ECONOMY

Operation of big malls has not affected rent levels yet

Despite the opening of two new shopping centers in Athens city center (Citylink, including the Attica department store) and in Maroussi (The Mall), the market of commercial stores in the city’s most important spots is showing signs of resilience. Premature though it may be to assess the impact of those two major investments, given the short period of their operation, market professionals note that there will be some kind of effect at least on the neighboring markets. «The two months of operation of The Mall cannot be taken as a criterion. Yet certainly there will be some sort of impact, in the form of the drop in sales in the adjacent markets of Maroussi and Nea Ionia. For the time being, though, there is no recorded increase in space availability,» Dimitris Voutsas, senior negotiator for Cushman & Wakefield told Kathimerini. What is already becoming obvious in most high streets, though, is the effort by tradesmen to reduce the cost of rent. According to Voutsas, traders have recently exercised great pressure to bring rents down during negotiations with landlords. They have not hesitated even to leave without reaching any agreement, which did not happen often in the past. The majority of commercial streets still have a rosy picture, as demand continues to be particularly high, while available spaces are entirely absent because there is no intention by established companies and their franchises to depart from the stores they lease. «Glyfada is the only area with some availability, albeit small. Similarly Kolonaki, which had some problems in the past, also seems to have been affected negatively by the Attica department store,» argued Voutsas. «The new shopping center, owing to its composition and the nature of the stores it hosts, directly competes with the shops in Kolonaki, offering at the same time a great concentration of brands under one roof, unlike Kolonaki, which does not offer consumers any particular convenience,» he said, adding that «Attica operates as a crowd-puller for the broader area around Stadiou Street, where recently we have noted a rise and not a decline in demand.» In any period of restructuring and the entry of new players in retailing, competition spreads to available spaces, too. There are many chains that are entering the Greek market for the first time from abroad. They are FNAC, Media Markt, Sfera, Promodes and Footlocker, companies with hundreds of outlets in other countries. Another category is the existing Greek groups, such as Notos Com, Elmec, BSB and many other brands that are always actively seeking space. Of course, there is also the odd family enterprise with one or two stores, or local traders. Treading carefully International chains such as FNAC are presently restricting their presence to The Mall. Their intention is to expand their networks and make their presence felt at central spots and on high streets, while remaining the top candidates for entering any new shopping centers whenever there is an opportunity. The example of Media Markt is typical: The German chain has formed a partnership with the Babis Vovos group as the store it operates is owned by the Greek development company and it has already agreed to be included in the commercial and entertainment complex of Babis Vovos in Faliron. «International chains need a presence with several stores in every country they have entered. This is the only way can they secure economies of scale and be profitable. However, they will not pay anything they are asked to just to gain a store in a popular street such as Ermou, despite the strong competition,» noted Voutsas. Stadiou Street in central Athens, for instance, has at the moment four appropriate spaces for shops, but although they cover the needs of several chains, the rental cost is so high that no agreement has been reached. Many in the market had thought that the simultaneous entry of FNAC, Media Markt and the new brand of the Germanos group, Germanos Central, would lead to something of an auction. These groups are all seeking spaces of a similar size (about 5,000 sq.m.) and in the same spots. This has not materialized, though, as companies are treading with great care without exaggerated moves. Firms that do not find space in central spots opt for spaces just off them, as on roads crossing the high streets, without being too far from the popular spots. According to Voutsas, «there is always interest in those roads, too. On Ermou Street we have also seen in the last few months the lower section, beyond Kapnikareas Square, becoming developed due to the lack of space on the street’s higher section.» Commercial space availability is not expected to increase soon. The best example of this is the IBC building in Maroussi, where the tender for its use continues. The majority of groups to have tabled bids are leaning toward the creation of a shopping center, covering 20,000-22,000 sq.m. This includes both Lambda Development and Sierra-Haragionis which have submitted rival bids though they cooperate in the Mediterranean Cosmos shopping center in Thessaloniki. Similarly, the GEK group intends to create stores on the ground floor and office space on the other floors. So what does this year hold for us? Will the situation change due to the operation of new shopping centers or will their presence not be enough to damage the market at other points in the city? Voutsas suggests that rental rates will remain at their current levels, at least in the most central spots in popular areas. This means we should not expect any dramatic rate changes at the first three blocks of Kolonaki (Skoufa and Patriarchou Ioakim streets), on Ioannou Metaxa Avenue in Glyfada, on Levidou, Kolokotroni, Cassaveti and Kyriazi streets in Kifissia, on Ermou street off Syntagma Square and the Haimanda and Platonos pedestrian roads in Halandri. In contrast, at spots just off these roads or in other areas there may be a reduction in rates, depending on the exposure they offer.