Office for rent in Athens
26 October, 2019
The economic crisis in Greece has certainly had serious consequences for all but especially on the real estate market. Hardest hit so far have been areas concerning office space and other commercial real estate.
Following the economic storm, which hit the country more than a year ago, the market is changing at a rapid pace.
Before broaching the subject of prices, it is important to mention the radical change in the law that was modified last December. Up until that point in time, business and office tenants were obliged to provide 6 months notice prior to vacating their premises and were fined 4 months’ rent! We feel that this law was excessive in its protection of the property owners and blind to the needs of the tenant. Imagine a young company, expanding at a steady rate, requiring more space and being obliged, by law, to pay 10 months’ rent before being able to make a move. This law allowed no flexibility whatsoever for companies or businesses throughout Greece.
In short, the new law states that three months notice will suffice and one month’s rent compensation that may be offset against the standard two-month security deposit (subject to prior agreement with the owner). Simplifying the procedures of the law will not only benefit tenants by granting them greater contract freedom but it will surely result in decongesting an already burdened court system.
The latter provision thus facilitates the mobility of firms, and indeed our agency has seen an increase in demand for corporate rentals, particularly concerning office space: firstly, due to downsizing, a need for smaller space, and secondly, a move to reduce overhead.
According to the Athens Chamber of Commerce over 60 businesses per day have either closed or declared bankruptcy. Most of these have freed up the office and commercial spaces that are now on the market. In addition to the above, the economic climate is not conducive to starting new business thereby creating a greater supply than demand resulting in the drop in real estate prices - to the delight of many companies which see a reduction in expected expenditure.
The fall in rental prices will then cause a wave of renegotiations, especially for businesses that wish to avoid the complications and costs involved in a move. At Mobilia Real Estate we undertake such negotiations in an effort to obtain a fair market price in the present circumstances. These prices have indeed hit an all time low.
Three years ago it was not uncommon to pay anywhere from 20 to 30 Euros rent per square meter in the traditional business districts. These business districts are mainly: Maroussi, Kifissias Avenue, Syngrou Avenue, central Kolonaki and Syntagma.
Rental prices in the city center now range, on average, from 9 to 14 Euros per square meter, a little less for Syngrou Avenue. In peripheral areas of the center, you can even find owners willing to accept between 7 or 8 Euros per square meter.
However, prices remain higher in Maroussi due to the fact that many companies have relocated there since 2004 and the inauguration of the "Attiki Odos" highway. This highway provides easy access to Athens city center, the new airport and intersects the freeway to all points north and south in Greece. Maroussi also provides easy access to the suburban railway, bus and subway system. It is rare to find office space there at a price below 14 or 15 Euros per square meter.
The scarcity of true office space (a building built for office use only) that is also large in size is a problem. Rare are the great buildings of several thousand square meters taken by and for very large companies which do not want to pay for floor space alone. This is what causes the relative price difference between Maroussi, where there is a large majority of rather recent large commercial buildings, and Athens city center where the vast majority of commercial space is older and smaller and unable to fill the need for larger spaces.
This all begs the question: Is it the right time?
Buying commercial properties such as retail parking can be really interesting. We have, for example, a very modern and superior parking structure which has a return of 8%. The parking problem in Athens will not be resolved in the short term. Office space, in terms of pure rental investment, is presently of little interest. On the other hand, the time for rentals is just right if you happen to be an embassy or other such institution.
The time is also ripe for those companies that rent office space. There are a lot of high quality properties available in great locations whose owners are quite open-minded about negotiating equally viable terms at lower prices.
Relocating to Athens may not be such a bad idea after all. In fact, against all odds, our agency only recently closed a deal for a new engineering company that has yet to sign their first client in Greece. Their arguments in support of this bold move are irrefutable: a) highly qualified personnel recruited directly through ad placements (much of today’s Greek youth have completed higher education, many of them abroad) b) lower wages c) a pleasant living environment (listed as 24th) and d) home rents are significantly lower than the European average.
At the time this article was written, this company also serves as a perfect example.
In fact, the case of this specific company would make a very interesting article for our next issue.