Shopping malls secured the bulk of turnover during the summer sales this year, rendering the next few months even more difficult for store owners in the capital?s traditional commercial districts as sales continue to slide.
With 2010 having been very difficult for retailers, and the financial crisis showing no signs of abating, it is almost certain that the number of shops that will be forced to close down by the end of the year will be very high.
If the above proves correct, it is expected to exert additional pressure on shops? lease rates, as despite the considerable reductions to date, it is clear that there is scope for a greater drop in rental rates.
Market professionals suggest that the majority of shopkeepers are locked in negotiations for the reduction of rents, with many asking for discounts of up to 70 percent compared to what they were paying before the crisis broke out.
Traders are banking on the fact that owners do not have many options left, as it?s extremely hard to find new tenants quickly in the current climate, especially ones willing to pay the same rents as landlords had become accustomed to collecting before the crisis began.
As the economic crunch deepens, tenants are becoming more assertive in asking for discounts, with owners conceding in most cases and consenting to lower rents for at least the next couple of years, in the hope that the situation will improve by the end of that period.
However, market experts are expressing reservations as to whether a rebound is possible just a couple of years from now and estimate that rental rates will remain low for a number of years to come. They even foresee a further slide, at least up to the summer of 2012.
Data issued last month by the National Confederation of Greek Commerce for the summer sales period indicate that the state of the market affects rental rates too: The drop in retail sales in the period from July 15 to August 10 - i.e. not including the last three weeks of the summer sales - reached 25 percent on an annual basis. In Athens alone this drop amounted to no less than 40 percent, a sign of the deepening crisis that is dogging consumers.
In other areas around Athens the decline in sales has also been disheartening. Piraeus saw a 20-30 percent drop, Glyfada?s was at 20 percent, Peristeri?s at 30 percent and in Maroussi it came to 30-35 percent.
Local traders? associations conducted surveys which showed that, regardless of the percentage of decline, eight out of every 10 shopkeepers confirmed the drop in turnover, with the other two stating it was on the same level as last year - which was already low. Data show that the drop in revenues over the first three weeks of the summer sales was the biggest in the last three years.
A recent report by Danos/BNP Paribas suggested that retail turnover in the center of Athens is contracting at an annual rate of 20-40 percent, as besides the financial crisis, an ever-increasing part of consumption is being absorbed by shopping centers.
As far as rental rates are concerned, the decline since the start of the year ranges from 10 to 20 percent, with rates in Greece?s best-known shopping street, Ermou, coming to an average 220 euros per square meter on a monthly basis. This signifies a 15 percent decline from the end of 2009.
Empty stores in less popular spots now account for 25 to 30 percent of the total, while in the most popular ones they account for 20 percent, which is indicative of the impact of the crisis on the market.
By contrast, shopping malls continue to show a far more positive picture. First-half data for 2011 published by Lamda Development in its financial results showed that Golden Hall has one of the best records this year as the stores it hosts posted a 1 percent increase in turnover while their profits have grown by 2 percent.
The Mall Athens registered a 10.4 percent drop, which was still smaller than that of other retailers, while the decline at Mediterranean Cosmos in Thessaloniki came to 9.5 percent from the first six months of 2010.
The picture at other shopping centers in Athens is similar, while consumers seem quite enthusiastic about new developments such as the McArthurGlen discount village in Spata, east of the capital. The complex, which opened in June, has enjoyed a particularly good reception in its first few months of operation.