National Exhibition Centre's Capital Centre," he said. "It's going to be a good location that looks to compete with other major projects."
Other relocations across the city are being held up by a combination of slow delivery of buildings and a prevalence of flexible leases that enable tenants to wait for rents to fall.
Whereas in developed leasing markets in London or New York, businesses are usually locked in to five to 10-year leases, many contracts in Abu Dhabi allow companies to sign up for a year at a time.
Many tenants, including some of the big oil and gas companies that make up the second-largest group of occupiers after the Abu Dhabi Government, are taking a wait-and-see approach as rents in the capital continue to soften.
Mr Barttelot said the best-quality office space in Abu Dhabi now costs about Dh2,300 a square metre to rent, compared with Dh3,700 a sq metre at the peak of the market in 2008.
Still, many developers in Abu Dhabi were aiming for "aspirational" rents as high as Dh4,000 a sq metre in "iconic" buildings, he said.
With another 1.2 million sq metres of office space expected to be delivered in Abu Dhabi by the end of 2012, they may face a much more challenging market in the next two years.
"When this space comes online and prices come under pressure, that's when you'll start seeing a lot of movement among the buildings in Abu Dhabi," he said.