31 Oct 2017 - Azerbaijan (Baku)
During my recent trip to Baku I reviewed the office market where up until circa 2013 there was a limited supply of Grade A office property with good health and safety provision and the CBD of Baku was centred on and around a single office/hotel complex – Landmark Building.
In 2014/15 completion for tenants intensified with new players delivering office buildings (Marina Plaza and Porto Baku), a 5 minute drive to the east of the Landmark Building. The promise of additional office buildings in the vicinity of Port Baku has not come to fruition and construction has now stopped on the those buildings that were due to complete in 2016/17, weakening their claim to the CBD albeit in the medium term we anticipate Port Baku will be classified as the CBD of Baku.
The office tower at the prominent Flame Tower (pictured below) development situated to the west of the city remains empty. The reason that owners have not put the offices on the market to lease are uncertain and opinion varies between potential structural and legal issues.
Even though demand for offices is at a low ebb it continues to be the case that city centre office stock is being shunned in preference for peripheral office locations that are 5 to 10 minutes drive from the centre. This movement is due to lower prices, less traffic congestion and better quality buildings.
Establishing which is best office option commercially remains a challenge as there is no market standard in terms of rent, measurement, service charge or currency.