Fledgling startups and giant multinationals operate dozens of technology centers nearly everywhere in Israel, but behind the glass facades are great differences in cost, amenities and access. These are the biggest.
Once upon a time, when we wanted to fix our old Subaru, we drove to the end of the old industrial area at the edge of town, and while the mechanic put the car up on the lift we would eat a falafel at the nearby stand.
But then came the 1990s, when the Israeli high-tech sector was fueled with big money raised through a government program aimed at encouraging local venture-capital investment.
Within 20 years, the new Startup Nation had a flourishing tech sector, with exports of $22 billion a year and a workforce of more than 100,000 people. Each additional employee with a company car marked a shift in zoning plans: Garages and workshops are out, sparkling office towers, designer restaurants and shopping are in — and the more, the merrier.
There are dozens of high-tech industrial parks in Israel today, some larger and some smaller. Many of them began as local industrial zones, while others were purpose-built for tech firms. The companies range from one-person startups to huge corporations with thousands of employees. Each such park has its own unique mix of services, assets and business focus.
The competition is not easy, the choices are difficult and employers and entrepreneurs looking for a location for their companies are forced to make their decisions based on a large number of variables. The first is of course price per square meter, together with other fixed costs such as maintenance and management fees. Sometimes the differences are big: For example, rent in a new building with a high standard of construction in Herzliya Pituah can reach 110 shekels ($27.50) per square meter, while in the northern Tel Aviv neighborhood of Kiryat Atidim — just a few kilometers away — office space can be rented for just 65 shekels a square meter, all-inclusive.
So are we moving to Kiryat Atidim? There’s no simple answer. If there are such huge differences in price, there must be important differences in other categories as well.
Boaz Keidar, the CEO of Michlol Solutions, which manages properties for international firms all over the country, says it is very important to pay attention not just to the price but also to the ratio of net to gross space of the property.
“There are properties in which the public spaces in the building are expansive compared to the internal spaces. The significance is that you spend a lot more money on areas you don’t use.” Sometimes this can reach 40% of the total space, including lobbies and parking, he says.
Accessibility is the next parameter, by which we mean road access and, especially for younger employees, public transport.
The presence of banks, a post office and an HMO clinic can be quite important, as are cafes, restaurants and even bars that are suitable for guests. Stores or nearby mall shopping is another big draw.
Close to home
Another parameter is the desirability of nearby residential areas, as employees want to live close to work. Proximity to universities or other academic and research institutions is also important.
TheMarker examined what some of the most prestigious high-tech locations have to offer, which companies operate there, who operates them and how easy it is for employees to get to work in the morning and get home at night.
The “poster boy” of Israeli tech parks is, without a doubt, the Herzliya Pituah industrial zone, west of the main coastal road, adjacent to the exclusive residential neighborhood of the same name and of course just a stone’s throw from the Mediterranean. Additional exclusive neighborhoods, such as Ramat Aviv and other north Tel Aviv neighborhoods, are nearby.
There are 1,500 companies in the area, including Verint, Microsoft, EMC, Pandatech and Apple, which recently leased 18,000 square meters in one of the new buildings. Leading property companies there include Bayside Land Corp. (Gav Yam), Industrial Buildings Corp., Vitania and Ampa Real Estate. Each of them charges management fees based on the services they provide, which usually include continuous air conditioning. Average management fees run about 20 shekels per square meter.
“The offices are mostly populated by large high-tech companies and venture-capital firms, but there are also professionals, real estate developers, energy companies or law offices that rent hundreds of square meters,” said Snapir Erez, the head of the commercial department at Anglo-Saxon Realty in Herzliya Pituah.
“We see fewer startups and small companies, which prefer the area of Rothschild Boulevard in Tel Aviv. Lawyers who want to be near the courts also do not come here, nor do the embassies, which prefer to be in Tel Aviv,” Erez added.
Another advantage of the area is the atmosphere. There are more than 100 restaurants, coffee shops and bars in the area, many of which are open in the evening as well. There are stores of all kinds, and there’s even a small, indoor mall of outlet shops. In recent years there has been a change in the mix of businesses, with fewer new restaurants opening and more stores for luxury household goods, alongside the showrooms of car dealers — including most of the luxury brands, said Erez. Knowledge-based companies get a big break on local property taxes, too, he said. But traffic is a different problem.
Fewer choices in Jerusalem
If you have decided to locate your business in Jerusalem, you will have fewer price options than your colleagues nearer to the sea.
Jerusalem has a number of high-tech parks, such as the Malha Technology Park or the JVP Media Quarter. Har Hotzvim, in the northern part of the capital, is the only one that offers large spaces, experience and a strong reputation, all of which are hard to compete with. Demand is high, with an occupancy rate that exceeds 90%.
In addition to the breathtaking views of the Jerusalem Hills, the Jerusalem Development Authority provides grants and property tax discounts. The park is not centrally managed. Each building is operated by its owners, which include Rad-Bynet Properties, the Hadar Group and the Ofer brothers.
Preference is given to technology companies in Har Hotzvim, including cleantech, life sciences and biotech firms. Tenants include Teva Pharmaceutical Industries, Intel Israel, Cisco Systems, Omrix Biopharmaceuticals, Medinol, Rafa Laboratories, Matrix and Bynet Data Communications. There are also quite a number of startups and professional offices. Har Hotzvim maintains a broad but unofficial relationship with the Hebrew University of Jerusalem and Hadassah Medical Center, which allows its medical students to intern at relevant companies located in the industrial park.
Still, you cannot compare the character of Har Hotzvim to that of Tel Aviv or Herzliya. Even though a few new restaurants have opened in the past few years, there are no impressive gourmet restaurants or bars and very few workers bother to drive into the city center. Har Hotzvism does, however, offer banks, a day care center, a gym and other services.
There are two busy high-tech parks in northeast Tel Aviv, Kiryat Atidim and Ramat Hahayal, which are basically right next to each other. There are exclusive neighborhoods around them. Resident of these areas — and of much of Tel Aviv and Ramat Gan — can easily bicycle to and from work, on a route that may include Hayarkon Park. All this makes the two locations very attractive for the educated workforce living nearby.
But there are also significant differences between the two locations: Kiryat Atidim is managed by a central company, which is proud of its being a “city within the city.” It has 90 dunams (22.5 acres) under central ownership and management, which builds, maintains and provides services that include coffee shops, restaurants, kosher cafeterias, banks, a post office and even a day care center for children up to 3 that is open daily to 7 P.M.
That’s not to say there are no problems. While at rush hour the traffic barely crawls, at night the area feels almost abandoned, with only a few lighted windows. Ramat Hahayal, just a few minutes away, is a very different animal. It is lively all day — and all night, filled as it is with bars, coffee shops, gourmet restaurants and live-music clubs. Many of the eateries are on the ground floors of office buildings, which discharge crowds of hungry techies at lunchtime. You could also run into stars from Israel Channel 2 television broadcaster Keshet, doctors from Assuta Medical Center and engineers from companies including Comverse, Ness Technologies, Alvarion and Rad Bynet.