Although the amount of empty commercial space in Dubai is currently equivalent to around nine Empire State buildings, large companies are having trouble finding adequate space under single ownership, and the problem looks set to increase.
The majority of properties constructed over the next couple of years are held under strata title, which enables different investors to own one or more floors, and this makes it difficult for companies requiring large numbers of floors to find adequate space which isn’t controlled by multiple landlords.
An example is Standard Chartered plc, which spent two years trying to find adequate space in Dubai. Eventually, the third largest UK bank elected to build its own tower, and will occupy eight out of the 13 floors. Standards Chartered reached an agreement with the Gulf Resources Development and Investment LLC to build the new tower near the Burj Khalifa, which is the world’s tallest building, and will invest a total of around $140 million.
During the property boom, developers often sold apartments and office buildings off plan to investors, who frequently resold them for a quick profit. Many of these investors were inexperienced at dealing with commercial tenants or managing buildings, and hadn’t considered the long-term consequences of finding tenants.
Corporate occupiers are looking for a well manage building which can be adapted to give them a customized space, and are far more likely to find this where there is just a single landlord.