Commercial rents, and therefore store values, are set to suffer strong pressure in the coming months, as the crisis generated by the coronavirus is growing both in intensity and duration, which is weighing on private consumption.
At the same time an increasing number of consumers are turning to online stores, a trend that is seen becoming permanent after the pandemic, forcing retail chains to amend their plans regarding their brick-and-mortar shops.
Property market professionals say that stores near popular commercial districts and within malls and shopping parks will show the greatest resistance. However, all other commercial properties are expected to face the prospect of closure, depending on the strength of each entrepreneur or the plans of each commercial chain. This is 2012-14 all over again, as the share of vacant stores, even in central spots, came to around or even exceeded 40% at that time.
Unless tourism flows are restored to a certain extent, by the end of spring 2021, the rental rates may even drop on Ermou Street, Athens’ main commercial district, which up until today has not been hurt by the crisis.
In a recent analysis, property service company Proprius-Cushman & Wakefield noted that “stores in the most popular commercial spots are suffering from the shortage of tourism flows and extensive working from home. Therefore, in some markets there are signs of a rental slide, while rents remain stable in the most popular areas.” According to the company’s analysts, the worst-off sectors are food service outlets, such as cafés, and entertainment spaces.
The first rent reductions were recorded in Attica shops in the third quarter of this year. The phenomenon was observed in areas such as Kolonaki, Glyfada and Piraeus, and also on Thessaloniki’s Tsimiski Street. For now, Ermou Street’s rental levels have remained resilient, with its top half, near Syntagma Square, still paying rates of around 285 euros per square meter a month.
The industry has also been hurt by plans for the closure of dozens if not hundreds of bank branches across the country. National Bank has announced it will shut another 41 branches in January, while Piraeus will shave 53 branches off its network.