The Burj Khalifa, located in Dubai measures 828 meters (2,749 feet) in height, making it the tallest building on the planet. The complex also features an Armani hotel, 900 luxury apartments, an observation deck and 37 floors of office suites available for commercial tenants.
The commercial property is a popular spot for guests and approximately 80 per cent of the apartments are occupied. Rents on these units have increased by about 10 per cent over the past 12 months, which is good news for the developer. The news is not so positive for the office space in the building, though, with about 20 floors standing vacant.
One of the reasons commercial tenants are staying away from the property may be cost. The price of space in the Burj Khalifa tower can be twice as much as renting a similar office in a building located 50 meters (164 feet) away.
The tower’s design is another factor which may be at play. Since the tower has a long, spindly appearance, floor space is limited. Large companies would need to look at renting space on several floors, which is further complicated by the fact that each level is owned by a different company.
Double-digit office vacancy rates are not exclusive to the Burj Khalifa tower. According to a report released by Jones Lang LaSalle, the office vacancy rate in Dubai is 35 per cent. The firm points there are parts of the country where there is a heavy demand for available office space while demand is not as high in other areas.
A report prepared by Bank of America Merrill Lynch predicts that the population of Dubai could double over the next ten years as more jobs are created in the country. If this happens, demand for residential and office space will increase. The vacancy rate in the Burj Khalifa will likely not be affected, since that office tower would appeal to a specific niche market which is interested in locating there.
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