TEL AVIV — When terrorists crashed hijacked planes into the World Trade Center on Sept. 11, the shocking acts sent sympathy tremors through skyscrapers and office towers worldwide, raising questions about highrise building projects across the globe.
Tall buildings will rise again, say the experts, occupied by corporate clientele, particularly in cities like London and New York, which are running out of available space. But the plans for future corporate towers may be affected by higher insurance premiums, new safety requirements, and lower rents that are forced down by an increasingly wary market.
In this coastal city, however, where space is at a premium but skyscrapers aren’t yet dominant on the skyline, real estate experts aren’t concerned.
Cranes are still hanging overhead at the Azrieli Center, where two out the three planned, mirrored towers in the city’s center dominate the Tel Aviv skyline. The towers are located in the middle of a major intersection, between Petah Tikva Road, Kaplan Road and the Ayalon Highway, and situated next to the Hashalom train station.
In early August, eight soldiers and two civilians were lightly injured when a Palestinian terrorist opened fire on a crowd outside the Kirya military compound on Kaplan Street, just a few blocks away from the Azrieli Center.
About 1,000 people work at two of the buildings in the $400 million complex — the round tower with 48 floors and the triangular with 44 floors — although an estimated 12,000 people are expected on a daily basis once the third building is completed.
Construction on the third, square-shaped building in the cluster has been halted due a dispute between the developers and the Tel Aviv municipality.
Meanwhile, no one seems to be leaving Azrieli just yet, said one real estate agent of a local brokerage that recently rented a full floor in Azrieli at $24 per month.
“I haven’t heard anything about different insurance rates for any Tel Aviv towers or Azrieli,” the agent said.
There haven’t been any changes, insurance or otherwise, according to Menachem Einan, who heads the Azrieli group. The building was constructed under international building standards, built to withstand any natural or man-made disasters. Security has remained tight, with extra forces to protect the center’s clientele.
Azrieli still has a number of available floors, with space being offered at under $20 per square meter, fully finished.
“I suspect that what happened to the Twin Towers will bring down demand,” said Tamir Ben Shahar, a managing director at Czmanski Associates Consulting. “In Israel, we’ve always had a problem with high buildings in general. In residential buildings, people with kids don’t like to live on the high floors, so demand wavers.” According to Ben Shahar, there are several tower project deals in progress in Tel Aviv, but he thinks they’ll be frozen for now.
Nevertheless, there isn’t enough land here, so developers are forced to build towers.
“It’s more economical, you can build more on each dunam,” Ben Shahar said, using the Hebrew word for what is about a quarter acre. “Ten years ago, there weren’t any towers along the Ayalon.” But what could change is the ratings of the construction companies and developers that build and sell these projects, said Jacob Akilov, an analyst at Maalot, the local branch of Standard & Poors.
What happened on Sept. 11 in New York and Washington won’t affect the real estate market in Israel, said Akilov, because the market has already been hit hard by a three-year slowdown, plus the intifada that began 14 months ago “This kind of stuff isn’t fresh here,” he said. “We’ve already watched the high-tech bubble burst, and the intifada, and that effect was much stronger.”