The office market in Israel is experiencing a sharp decline in construction starts, with data indicating the lowest pace since 2009. In the first quarter of 2026, only 53,128 square meters were started, indicating a significant decrease compared to previous years, where volumes exceeding one million square meters per year were recorded. This slowdown is due to several factors, including the overall situation in the country, wars, high interest rates, and the slowdown in the high-tech sector, which leads the market.
Additionally, occupancy rates in office buildings outside of Tel Aviv are low, with some buildings remaining vacant for long periods. Industry consultants note that there is a need for a change in planning policy to align with the actual demand in the market. While the office sector was previously the leader in construction starts, it is now lagging behind other sectors such as industry and commerce. The current situation requires rethinking the needs and demands in the real estate market.