Nvidia's dramatic announcement yesterday that it is seeking to buy land in northern Israel on which to build its new campus typifies a new trend in Israel's office market, with an emphasis on the biggest companies: a shift from leasing offices to finding land or existing offices to buy and permanently own.
Nvidia plans building a new campus on land it will buy for an investment of NIS 2 billion (cost of the land and construction), joining many other companies in Israel who have made similar moves. Cybersecurity company Check Point Software Technologies Ltd. (Nasdaq: CHKP), for example, purchased jointly with Israel Canada land in east Tel Aviv for NIS 800 million from an auction by Tel Aviv-Yafo Municipality. On the land, it will build a new campus with 60,000 square meters of office and commercial space.
Rafael Advanced Defense Systems announced last month that it is buying 16,000 square meters in the Cosmopolitan 1 project in Tel Aviv's Hassan Arafa district for NIS 520 million. The office space will become the company's main development center.
Mekorot national water company announced in May that it will move its new headquarters to the Onyx project in Kiryat Ono, after buying 20,000 square meters in the project for NIS 230 million. A few months ago, Meuhedet Health Fund bought six floors in the G City project in Rishon LeZion for NIS 155 million.
Abandoned offices
At the beginning of 2024, "Globes" reported that there is a lot of empty office space in Tel Aviv and its immediate vicinity. At that time, there was about 80,000 square meters of empty space in prime real estate towers in Tel Aviv and Ramat Gan, according to research conducted by Geocartography, and other estimates were higher.
The reason for this, primarily, is the relatively high interest rate in the last two years (which stands at 4.5%), which is "biting" into the yield on rented office space, and since the situation has not changed significantly in this respect since the beginning of 2024 - it can be estimated that the situation today is similar, and perhaps even worse.
It is possible that the reason why many companies choose to purchase office space rather than lease it is, among other things, the same challenging economic situation.
Purchasing, instead of leasing offices, after all, it is about owning the offices permanently, providing those companies with a greater sense of stability in a clearly unstable period, regardless of the economic situation of this or that landlord.
Published by Globes, Israel business news - en.globes.co.il - on July 7, 2025.
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