Te Bay La Sun Business Park is emerging to the north of Jeddah in the King Abdullah Economic City. SAGIA and Emaar have moved offices, and the next building of 35,000 sq m was expected to be completed by the end of 2010


as rapid as Riyadh, but neither are the office demand drivers from the public and private sectors as strong in Jeddah as they are in the capital,” Mr Williams said. Researchers at Jones Lang LaSalle also believe the office market is


continuing to move in the favour of tenants who are benefiting from more competitive market conditions in the face of an increasing choice of space and more flexible leasing terms. In JLLS’s Jeddah City profile June 2010, it states: “Te Jeddah office


market continues to experience a period of significant new supply. A total of 67,000 sq m was completed in 2009, including Jameel Square as well as the Shemeisy, Bin Suleiman and HMS buildings. “Most of this new development is located in the north of the city along Madinah Road and the west on Tahlia Street. Completions would have been higher but for a number of projects where construction has been delayed or placed on hold in an environment of scarce credit.” Commenting on last year, Mr Soraka Al-Khatib, Co-Head JLLS KSA, said: “Around 70,000 sqm of high quality office space (grades A and B) was completed over the second half of 2010, with the most significant new building being the Bin Solaiman and Al-Henaki on Prince Sultan street. Tere is a significant level of Grade A and B space currently under construction with around 160,000 sqm scheduled to be delivered in 2011.” In JLLS’s Jeddah City profile June 2010, it states: “Tere’s over 50,000 sq m of office space at King’s Road Tower on Malak Road on 24 levels. VIP floors at the top of this project will offer separate access / extra parking. Te Zahran Business Center will deliver 50,000 sq m of space on Amir Sultan in 2011. Tis project was originally being offered on a strata basis but has recently been acquired by new owners who are now taking it to the market for lease.” Another project of note is the headquarters development on the


Corniche, which JLLS say is understood to have secured additional funding and the developer is now proceeding with the 51 storey tower. Between 40-50% of the tower has been sold on a strata basis, mostly to local family businesses and high net worth individuals. Tis project is forecast to deliver 60,000 sq m of space by the beginning of 2012. Te Bay La Sun Business Park is emerging to the north of Jeddah in the


King Abdullah Economic City. SAGIA and Emaar have moved offices, and the next building of 35,000 sq m was expected to be completed by the end of 2010. Serviced office operator ‘Makateb Business Centers’ was the first tenant


and expected to offer turnkey offices for small or large businesses. Te JLLS report said tenant demand started to recover in the second half of 2009 and this recovery continued into the first half of 2010. Te strongest demand was seen from the sectors associated with the big increase in public spending such as infrastructure, healthcare and social education. “A number of large new deals were announced towards the end of 2009,


reducing the stock of vacant office space available in the Jeddah market. In the Shemeisy Centre on Amir Sultan, over 9,000 sq m on three floors was leased to a joint venture between the Saudi Railway Company and the Saudi bin Laden group. Further south, the HMS Group leased over 6,000 sq m in the bin Hamad Building to the Faisal Hospital. Te quasi-government Islamic Conference Group has rented a new 11 storey tower at King Abdullah and Madinah Road,” according to JLLS. Te report states while there continues to be demand from private sector


tenants, these leases have tended to be smaller. Leases signed recently include PwC (3,000 sq m), Punj Lloyd (1,000 sq m) and Mars Foods (750 sq m) at Jameel Square, Regus (1,000 sq m) at Bin Suleiman Center, and the


Islamic Development Bank (600 sq m) and LG (600 sq m) at Jeddah 101.


OUTLOOK FOR 2011 Last year JLLS commented there was little change in average rents for


newer buildings in the north-west of the city during the first half of 2010, with demand generally keeping up with completions in this sector. Te report said: “While asking rents have remained relatively stable in good quality buildings, it is noticeable that landlords are much more flexible about negotiating lease terms and providing incentives to tenants.” JLLS also stated that older buildings in the middle of the city were


experiencing increased vacancy levels. “Tere has been few recent deals to establish benchmark rentals in this sector, but average rents will certainly have declined, as the market moves in the favour of tenants. Quoted office rents vary from SAR 500 up to SAR 1,350 per sq m depending on the location and age of the building. Te average new building is quoting asking rents of around SAR 800 per sq m, plus 10% service charge,” according to the JLLS Jeddah City Profile Q2 2010. Commenting on Jeddah’s future office market for 2011, Mr Soraka Al- Khatib, Co-Head JLLS KSA, said in contrast to last year, rents are expected to drop slightly. “Given the new supply entering the office market, and the increased


choice now available to tenants, office rents are expected to decline from their current levels (of around SAR 750/sq.m on average) during 2011. The most popular area for offices are Tahlia and Prince Sultan streets, where rentals may remain unchanged, while rents in less popular locations are likely to fall. JLLS says it expects the market to remain competitive, even as the economy starts to grow again” l


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