Major chain stores including Carrefour, Media Markt, Kotsovolos and Praktiker are trying to negotiate reductions in their rents of up to 30 percent, as the economic crisis continues to take a toll on sales and commerce in general. According to a study carried out by the Greek branch of real estate adviser Savills, the commercial market has been negatively affected by the drop in personal consumption, a trend that began in 2009 and continued in 2010 and 2011 as unemployment rates in Greece soared and household budgets shrank.
According to Savills, the drop in sales is hurting popular high street shopping areas the most, while the decline for older commercial centers is between 10 and 15 percent of turnover. As far as the rent they pay is concerned, their demands for a decrease can only be expected given the losses that have also been experienced by malls. Savills says the drop in the rental fees at malls has reached 10 percent and as much as 20 percent at large-scale shopping centers. Moreover, many mall operators have introduced incentives for lessees, such as allowing them a grace period during which they do not have to pay rent, adjusting the amount of rent to the store?s turnover, and waiving all communal fees for maintenance and utilities, which usually make up a sizable chunk of the cost of renting a store in a mall.
In high street shopping areas of Athens, the decline in rent has reached as much as 25 percent.
?Many owners of old and well-known properties, especially in the center of the city, are willing to discuss very low rents because there are many that have remained without tenants for as long as 12 months,? said the Savills report. ?Nevertheless, there is little interest, as most merchants who want to open a store prefer to do so at a popular mall.?
At the same time, a significant number of small stores have been forced to close because of reduced sales, meaning that more and more commercial properties are emptying in central Athens, which has been slammed by strikes and protests. On most central commercial streets, the amount of empty shop spaces is around 15 percent of the total, while in some parts it is as high as 30 percent.
In an effort to battle this downward trend in sales, however, many commercial associations and organizations have launched successful initiatives to attract shoppers.
One such initiative involves the idea of so-called street or open malls, whereby makeshift stores are set up on streets in the city center that have been given up to urban degradation. These open malls aim at building a bridge between existing commercial pockets in downtown Athens and shoppers through services such as discount coupons, free parking or entertainment activities.
A proposal by a number of commercial representatives has been submitted for funding through the European Union-backed National Strategic Reference Framework, in collaboration with the Athens Tradesmen?s Association and local authorities. The first such malls are expected to start operating on Aeolou Street and a few of the side streets off Patission.