In 2022 more construction permits for employment areas were granted than residential

The report of the Central Bureau of Statistics published this week indicates a clear trend of a decrease in residential construction starts, which threatens to significantly exacerbate the real estate crisis, but actually contains signs of a completely opposite trend in regard to employment areas. Although the Planning Administration warned back in 2019 of an excessive supply of employment areas - in 2022, more construction permits for employment areas were granted (in an annual perspective) compared to 2021.
According to the report, in the first nine months of 2022, construction permits were granted for 2.3 million square meters of employment space throughout the country. This amount is not far from the 2021 rule, when 2.66 million square meters were approved for the entire year, and in 2020, when 2.47 million square meters were approved for the entire year. That is, at an annual rate according to the construction permit estimates, employment areas in 2022 will exceed those of 2021.
In fact, the state provides building permits for employment areas that are not needed, while building permits for residences are stuck in the pipeline. Back in August 2019, the planning director found that even before the corona crisis began, there were already too many employment areas in the planning - 240 million square meters instead of the 36 million square meters that will be needed in 2040, throughout the country.
The analysis of the granting of building permits by city reveals that in the first nine months of the year, the areas of construction permits for employment in Tel Aviv stand at 77.4 thousand square meters. This number is indeed higher than the area approved last year, which is 22.1 thousand square meters, but lower than the year before it. 2020, when 177.4 thousand square meters were approved.
In other cities too there is a trend of significant intensification of construction for employment. Thus, in Jerusalem, permits were given for 103 thousand square meters compared to 98 thousand square meters last year; In Beer Sheva, 84 thousand square meters were given compared to 72 thousand square meters last year; in Haifa 163 thousand square meters compared to 26 thousand square meters; in Herzliya 32 thousand square meters compared to 1,200 square meters; And in Ra'anana 72 thousand square meters compared to 16 thousand square meters.
Even in peripheral cities there is intensified construction of employment areas. For example, in Karmiel, where building permits were granted this year for 40,000 square meters; in Ariel, building permits were granted for 20,000 square meters; And in Kfar Yona, after years in which no permits were given for employment, this year permits were given for 71 thousand square meters.
Itai Shafran, from the Geocartography Group, explains that Tel Aviv is the main anchor in the demand for offices in Israel: "The CBS data reveals that the area of construction plans for offices in the city in 2022 is limited. Like one office building. This means that even if there is a decrease in demand due to the damage to the high-tech industry and the increase in interest rates, the city will still maintain its hegemony, for the simple reason that there is no supply. There is not enough construction for offices in Tel Aviv. This means that prices will continue to be high and companies that cannot pay the high rents will go to the outskirts of Tel Aviv, to the second and third rings. We see that the supply in the peripheral cities is increasing and we assume that the competition will be tough. who will win? It's mainly a matter of mass transportation systems."