The two-tiered office market in Athens

Business File, June-July-August 2017, No. 111
Real Estate

The office market in Athens, at its lowest point in ten years, is now expecting the kick off in demand for Grade A office space, while rents in secondary locations are facing additional reductions.
With business activity expected to slowly start its rebound phase after years of drops, things could start looking better for owners of office properties in Athens. In a market where rents have dropped even by 50% in some occasions and availability of spaces has gradually creeped higher and higher since 2010 onwards, the news that the Greek government managed to broker a deal with its lenders regarding the completion of the second review of its bailout agreement couldn’t ring any better.
The expectation is that, now, companies will be able to better plan ahead and move forward their investment plans for growth, which in turn will be translated to demand for bigger and more office spaces. This trend is expect- ed to be compounded by the fact that, as things stand, financial incentives (like months of free rent) and the level of rents are additional bonuses for business owners looking to expand their office requirements at an attractive price.
Positive trends
There are already some positive trends emerging in the o ce market. During the second half of 2016 (i.e. after the rst review of the bailout agreement was completed in June of last year), de- mand for prime o ce space grew, rents stabilised, leasing agreements rose and space availability diminished. This has been the case so far in 2017, with the future looking even brighter, in what could easily be described as the best period for the market since the beginning of the financial crisis, in 2010.
In a recent note, real estate services company Proprius noted that occupier demand and activity levels over the first quarter of 2017 were in the same levels as in the final months of 2016, with more renewals agreed rather than new trans- actions. “Kifissias Avenue and the Athens CBD area are attracting the majority of interest, as occupiers continue to take ad- vantage of low rent levels and upgrade to better space,” said Proprius. In its outlook of the market, the company added that development activity in the office sector is still very limited and therefore the exist- ing stock is getting old, with increased t out costs for occupiers….
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