Food manufacturer Tnuva Food Industries Ltd. is expected to vacate its offices in the Cinema City compound at Glilot, rented from Nitsba Holdings Ltd. (TASE: NTBA). Sources inform "Globes" that the company has been looking for new offices in various parts of central Israel in recent weeks, including the Kiryat Arie industrial zone in Petah Tikva and the business zone on Kibbutz Yakum.
Tnuva's current offices cover 13,000 square meters. Tnuva formerly owned the property, but sold it to Nitsba in 2009 for NIS 406 million when Tnuva was still controlled by Apax Partners.
The rent for the lease is believed to be fairly high, and Tnuva is no longer willing to pay it. The lease expires in 2019, but Tnuva has an extension option.
Offices market sources say that Tnuva has no interest in keeping its offices in Cinema City, which are located there for historical reasons, despite the compound being zoned for commerce, not industry. The sources add that Tnuva is looking for 11,000 square meters of offices in industrial zones with lower rents per square meter, meaning both saving on space and a lower rent per space.
Nitsba's 2016 financial statements indicate that the average rent in Cinema City at Glilot, including both commercial and office space, is NIS 172 per square meter. Nitsba's revenue from rent in the compound totaled NIS 56.2 million in 2016.
Another interesting figure from Nitsba's reports is that the occupancy rate in the compound declined from 98% in 2015 to 95.5% in 2016. Tnuva's management is the main renter of office space in Cinema City, and Nitsba is liable to have trouble finding a replacement tenant, also because 600,000 square meters of new offices are planned close by Cinema City on its northern side.
Published by Globes [online], Israel Business News - www.globes-online.com - on October 2, 2017
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