ECONOMY

Commercial rental rates take 11.8 pct nosedive

Store rents in Athens posted the second-biggest decline in Europe in the first half of 2012 compared with the previous six-month period, according to a survey by Colliers International.

Rental rates for shops in the most popular streets of the Greek capital have declined by 11.8 percent since the end of last year, trailing only Sofia, which saw a 20 percent drop.

The Colliers survey showed that the average rate on a monthly basis in Athens came to 150 euros per square meter, while the rate for stores in major shopping malls stood at 45 euros/sq.m. Mall rates are considerably lower than in the rest of the market as expenses for maintenance and promotion of the shopping center are shared, while owners of malls nearly always collect a share of the stores? turnover in return for the lower lease rates.

The general picture in retail commerce is disheartening as turnover continues to decline. Hellenic Statistical Authority (ELSTAT) data show that the volume index of retail sales declined by 10.2 percent in 2011. Compared with 2008, just before the start of the crisis, the drop in the index has come to 25.4 percent.

The apparel sector is continuing to nosedive, as its volume index shrank by 18.8 percent in 2011 compared with the previous year. Furniture, electrical goods and homeware stores saw their index volume lose 15.7 percent last year.

This has forced tens of thousands of enterprises to shut down and led the rest to submit requests for a reduction in rental rates. When owners reject such requests, tenants tend to opt for immediate departure and relocation to a neighboring building whose owner is willing to accept a significantly lower rate.

In a recent report, Panos Danos, who heads real estate consultants Danos