Sassine Square is the uncontested historical heart of Ashrafieh. It is the place for public gatherings and demonstrations as well as public, cultural and artistic events. It is also a known business destination although only a dozen office buildings out of more than 100 in Ashrafieh are located in that neighborhood. Despite the fact that it is not a prime office center, Sassine and its immediate surroundings are a high-performing niche market. Future prospects are rather limited, as the area lacks vacant plots ready for development and is difficult to access particularly in peak hours. The limited stock, however, ensures the continued good performance of the sector.
Ashrafieh counts more than 100 office buildings, but only 12 office buildings are located on Sassine Square. The majority are tenanted under the old rental law, so they are effectively not on the market, as they have a very low turnover ratio. Sassine was not always a business destination. During the Lebanese Civil War, a number of local companies relocated their offices from the devastated Beirut City Center to Sassine. As there was a lack of purpose-built office towers, they rented residential apartments. Slowly, many residential buildings were thus transformed into office buildings, although they did not have the necessary amenities – no proper entrance halls, no adequate signage, no underground parking, and inappropriate floor plan layouts. A few office buildings emerged in the 1980’s and 1990’s, around which the office rental market currently revolves. More recent projects have office units offered on the sale market. One recent office center, a classical building with no particular architectural charm, has been on the market since the summer of 2000 but still has office space for sale. Another project still under construction also has about 500 SQM of offices available. Very few offices are available for rent on Sassine, as the market is predominately still tenanted under the old rental law with very low turnover rates. Only two recent office centers have offices to sell. Overall, the stock is of mediocre quality, with minimal amenities and maintenance. Despite these drawbacks, however, while supply remains limited, occupancy levels will surely stay high – the market currently performs at between 90-95% occupancy.
Demand, which started with local companies in the late 1970’s continues to be driven by small to medium-sized local firms looking for offices ranging between 100 and 200 SQM. Demand typically comes from companies that cannot afford the higher expenses of the more renowned business centers of Ashrafieh, such as Charles Malek, or the newer stock along Corniche el Nahr. Sassine, which is an affordable alternative, attracts local companies wanting to be located in a known business address. Offices on the first floors also attract banks, which often have branches on the ground floor and offices above them. Sassine Square is also attractive to a number of NGO’s and para-governmental organizations or business-related associations, such as the Lebanese Businessmen Association. Only two major international companies are located in Sassine: Total and ADPI.
The few offices that are placed on the sales market post asking prices of around USD 4,500 per SQM. After negotiation, however, effective sales prices can drop to USD 4,000 per SQM. These prices, however, are slightly overvalued, as new stock in other areas of Ashrafieh, such as Saifi, Mar Mikhael, Mathaf, or Corniche el Nahr, range between USD 3,100 and USD 4,000 per SQM (on the first floor). The comparatively high prices can be explained by the scarcity of the stock. As many offices have been on the market for several years, it is correct to conclude that these prices may be too excessive for their location. Estimated rental values reflect an average of USD 200 per SQM per year. At such rental rates, the yield would stand at around 5%, which is a reasonable return on office rentals under current market conditions.
Sassine Square Office Market
- Number of purpose-built office buildings 12
- Average sales price (USD/SQM) 4,000
- Average Estimate Rental Value (USD/SQM/Year) 200
- Profile of Demand Small local companies
- Office size most in demand (SQM) 100-200