Qatar’s office space market expected to face downward pressure, says Cushman and Wakefield Qatar report
Qatar’s commercial office market is yet to feel the full impact of the pandemic; but the segment is expected to face downward pressure in rent as more office space comes to the market, according to Cushman and Wakefield Qatar (CWQ).
Although internationally, many companies are reporting that working from home has generally proved to be much more successful than anticipated and expect the trend of working from home and other non-office-based locations to be accelerated; CWQ, however, said these trends are less likely to be maintained in Qatar.
“There has been limited evidence to date of Covid-19’s impact on rental rates, due to a lack of transactional evidence. In part, this is due to the uncertainty generated by Covid-19, leading to occupiers adopting a wait-and-see approach before making financial commitments to new space,” CWQ said in its report.
As more office space comes to the market, it expects further downward pressure on rents, which may manifest in generous rent-free incentives or fit-out allowances.
CAT A and fitted office space in West Bay is typically available for between QR100 and QR140 per sqm per month exclusive of service charges, it said, adding prime accommodation in Lusail is available for QR90 to QR120 per sqm per month, reflecting the fact that it is a new district trying to attract tenants and build occupancy rates.
In terms of general demand trends, CWQ said a rising trend is that occupiers are seeking fully fitted space and, in some cases, offices that are furnished by the landlord.
In the current economic climate this trend is driven by companies, trying to reduce their capital expenditure when relocating, it added.
On working from home and its manifestations in the domestic market; the report said these trends are less likely to be maintained in Qatar on a large scale when offices reopen at full capacity, due to a combination of local cultural practices and that most employees in Qatar do not face lengthy commutes on public transport into the office.
“While an increase in flexibility, allowing more staff to work from home periodically is likely, this could be offset by office fit-outs that allow for greater social distancing, private space, and break out areas.
The report said at the end of Q2, prime office supply across West Bay, Lusail and Msheireb reached 2.3mn sqm, an increase of almost 15% since the beginning of 2019, with occupancy rates in the region of 70%.
Relative to the initial downturn in March, enquiries for new office accommodation in Doha have shown some signs of improving, with increased activity towards the end of Q2.
There has been an increased level of interest in Lusail Marina District as the area becomes more established, with a critical mass of public sector tenants. Private sector occupiers are being attracted to Lusail by lower occupation costs, compared to West Bay and Msheireb, along with good accessibility and better car parking provision.
They progressively view Lusail as the future hub of commercial activity in Qatar, with the only downside being the lack of nearby amenities currently operational.