Azrieli Drops Residential Plans for Tel Aviv Spiral Tower in Favor of Offices

The Azrieli Group has decided to eliminate the residential component from its flagship "Spiral Tower" project in Tel Aviv, converting the planned apartments entirely into office space. This shift highlights emerging challenges within Israel's mixed-use real estate development sector.

Abandoning the Mixed-Use Residential Model

The Spiral Tower, slated to become Israel's tallest skyscraper at 91 floors on the former Yedioth Ahronoth site, was originally planned in 2018 as a multi-use complex. The project was set to include 67,000 square meters of employment space, 15,000 square meters of retail space expanding the existing Azrieli Mall, and 292 apartments alongside approximately 200 assisted living units.

Over time, however, the project evolved. The assisted living units were replaced by a hotel use, and the apartment count was progressively reduced from 171 down to zero during the second quarter of the year. Tel Aviv City Engineer Udi Carmeli noted at a recent real estate conference that developers are increasingly learning the hard way that rigid, imported mixed-use concepts do not always succeed in practice.

"We are learning the hard way that not every building can and should be designed this way," Carmeli stated.

Market Realities and Oversupply in Luxury Housing

Economic considerations heavily influenced the decision. The Tel Aviv residential market is currently grappling with an oversupply of roughly 10,000 unsold new apartments, particularly in the luxury segment. Azrieli likely determined that converting the upper floors into prime office space offers a more viable return, targeting major corporations seeking large-scale floor space rather than small rental units.