Standard Chartered searched for more than two years for new headquarters in Dubai, where more than 40 per cent of the office properties sit empty. In the end, the UK's third-largest bank decided to build its own tower.Companies like Standard Chartered, which will occupy eight of the new structure's 13 floors, often have a hard time finding large blocks of office space because many buildings have numerous owners, according to Robin Pugh of Jones Lang LaSalle Inc. He assisted the bank in its search in 2008 and 2009."For large occupiers, it's actually quite difficult to find space under single ownership," said Pugh, head of agency work for the Chicago-based broker. Buildings with multiple landlords "are not suitable."Dubai's landlords are trying to fill empty commercial space that's equal to about nine Empire State Buildings and rising. Most properties built over the next two years will be held under so-called strata title, where different investors own one or more floors. That will make it harder for renters to find large spaces with a single owner.Standard Chartered agreed with Gulf Resources Development and Investment LLC. to build a 13-storey tower near the Burj Khalifa, the world's tallest building. The bank committed to leasing eight of the floors for at least 15 years and will make a total investment of about Dh514 million.The company shunned the 30-storey Boulevard Plaza towers nearby because they have several owners, which would make modifying the space more difficult, Pugh said. Developer Emaar Properties PJSC, which built the towers, didn't respond to e- mailed questions about the number of owners.During Dubai's property boom from 2002 to mid-2008, developers sold sections of yet-to-be-built apartment and office buildings to investors who often resold them to turn a quick profit. Many office buyers had no experience of managing buildings or dealing with commercial clients and gave little thought to finding long-term tenants.Negotiations with multiple landlords tend to be long and frustrating, said Ian Albert, regional director at property broker Colliers International. Even when a majority of a building's owners agree on rents and terms, one will often hold out for a better deal, knowing that the tenant is eager to complete an agreement, he said."Corporate occupiers don't want to deal with multiple landlords," Albert said. "It may have worked for residential towers, but the commercial market doesn't operate the same way."
Companies needing more than 800 square metres (8,600 square feet) of space tend to steer clear of commercial buildings with strata titles, Albert said. That effectively rules out a large portion of Business Bay and Jumeirah Lakes Towers, leaving smaller businesses to pick up the slack.Most of the new office supply will be under strata title over the next two years. About 41 per cent of the 13.1 million square feet of space due to be completed this year will be held by multiple owners. That will soar to 81 per cent of the additional 12.7 million square feet to be completed in 2012, said Matthew Green, head of UAE research at CB Richard Ellis Group Inc. By the end of last year, 22 per cent of Dubai's 61 million square feet of commercial space was held by multiple owners.Strata titles were first introduced in Australia in 1961 to help manage apartment blocks owned by various landlords. They divide a building horizontally, creating layers of management for a mixed-use development, according to Ludmila Yamalova, a partner at law firm HPL Yamalova and Plewka JLT.
From / Gulf News