Modern business premises are selling out like hot cakes, “erasing” the decades-old rule that a “good location” is enough for a high rent.
The vast majority of professionals, as well as investors, are now looking for sustainability, digitized/automated systems, contribution to the environment, regardless of the location of the property. According to the relevant research by Geoaxis, energy certified buildings register up to three times the rents of the older ones, at the level of 30-35 euros/sq.m.!
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The three characteristics of the office real estate market
Today, the office market is characterized by three different speeds:
- First speed: Quality, modern, green offices, almost regardless of location, attract very high demand and rents that can exceed 30 euros/sq.m.
- Speed two: Old, renovated offices in Kolonaki and on central roads, show remarkable durability and rental values around 15-20 euros/sq.m.
- Speed three: Older or unrenovated offices that cannot be rented even for 10 euros/sq.m. in secondary positions in the center of Athens.
Office rentals – The “photo” of the market
After the strong shock of the corona virus and telecommuting, which also rearranged the commercial housing market, “imposing” smaller and more functional spaces, the characteristics and trends of the market are as follows:
- Extremely limited inventory and high demand for modern, high-quality, green, location-independent offices.
- Absence of foreign capital mainly related to the size of the product available and the rigid market framework.
- Start of recovery of Northern Suburbs values (Marousi-Kifisia).
- Significant increase in newly built stock in the North (Noval, PwC, TEE, Aidonakia) in the coming years.
- Placing Piraeus as a possible location for new offices due to metro and new developments.
- Extremely decreasing number of old apartments being converted into offices in central Athens as residential use/Airbnb proves to be more affordable.
- A relative increase in demand for old renovated offices in the center, with a parallel shift of small and medium enterprises to smaller and cheaper professional accommodation in decentralized locations.
- Increased supply and particularly low prices of old specification horizontal properties in secondary locations.
- Fixed gap opening between AAA offices and low quality offices or in secondary positions.
- Continued increase in construction / financing costs and reluctance to develop new small-scale investment projects.
Very interesting are the findings in terms of rental prices. From the processing of the data, it appears that there is an average increase of 37% in independent office buildings without parking spaces and 33% in independent office buildings with parking spaces compared to the values of 2015.
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Even greater is the increase over a decade for office space in horizontal properties, especially where there are also parking spaces. Specifically, an average increase of 46% is recorded in horizontal properties without parking spaces and 54% in horizontal properties with parking spaces, compared to the values of 2015. The highest possible rental prices are presented by Kolonaki with 16.88 euros/sq.m. / month and the axis of L. Kifisias with 16.36 euros/sq.m/month. Next is the axis of Vouliagmeni Avenue with 12.50 euros/sq.m/month, the axis of Mesogeion Avenue with 9.56 euros/sq.m/month and finally the axis of Syngrou Avenue with 9.42 euro/sq.m./month.
The trends
According to Geoaxis, the different speeds in the office market will continue in 2024/2025, with a) a stabilization in values for older offices in secondary locations, b) an increase in older renovated projection offices and c) a halt in the rate of growth values in modern, green offices, regardless of position.
Of particular interest is, however, the new trend, which has the characteristics of short-term leases in commercial spaces as well. 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 this market (not yet in Greece), signaling a potentially significant future change in the work environment.
