ECONOMY

Athens, Thessaloniki see among world?s steepest declines in office rental rates

The decline in office rental rates in Athens and Thessaloniki were among the five steepest in the world in the March 2011 – March 2012 period, according to a survey conducted recently by CBRE of 133 cities.

Thessaloniki registered the third steepest decline, with an average drop of 16.3 percent, while Athens came fifth with a decline of 13.5 percent.

The biggest fall in rental rates for office space was noted in Hong Kong (17.2 percent, or 187 euro/sq.m./month), though even this was not able to knock the Asian powerhouse from the top spot of having the highest rental rates in the world.

It is worth noting that the CBRE survey looked at the total cost of office space, from rent to operational costs (such as building maintenance costs, taxes, communal costs, etc.), the latter of which, however, account for only a small percentage of the overall bill.

In the top five spots of decline in rent, Athens and Thessaloniki are also joined, other than first-place Hong Kong, by Abu Dhabi (with a 16.7 percent decline) in second place and Dublin in fourth, where rates dropped by 13.6 percent in the March-March period.

A few weeks ago, CBRE noted in a report that the rental rates for some of Athens?s best office spaces were at the lowest they have been in the past 17 years for the first quarter of 2012. Specifically, the average rate for renting an office in the capital?s most expensive neighborhood came to 288 euros/sq.m./year, or 24 euros/sq.m./month, as a result of the economic crisis which has led businesses to negotiate strongly for significant reductions in rent, as well as to reduced demand in the market overall. Just a few years ago, renting an office in a high-end neighborhood could have cost as much as 35 euros/sq.m. a month.

According to the CBRE survey, among the 50 most expensive office markets, 19 are in Asia, 19 in Europe and 12 in the United States. In fact, six Asian nations rank among the top 10, clearly illustrating that the strength of the rental market goes hand-in-hand with the strength of the national economy.

In Europe, London?s West End district is the second-most expensive place to rent an office in the world, with the average asking price set at 166.5 euros/sq.m. per month, with an annual increase of 4.7 percent.

The fifth most expensive city to rent an office in the world is Moscow (130 euros/sq.m.), followed by Paris (93.5 euros/sq.m.) and Geneva (75 euros/sq.m.)