Quarterly Report Qatar Q2 2024: Office Market Overview

Increase government take-up of offices reduces the availability of Grade A accommodation

Office leasing activity remains dominated by government demand, particularly in prime office districts. Cushman and Wakefield estimate that approximately 120,000 sq m of gross leasable office space has been leased or placed under offer in the in the first half of the year, with take-up mainly split between Msheireb Downtown and West Bay.

The most significant transaction in Q2 was the lease agreed by the government for the World Trade Centre Tower on the Corniche, which was vacated by Qatar Energy in 2022. This building provides approximately 58,000 sq m of Grade A office accommodation. We estimate that available office space in West Bay has fallen to approx. 160,000 sq m, reducing the vacancy rate in the district to less than 10%.

Elsewhere take-up in Msheireb Downtown has seen availability fall to less than 5%, while there has also been leasing activity in Lusail’s various districts.

Overall availability in prime office district has now reduced to less than 15%, which contrasts to the secondary market across central and south Doha, where vacancy rates are significantly higher.

A significant amount of the take-up in prime office districts relates to the expansion and relocation of government departments from older buildings across Doha. This is expected to lead to further increasing vacancies in secondary districts at the expiry of existing leases.

Leasing trends have created a two-tiered market in Qatar where demand is focussed on an ever-decreasing amount of Grade-A space, while older stock is lying vacant for extended periods with limited new demand. Pipeline supply is dominated by Lusail Towers, with three of the four landmark buildings allocated to QNB, QIA and QCB. It is yet unclear as to how much, if any of this office space will be released to the wider market.

With occupancy rates climbing across Grade A locations, upward pressure on rents is starting to reemerge for the first time since 2015. While the majority of Grade A office space in West Bay and Lusail can be leased for between QAR 100 and QAR 130 per sqm per month, exclusive of service charges, a select number of higher-specification buildings are looking to increase rents for vacant space. In secondary areas, office spaces leased as ‘shell and core’ can be secured for QAR 50 – 60 per sq m per month.

Cushman & Wakefield Quarterly Report Qatar Q2 2024

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