The Tel Aviv Municipality has unveiled interesting plans for Carlebach Street near TLV Mall and the former Tel Aviv wholesale market. The municipality recently published a guide for current tenants of the Carlebach plot of land in the city centre, offering two proposals – extending the lease, which expires next August, and joining a “plot development process” that would grant rights to most of the land. region.
It covers 26 dunams (6.5 acres), along and west of Carlebach Street, where several existing buildings are located, including the Capital Markets Tower, the Chamber of Commerce Building, and more. There are 150 tenants to whom the municipality rents the buildings. The current lease expires in August 2025, and the municipality is now approaching tenants with a proposal to renew the lease for a further 49 years – and is using this opportunity to promote the regeneration of the plot of land and the formation of a new city building plan which will allow office and residential towers to be built in place of some of the existing buildings.
Up to 30,950 shekels per square meter
The guide published by the municipality for the plot divides the existing buildings into two parts: four “buildings” (each building includes several buildings connected by separate entrances), designated for demolition, as part of the new plan; And two buildings – the Capital Markets Tower and the Chamber of Commerce Building, which will not be demolished but will be renovated. As for the buildings scheduled for demolition, the municipality proposes to pay rental fees every seven years, assuming that within seven years from today the new plan will be approved and building permits will be issued.
Rents will rise
The rents that tenants will be required to pay will vary depending on the building, floor and whether the building is slated for demolition or renovation. The amounts vary, and the equivalent ranges per square meter set by the municipality are very wide – starting from NIS 9,900 per square meter per month in the basements of the Capital Markets Tower, up to NIS 30,950 per square meter for commercial space in the Chamber of Commerce building facing Carlebach Street.
For example, the typical rents that tenants in a Chamber of Commerce building will be asked to pay: A standard office floor in the building occupies 849.95 square meters, and the price per square meter is NIS 17,150. The tenant of an entire floor in the building will have to pay about NIS 7.9 million to renew the lease, and another NIS 114.8 million in rents for the entire additional lease period – the next 49 years. Thus, on average, the tenant will have to pay about 3.1 million shekels annually.
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The initial design includes four buildings facing Carlebach Street, 9-15 storeys high and with a commercial ground floor, and behind them several other 30-storey towers.
Challenge: 90% approval
The challenge facing tenants is the ceiling set by the municipality for joining the process: if tenants in each building fail to achieve at least 90% approval among all tenants in that building, they will not be able to join the process, and even worse, their lease will be cancelled. They will be evicted from the building.
The Tel Aviv Municipality said, “The municipality is not obligated to renew lease contracts. The requirement for the approval of at least 90% of the tenants is a serious factor, and through it the municipality is prepared to renew contracts on the condition that.” Each tenant joins the renovation, which will also allow future planning trends to be realized in the future.
“The 90% agreement allows the municipality not to discriminate between different tenants: between those who join and those who have not yet decided. In addition, the municipality wants certainty regarding the complete renewal and not just with some tenants.”
Published by Globes, Israel Business News – en.globes.co.il – on January 19, 2025.
© Copyright Globes Publisher Itonut (1983) Ltd., 2025.
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