Athens office space market stuck in the doldrums

As Athens?s office space market continues to languish, experts warn that it is not even close to reaching rock bottom, given the general sense of uncertainty in the Greek economy.

According to data published recently by Athens Economics, the Greek alliance partner of Jones Lang LaSalle, ?the surplus of office space in the A and B categories in Attica saw no significant change in the second quarter of 2011. We estimate that it reached approximately 2,615,000 square meters, with an additional 15,000 sq.m. at the new business park on Pireos Street in Moschato.?

Nevertheless, and despite that fact that demand for office space has flatlined – a natural development given the uncertainty along with high regular and one-off taxes – the percentage of empty office space came to 15 percent, an effect of the strategic choice of many firms to cut back on expenditures relating to business premises.

As far as Attica is concerned, central Athens continues to maintain the highest rents in the region, with the highest (22.50 euros per square meter per month) recorded during a renegotiation of a lease in the upscale neighborhood of Kolonaki in the second quarter.

Likewise, the northern suburbs, according to Athens Economics, ?continue to attract the interest of renters and the highest price asked during the second quarter came to 19 euros/sq.m./month.?

Property past the 12th kilometer mark on the Athens-Lamia national highway and after is also proving popular with renters, mainly because prices remain low in those areas. Indicatively, the monthly rent starts at 10 euros/sq.m. and goes up to just 14 euros/sq.m., depending on the location and quality of the space.

In the sales market, things look even bleaker.

?Net returns fluctuate between 6 and 6.4 percent,? according to the report, ?though the sample on which these figures are based is negligible and therefore not very significant statistically.?

The main causes for the slump, according to the firm, are to be found in the high cost of loans and in expectations for a further drop in prices.

In fact, experts say, in the entire first half of 2011, just one major sale took place in the office space property market and that concerned the purchase of a building belonging to Hellenic Petroleum in the northern suburb of Maroussi by the L.P. Ellinas Group.

Meanwhile, according to a study carried out by Jones Lang LaSalle over a period of three months into the European office market, it emerged that the gap between the countries in the north of the continent and those in the south is continuing to widen.

According to the study, the average cost of rent in the region overall rose by 2.1 percent in the second quarter compared to the first. The biggest leap was recorded in Moscow, where the average increase in rent reached 20 percent.

The news from Britain, Switzerland, Germany and the Scandinavian countries is also positive, while Poland is also making notable progress.

The same cannot be said of the markets in southern Europe, where the slump continues in Greece, Portugal and Spain, with Ireland also beginning to show signs of a depression in the professional space market.