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Nike gets major discount on renting prime Athens space

By Sharon Smyth & Eleni Chrepa

Nike Inc., the world’s largest sporting-goods company, agreed to rent prime retail space in the center of Athens for at least 43 percent less than the previous tenant, according to an adviser on the transaction.

Nike, named after the Greek goddess of victory, agreed to lease 775 square meters (8,300 square feet) from the state- controlled Greek civil servants pension fund, according to CBRE Atria, the CBRE Group Inc. unit that acted for Nike on the deal.

Greece’s economic crisis is prompting banks, local businesses and other owners of commercial real estate to close branches and stores, offering opportunities to foreign companies with cash to spend. Greek retail sales plunged 8.1 percent in October from a year earlier, the 16th consecutive monthly decline, the Hellenic Statistical Authority said.

“International retailers are taking advantage of lower rents and higher vacancy rates in Greece to establish networks that they couldn’t have created previously,” said Yannis Perrotis, managing director of CBRE Atria in Athens.

Nike, via local partner Folli Follie Group (FFGRP), is paying 57,000 euros ($73,000) a month for the first year to lease a ground floor, mezzanine and two basements in the building at 1 Ermou Street and Syntagma Square, CBRE Atria said. That compares with more than 100,000 euros paid by previous tenant Geniki Bank SA (TGEN), the Greek unit of France’s Societe Generale (GLE) SA.

Calls to Nike’s European office in London seeking comment weren’t immediately returned.

The Ermou Street premises had lain empty for almost two years before Nike opened its store in December, Perrotis said. The building also contains the Greek Ministry of Finance, the Syntagma Square post office and a shoe store.

“This is a sign of things to come as the state becomes more in tune with the reduced level of consumption and older tenants can no longer afford to pay rents,” Perrotis said.

Clothing and footwear sales in Greece dropped 28.3 percent in the year through October, according to the statistical authority. Furniture and electrical and household equipment fell 16.9 percent. Last year Kou-Kou SA, Greece’s second-biggest toy retailer, filed for creditor protection amid falling sales. Expert SA, the Thessaloniki-based electronics retailer, also filed for protection.

Commercial-property vacancies in the center of Athens rose to 24.4 percent in August from 18 percent a year earlier, according to the most recent survey by the National Confederation of Commerce, conducted from July 25 to Sept. 6. Twenty-two percent of businesses remained shut in Athens during the period.

Higher vacancies in prime areas have contributed to a 15 percent drop in rents from a year earlier, Eri Mitsostergiou an Amsterdam-based analyst at Savills Plc (SVS) said in a November note.

Greek gross domestic product may show “anemic” growth starting in 2013 after a 7.4 percent contraction in 2011 and a likely drop of about 2 percent this year, Savills said.

CBRE Atria’s Perrotis expects more international retailers to open in Europe’s most indebted country even as the government awaits a final outline on a voluntary swap of the country’s debt with private creditors that may decide the nation’s future.

“We’ll know the outcome of private sector involvement before year-end,” he said. “After that, Greece’s economy will move on to recovery, so large internationals are positioning themselves now for a future change in the downward trend of consumption.” [Bloomberg]

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