ECONOMY

Athens office space lease values growing

For the first time since the early days of 2005, Athens’s prime office space market is now being upgraded and included among the European markets posting an upward trend in terms of rental values, at least according to a recent survey titled «Office Clock» by the international consultants firm Jones Lang LaSalle. The survey is divided into four parts, with the first corresponding to markets showing a downward trend in lease sums (and which has no content for the second half of 2007), while the second part relates to steady lease markets, represented only by Berlin. The third part, which now includes Athens together with other European capitals such as London, Barcelona, Madrid and Paris, covers markets registering a pattern of growth, while the fourth refers to markets showing a slowing of their upward trend in rental values. «Athens’s office space market is now showing its first signs of an increase in rental values, but this does not actually translate into a general market improvement,» said Dika Agapitidou of Athenian Economic, an agent of LaSalle. Agapitidou stressed that a small improvement in rental values could be attributed primarily to a lack of available prime office space, owing to previous years’ reserves having been taken up. Demand for prime office space comes primarily from the financial services sector and consultancy firms, hence office interest is focused around central Athens’s Syntagma Square and Vassilissis Sofias Avenue. Foreign funds, according to Agapitidou, are interested in investing in the local office market, which constitutes a popular global choice. «Funds focus mainly on prime office space, privately used by companies. The funds buy the property but retain the lessee under such contracts (not in the form of sale and lease back), that allow the property to remain in the ownership of the seller upon contract expiry,» she said. It was in this context thatthe Arcania fund recently bought AEGEK’s Maroussi building, and the buying firm offered for lease the building’s back space. The front space is used by NFN, a Nokia-Siemens firm. As for Athens, according to the LaSalle survey, the annual rental value in the city center stands at -372 per square meter and shows an annual rate of increase of 14.8 percent. In fact, the Athens office market is among the four markets showing the highest quarterly rental value increase: Oslo (26.5 percent), Budapest (18.9 percent), Moscow (15.4 percent) and Athens (14.8 percent). On an annual basis, the highest increase of 79.2 percent was recorded in Oslo, followed by Warsaw (28.6 percent) and Moscow (25 percent). The report says 1.2 million square meters were constructed in the second quarter of 2007, bringing the total office space for the first half of the same year to 2.3 million sq.m., down 3.0 percent year-on-year. It is estimated that in the second half of 2007, office space supply across Europe will be in the order of 4.2 million sq.m., primarily in Moscow (1.37 million sq.m.) Paris (642,000 sq.m.) and London (428,000 sq.m.). London’s City and West End are still the most expensive office markets in Europe, with annual rental values per sq.m. standing at -1,039 and -1,579 respectively.