Globes, Daphne Bramley Golan, 01.03.2020

When wandering the main streets of old cities around the country to make arrangements or shopping, the question sometimes arises who lives up there, in the apartments above the shops. The Israeli tendency, even in residential areas of the city centers, is to live in a building that has a small, well-kept garden, preferably in the back of the apartment, and to prefer fewer apartments in buildings that have a small supermarket, a barber shop or a vegetable shop.

As a result of this preference, in construction that began in the 1990s in the suburbs, the commercial fronts that characterized the old streets disappeared until those years. There are identical buildings in these neighborhoods with balconies, entrance vegetation, underground parking and a public garden in the center. For the most part, there is no trace of a grocery store or a blast, laundry or hairdresser. There are mostly children's whistles, but every small arrangement has to start the car and drive to town.

However, in recent years it seems that the commercial fronts are evident. This stems from a combination of several factors: the term "mixed use" returned to the heart of the planning concept, out of longing for that long-standing, long-lived street that disappeared because of the malls; Municipalities encourage such construction so that they will pay higher property tax payments than commercial and not just residential; And shoppers' preferences have also changed - they miss the availability of services and are tired of having to travel anywhere. And the companies themselves find another way to make money from it besides selling the apartments - renting commercial properties.

How are all these changes reflected in the value of these assets? We checked.

Prices : Opportunity veteran assets

Buying a second-hand apartment in a building with a commercial facade can be a real opportunity: Realtors tell of big gaps between apartments in "regular" buildings and apartments above commercial fronts.

The city of Rehovot was recently sold in the northern area of ​​Main Street, Herzl, a 3-room apartment located above a pub, for NIS 1.4 million. A similar apartment on a nearby inner street sold for NIS 1.58 million - a 15% gap. However, it should be borne in mind that not only the commercial facade affected the price, but also the fact that the building is located on the noisy main street and the fact that the property below is a pub.

According to Kfir Zohar, CEO of Anglo Saxon Tel Aviv: "When there are a few individual stores, and 'clean' commercial areas such as a clothing store - there is no mention of apartment prices. But when it comes to a commercial center that includes a fish, pub, or jade-selling store, and issues of noise, smell, dirt and busy traffic come in, then the situation is completely different and prices may be 10% lower than a building without a commercial facade. " Let's go back later.

According to data from appraiser Levi Yitzhak, the gaps may be even greater: a 4-room apartment in Neve Sharet in Tel Aviv, on the first floor above shops, was recently sold for NIS 2.11 million. According to Levy, the real value "without a nuisance below" is NIS 2.6 million. The 4-room apartment on Hod Hasharon Street, above shops, sold for NIS 1.68 million, compared with a realistic price of NIS 1.95-2 million.

According to Anglo-Saxon Agency franchisee Yuval Shmuel, "Apartment above commercial floor will be about 20% cheaper compared to apartment of no size floor. For example, apartments in a new building now built on Goshen Street, 5 rooms, 120 square meters, are offered NIS 1.6 million for sale and very difficult to sell. In contrast, the 5-room apartment on Barak Street adjacent to it sells for NIS 1.75 million, much faster and easier, because it is quieter and less commercial. And it's just a ten-meter air line between the two apartments. "

Also, Keller Williams franchisee in Be'er Sheva, Shlomi Amar, says that Beersheba has a significance in the cost of apartments in buildings with a commercial facade, which reaches a 15% gap in price. Thus, 4-room apartments in the Neve Ze'ev neighborhood of a 20-year-old building are sold for about NIS 1 million or less, and similar apartments on nearby back streets reach NIS 1.1-1.15 million.

Oded St Mary / Max Moore Intelligence gives us some more examples: On Crystal Street in the Kaiser neighborhood, the average price of a 4-room apartment is NIS 2.15 million, while a similar apartment in the same area, but above stores, costs NIS 1.9 million. Hill c has a commercial center where a restaurant, barber shop and children's club center. The price of apartments close to the center is 5% to 7% lower than the price of apartments down the street. A six-room penthouse apartment without a commercial facade will sell for around NIS 4 million - and a similar apartment with a commercial facade for NIS 3.7 million.

But not in all cases it is an opportunity, and as a rule, as you approach the center and Tel Aviv, the openness of the tenants increases.

In Rishon Lezion we found apartments in buildings with commercial facades, which are sold at the same price as apartments without commercial facades, and even more. Sivan Koons, an Anglo-Saxon franchisee in Rishon LeZion, tells of a 3-room apartment downtown at 82 Rothschild Street, with an elevator and parking, over a vegetable shop, clothing store and change, which sold for NIS 1.61 million. The 3-room apartment was sold in a building on Sde Street 2 Rothschild corner, with parking and elevator, above nursery and hairdresser, at NIS 1.5 million, she said, average prices for the area and even slightly higher, thanks to the addition of elevator and parking.

New projects : The price is less affected

Even in the western neighborhoods of the city, where construction is more modern, there is no real effect on the price of apartments in buildings with commercial facades. In the Kiryat Rishon neighborhood, on Halmonit Street, a 4-room first-floor apartment with a balcony, parking and elevator was sold, just above a large branch of Pavilion wines, for NIS 1.8 million. By comparison, a similar 4-room apartment in the same neighborhood, also with a sun terrace, elevator and parking was sold for 1.85. An insignificant gap of less than 3%.

In Ra'anana, Keller Williams franchisee Roy Salzman tells of a new project in the Neot Sadeh neighborhood, where street-level commerce is being built and prices are the same as prices of identical apartments without a commercial floor.

There are places where prices are even slightly higher. The Azorim block project of Azorim, opposite Ben-Gurion University in Be'er Sheva, is an eight-storey project above the commercial floor, with 147 apartments in four buildings. According to Gil Gurevitz, marketing and sales manager for the company, the price per square meter in this project is 17 thousand per square meter, compared to an average of 15 thousand per square meter in the area. The buyers are not typical buyers, but mostly 50+, doctors in Soroka or academic staff. At the university, even in the Herzliya Hills project of Azorim, the prices per square meter, according to the company, are the highest in the city, except Herzliya Pituach.

But as mentioned, it depends on where the building stands and how the trade is built.

According to Kfir Zohar, CEO of Anglo Saxon Tel Aviv: "The price of apartments in the Sheraton City Tower area in the Ramat Gan stock exchange is lower than the apartments of a tower without a commercial center down because of movement of people that could impair the quality of life of the occupants, disruptions to traffic at the entrance and exit from the complex , Parking and dirt issues. However, a commercial center will be considered an advantage for young people and therefore these assets are very attractive to investors, ”explains Zohar.

"If we take the Noga complex in Jaffa, where residential living is one-stop shopping, including cafes, bars, neighborhood containers and clothing stores, it is very easy to rent apartments to young people and improve housing with a small number of children," Zohar said. "In the state square, the closer to the inner circle of the square, the higher the store line, the higher the prices, and most of the residents own the apartments themselves and do not rent, and the complex is considered extremely prestigious, despite the existence of greenhouses, cafes and the like."

Shelf Time : Longer

In some places, the time required for a sale is longer. "A few years ago, I got an amazing penthouse for sale in the city center, which spans more than 400 square meters, luxurious and high-quality," says a veteran realtor in the center. "The problem was that it was located in a building with a commercial facade and entrance to Pasche, and the building's staircase was not. Separated from store entrance. Those who came there first saw rubbish and did not want to go up to the apartment. I used to come to the building half an hour ahead of time to clear the entrance because people from the shops would sit at the entrance on the stairs eating, drinking, nuclear crackers and smoking. I would come in fear and shake what I am going to find today when I come with clients.

"It was a serious problem. I even tried to talk to the building committee that a small investment would close the area of ​​garbage that would not be open to anyone who came. It took me two years to sell it, and it sold for about 15% of the price it would have sold if it was located in a building near ". The one who bought the penthouse at the end was a young couple, "who agreed to close their eyes all the way to this amazing apartment," the realtor says.

Keller Williams franchisee Ness Ziona, Ofek Ben Eliyahu, recalls an old apartment on Rothschild Street in the city, a bustling shopping street.The apartment needed a massive renovation.

He had trouble selling it for about six months, although it was priced correctly, and according to three different appraisals. According to Ben Eliyahu, salvation for sellers also came in this case from a young couple who fell in love with the location of the building.

"The advantage for young couples who have everything under the house, the comfort of not having a vehicle to travel and can rely on public transport, is tremendous. What one is a disadvantage to another can certainly be an advantage."

Buyers : Looking for comfort under the house

Sharon Bend, a city planner and marketing manager, is the owner of this point, the owner of Bashta - a strategic planning company in the field of business, community and tourism development. "When designing such buildings, it can be taken into account that the apartments on the first floors of commercial space are smaller and cheaper studio apartments, designed for younger guys who are less susceptible to noise and ready to live in a more vibrant area. Young people are much less susceptible to noise and sometimes even cooler to live above a bar. Or a restaurant or neighborhood cafe. "

According to Avi Pinchas, the Anglo Saxon Rehovot franchisee, who is interested in buying apartments in the northern part of the city for investment, does not shy away from buying apartments located above cafes and pubs, because these apartments are most sought after by students in the agricultural and nearby Weizmann Institute and important proximity to the recreation centers.

The geographical location. According to Amos Na'im, CEO and owner of Keller Williams Agency, "In Tel Aviv, we see how the right retail is leading to an increase in real estate value. An example is the Basel complex, which has created a neighborhood characterized by a strong local Brit. Young families and renters, as well as renters, They are very interested in living near the complex and enjoy the cafes, delicacies, etc. This of course contributes to the high branding and positioning of the place, and because it is an area with parking and transportation problems, so the existence of high-level commerce has a great advantage for tenants. The car from the parking lot they were able to find and / or think later how to find parking in the area when you return, Since everything is within walking distance.

"Tel Aviv in this context also behaves similar to Manhattan - where most residents move through public transportation and the existence of commerce is of great importance to buyers."

"Investors like to buy apartments in the city center, no matter if they have a commercial front or not," says Sivan Koons, an Anglo-Saxon franchisee in Rishon LeZion. Young couples love life in the center, because in the evenings all pubs open. People without a vehicle love the center, and even students, who until a few years ago chose to rent housing units in the private homes in the neighborhood adjacent to the College of Management, are looking for divided apartments today at the Rothschild Center. The noise, the dirt, the smells and the clutter in the recreation areas don't deter them. This location is warm enough so there has never been a problem selling apartments there. "

The mix : a cafe, but no good

The mix of stores on the trading floor will dramatically affect the value of the property. "One of the questions we ask most of the buyers is the mix," Gurevitz of Azorim says. "As soon as the tenant sees that the developer is protecting his interests, it calms him down."

Appraiser Levi Yitzhak talks about a six-apartment building on Uziel Street in Ramat Gan, which has been a bookstore for years. "When the owner of the bookstore passed away, the store was sold and under it the Shawarma and Falafel coffers opened. The odors of oil, dirt and commotion led to a very rapid turnover of all tenants on the first floor selling less than 50% of their value, and the owner of the fortune bought them. The owners of the building sold or rented the apartments. Low. "

"The diner is a very important anchor," says planner Bend. "But it has to be 'easy' food. People less like functional commerce - the dairy grocery store, maybe Tambouria, hairdresser - they want it too. Once there were much clearer anchors, like a bank branch and a post office. In the current era, mail is still important because Online shopping packages, but bank branches are dwindling in. Today people want a coffee shop or deli, things that are related to Life Style.

On the other hand, when you put a restaurant or bar or cafe under the house then the neighbors who live above say, 'Sorry, I don't need people talking to me under the windows now or the owner of the cafe making music until 11 o'clock.' And so anyone who plans to trade underneath the residence should think very carefully about these aspects. "

The regions have formulated a strategy whereby they leave the trading areas and lease them to businesses, rather than sell them - thus maintaining the long-term mix. The company has nine mixed-use complexes, some with offices and commerce and some with commerce, which will include more than 50,000 square meters of commerce by 2025.

Next step : Not just stores, but also offices

Azorim is marketing some new projects that have a mix of uses - not just with down stores, but also with offices. One of the most prominent projects in the area today is Herzliya Hills - 600 housing units with an office building of 30,000 square meters.

Dan Moore, a high-yielding property manager, says that the closer buyers to Tel Aviv and the center, the more interest in mixed-use projects is growing, while peripherals have not yet discovered it.

"This audience sees it as a big advantage, because they have a better time utilization. You don't have to spend your car to go to a writer, to a cafe, to a book, and a large part of the tenants also work in the office building. Herzliya Hills is the project with the price per square meter Highest in Herzliya, except in Herzliya Pituah. "

Apartments above stores: That's how it works

1. Good Operational Separation: Separate residential and business entrances are required, and pre-loading and unloading thinking is required. "It is advisable that there should not be a common entrance for residents' parking and trade providers," says Sharon Bend. "The entrance to the apartments should be at the back of the building so that the apartment owners do not enter the stairwell between the café or pub customers, especially if it is open late, and prevent a situation where the blinders decide to shout or do their needs at the entrance to the building or ring the intercom in the middle of the night." It is worthwhile to learn from the case of the Sharona complex in Tel Aviv, that its occupants claimed that the food market built beneath the complex turned their lives into a hell of noise and smells.
2. Enough space for garbage: "Trading needs huge capacity of garbage and huge conflicts around the issue of garbage that is in the belly of the building downstairs, because someone didn't do a design job properly," Bend says. She said a treetop project on Sokolov Street in Holon is a good example of separating the commercial floor from the upper floors, but the planners' mistake was assuming that the garbage containers that serve the tenants would also suffice for commerce.
3. Preparation at the planning stage : The catering business requires preparation at the planning stage, because in order to obtain licensing, you need fat separators and vapors.
4. Wide sidewalks: To allow outdoor seating, sufficiently wide sidewalks should be designed to invite passersby to sit and create a sense of recreation.
5. Determining the right size for stores: Do not design too large spaces but ones that will fit into stores in a small shopping center.
6. All stores in the same direction: It is better for the storefronts to be facing the same direction and not to cover several sides of the same building. "When you walk down the street, you have between two seconds and eight seconds to decide if the store caught you. That means the look at commerce should be very open and continuous," says Bend. "The more critical the trade is, the more customers you have reasons to reach. You come to one store, but move on a few more spontaneously. If small centers or individual stores are planted under continuous buildings, trade is usually weakened. At a neighborhood level to concentrate on a massive commercial hub or open hub where all commerce can be viewed continuously. "