Professional properties in Greece – especially high-street stores – have been hit hardest by the protracted slump in the real estate sector as the ongoing decline in consumption is piling the pressure on rental rates and is leading to more and more enterprises being forced to exit the market. The result is a constant increase in the number of empty properties.
The report published by the Danos & Associates/BNP Paribas real estate agency concerning the property market in the first half of the year showed that professional spaces represent the worst-performing section of the market, with new rental activity being all but nonexistent due to low consumption and the fact that there is rarely a margin for further renegotiations between landlords and tenants given the drastic decline in rates.
One of the significant factors landlords take into account when adjusting rental rates is the solvency of their tenants. The level of rent not only depends on the surface area and location, but also on the reliability of the lodger, given that landlords’ primary concern is to secure the collection of the agreed rent.
Still, despite the drop in rental rates by up to 60 percent compared with the period before the crisis, shopkeepers are finding it very hard to stay afloat. A recent report by the Hellenic Confederation of Professionals, Craftsmen & Merchants (GSEVEE) showed that more professional properties are expected to be vacated soon as in the next six months some 40,000 enterprises are likely to go under, on top of the 90,000 that have already shut down since the start of the crisis.
Such a forecast appears very possible given that even the summer sales failed to boost retail turnover, with the National Confederation of Hellenic Commerce recording a 25 percent yearly drop.
Yet the Danos & Associates report does identify certain positive angles that might change the atmosphere in retail commerce. For instance, allowing all stores to open on seven Sundays per year and those up to 250 square meters to open every Sunday may lead to an increase in employment and in sales to Greek and foreign consumers who visit the country as tourists.
Another important point is the loosening of the procedure for the development of shopping centers outside the country’s main cities. The improvement of the legal framework – making it less bureaucratic and more flexible, reducing state intervention – will bring about radical changes to retail commerce, according to Danos & Associates, serving to bolster the creation of malls in provincial cities. Certain big chains – among them books, technology and entertainment products retailer Public and Orchestra children’s apparel stores – are currently looking out for new points of sale in a bid to expand their networks, which would secure an increase in demand for rentals.
In fact, once consumption does rebound, it will be shopping centers that benefit first and not high-street retail shops. It is already clear that the drop in turnover at malls is considerably smaller than that at individual stores and elsewhere in retail commerce. Notably, the occupancy rate at shopping malls these days is close to 100 percent, while at Kolonaki or on Ermou Street in central Athens – where in the past it was often impossible to find an empty store – the rate of empty spaces reaches or exceeds 30 percent. The situation is even worse on other commercial streets in the capital, such as Stadiou and Patission, where empty stores represent around 40 percent of the total.