A practical starting point for understanding the Israeli market is from the perspective of the various location and site alternatives which the market presents to the investor and user.

Commercial real estate in Israel is typically found in one of two types of locations, either center city “central business district” locations, or in outlying industrial areas which function much as suburban office parks. The two sources of property serve different purposes and markets.

Center city locations, such as those in Tel Aviv, Jerusalem, and Haifa, cater to financial and service businesses, professional services, media and government offices.

In addition, most retailing has historically been concentrated within the city and town centers, although the past decade has witnessed an increasingly dominant trend of construction of shopping centers and strip malls on the outskirts of the urban areas, adjacent to major highway and road development.

Industrial areas, located on the outskirts of Israel’s cities and towns, house a mix of uses, primarily high technology, manufacturing, and warehousing tenants. These industrial areas have also been the site of much of the recent growth in retail development. In recent years, these areas have begun to take many of the characteristics of suburban office parks, albeit with a higher concentration of development as is typical in Israel. Computer, electronics, and other high technology firms, whether engaged in development or in actual manufacturing, generally seek locations in the industrial and suburban areas, with a preference for industrial areas where other similar companies are concentrated, or separate industrial or suburban office park developments.

This overall trend of office, industrial, and commercial development outside the urban centers coincides with the rising level of automobile ownership and subsequent increased mobility of the country’s population and the trend of private home construction and sub-urbanization.