Market rents for old offices in the 1st quarter of 2024 are on the rise compared to a year ago, according to GEOAXIS research. It is indicative that in all 6 study areas an increase was found in the requested rents, while over a decade the data show an average increase of 40%. Old offices make up more than 90% of the stock, while the (few) newly built energy-certified buildings register up to three times the rents, at the level of 30-35 euro/sq.m./month, without including communal costs in this figure.
Medium term trend
Today, the office market is characterized by three different speeds
Speed one: Quality, modern, green offices, almost regardless of location, attract very high demand and rents that can exceed 30 euros/sqm/month and yields around 6.0%.
Speed Two: Old, renovated offices in Kolonaki and on central roads, note remarkable durability and rental values around 15-20 euro/sq.m/month with yields of 7.0%.
Speed Three: Older or unrenovated offices that cannot be rented even for 10 euros/sqm/month in secondary locations in the center of Athens, with yields of around 7.5%.
These different speeds are expected to continue for the rest of 2024 as the real economy does not appear to recover to help the thousands of SMEs and freelancers grow and initially absorb the stock of non-premium office space.
The next day
The new trend to use offices with flexible space and time cannot yet show its quantitative impact on the demand side, although there is an increasing number of users who prefer flexible spaces to long-term office leases. At least 10 such spaces are already registered in Athens, while the Airbnb platform has also entered the specific market (yet not in Greece), signaling a possibly significant future change in the work environment.
The handling of non-performing loans (NPL’s) by banks and funds that buy packages with collateral in real estate is a factor that can hardly be predicted in terms of further increase in supply, although the percentage of offices in
to date sold portfolios is very small. However, the hasty and poorly planned promotion of offices in the already shallow and troubled market could indeed put further pressure on prices.
The large rent increase recorded in 2019-2022 in high-end offices is expected to continue but at a slower pace, as in addition to the clearly worse political climate, the Macros of the Greek economy (GDP growth, borrowing,
bad loans, unemployment, brain drain, etc.) remain problematic.
As a general trend, Geoaxis estimates that the different speeds in the office market will continue into 2024/2025, a) with a stabilization in values for older offices in secondary locations, b) an increase in older refurbished display offices and c) a halt in the rate of increase in values in modern, green, location-independent offices.
