The market described as an office crisis from 2023 to 2025 looks completely different in 2026, but not because the tech sector has returned.
What Drove the Market Up
Defense-tech, cyber, and defense companies have become the main drivers of demand. According to Colliers Israel data reported during 2026, space leased by defense companies increased by around 32% in the first half of the year, to approximately 140 thousand sqm, compared with around 106 thousand sqm in the preceding half-year. Their additional active demand was estimated at around 145 thousand sqm, about one-third of total market demand.
A NEWMARK NATAM review found that occupancy in Class A towers along Tel Aviv's main corridors reached around 99%.
The City's New Map
The emerging corridors are the winners: Menachem Begin, Sarona, the Azrieli area, the Yigal Alon corridor, and the area's new towers. These locations saw increases in demand and prices between the second half of 2025 and the first half of 2026.
In the City, Rothschild, and Ahad Ha'am areas, prices remained around their levels of recent years, with a gradual downward trend. Weakness is evident in older parts of the city, surrounding cities, and the periphery.
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What Explains the Gap
Three factors: proximity to public transportation, especially light rail stations; the building's technical quality; and contractual flexibility. A tenant in 2026 is not looking for the cheapest space, but for space that can be occupied quickly under a commitment that does not become a burden.
For Tenants
If you are looking for an office in Tel Aviv, the practical implication is that the high-demand areas are almost fully occupied and require quick decisions, while older areas offer real room for negotiation, including fit-out periods and landlord contributions toward fit-out costs.
For Property Owners
A property that is not Class A and is not adjacent to public transportation is competing for a limited market. The improvements that usually pay for themselves are operational: upgrading the shell and systems, dividing the property efficiently into smaller spaces, and offering flexible lease terms—not raising the asking price.
Want to know where your property stands on this map? The Flamingo team will assess it against transactions actually completed in the area.
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Flamingo Investor Guidance
Want a team walking this path with you?
We build the plan with you, validate the property before you buy, and manage it afterwards. Intro call is free, no commitment.
