Commercial rental rates will continue to decline in central Athens next year and the number of empty stores will increase as retail turnover keeps falling and consumer purchasing power of consumers slides ever lower, a property service professional has told Kathimerini.
“Over the course of the next 12 months rents in the popular commercial districts will see a further decline while lease rates at shopping centers will remain stable,” stated Dimitris Voutsas, director of the retail trade service division for Greece and Albania at Colliers International Greece.
The real estate company official added that malls retain the top spot in the preference of foreign as well as local retail chains as they offer a safer environment compared with high streets.
Regarding the extent of the decline in commercial rents next year, few market professionals are willing to make any forecasts, instead saying there are a number of factors that will determine developments. Officials at one real estate service firm told Kathimerini that if there is a visible improvement in retail trade conditions in the second half of 2013, the rental rate drop may be contained or even stop.
Nevertheless, when a rebound does finally take place, the high number of empty stores is expected to hamper the rise in rates as the options that retail chains will have will be multiplied compared with the pre-crisis period, when competition for high-exposure spots was fierce.
The drop in rental rates for high-street locations is expected to reach 15 or even 20 percent by the end of this year. However, when one factors in stores located in shopping malls, the average drop is far smaller. Data presented recently by Georgios Papaioannou, vice president and chief executive of Piraeus Real Estate, showed that this year the average drop in store rents – including mall outlets – will amount to 9.1 percent year-on-year.
Compared with the rate peak noted in 2007, the slide in rents for commercial spaces has reached 53.1 percent. The country’s most popular shopping street, Ermou Street in central Athens, is a case in point, as it has seen its average rate slashed from 300-350 euros per square meter before the financial crisis to just 170 euros/sq.m. today.