Israeli Office Market Recovery: Amot Sees Strong Tel Aviv Demand

The Israeli office real estate sector is experiencing a noticeable uptick in activity, particularly within the Tel Aviv metropolitan area, according to insights from Amot Investments CEO, Shimon Abudraham. Following a period of subdued deal-making, the company is observing a renewed interest from tenants, signaling a potential shift in market dynamics. This resurgence is most evident in prime locations, while activity in areas further afield from the capital remains more challenging to finalize.

Amot Investments, a significant player in the Israeli income-producing property market, controlled by Alony Hetz (holding a 50% stake), reported its second-quarter financial results, which shed light on these evolving trends. Despite a slight dip in overall office occupancy rates nationwide from 86.7% at the close of 2025 to 83.7% by the end of the second quarter of 2026, Abudraham highlighted a growing demand for office spaces, especially in Tel Aviv's central business district.

A key indicator of this renewed demand is the progress at Amot's new flagship tower, ToHa2, located in Tel Aviv. With an expected occupancy in early 2027, the project has already secured commitments and is in advanced negotiations for approximately 75% of its leasable space. This represents a substantial increase from the 43% occupancy rate recorded in the previous quarter. While the company prudently notes that negotiations do not guarantee finalized agreements, the volume of discussions is a positive signal.

The anchor tenant for ToHa2 is tech giant Google, which has committed to leasing 20 floors in a deal valued at roughly 115 million shekels annually over a decade. Beyond ToHa2, Amot also reported a 10% increase in occupancy at its Holon campus, now nearing 70% capacity, up from approximately 55% at the end of 2025. Furthermore, the company is nearing a significant lease agreement with a major defense firm for the Amot View building in Modi'in's Technology Park.

The company's financial performance reflects these operational improvements. Net Operating Income (NOI) for the second quarter saw a 3% increase, reaching approximately 270 million shekels. Funds From Operations (FFO) also grew by about 4% to 212 million shekels. Net profit experienced a robust 10% surge, totaling 329 million shekels compared to the same period last year. These figures underscore the company's resilience and ability to capitalize on market shifts.

Despite these positive developments, the broader office market continues to navigate a complex environment characterized by an oversupply in certain segments and a more cautious approach to transactions outside of Tel Aviv's core. However, the proactive leasing strategies and the strong interest in prime assets like ToHa2 suggest that well-located, modern office spaces are regaining traction. The performance of Amot Investments, a company whose stock has seen a decline of approximately 26% year-to-date on the Tel Aviv Stock Exchange, will be closely watched as an indicator of the sector's recovery trajectory.