Market rents for old offices in the 1st quarter of 2024 are on the rise compared to a year ago. 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 over 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 euros/sq.m/month, without counting the Communal Expenses. These are mentioned, among others, in the Office Value Observatory in Attica for the first quarter of 2024 by Geoaxis, the first certified real estate valuation company in Greece, regarding the image in areas such as Kifisias Street, Syntagma Street, Syggrou Street, Mesogeion Street , Kolonaki and Vouliagmenis Street.
The big picture
According to Geoaxis, “the era of unfixing the beloved slogan location – location – location and replacing it with sustainability – digitalization – ESG has begun. The great majority of users and investors are now looking for sustainability, digitized/automated systems, contribution to the environment and a measurable contribution to social development, regardless of the location of the property. Historically, the power of location was one-dimensional until the internet and the coronavirus changed that and virtual reality is taking us into the future. More and more we shop without visiting the shops (even the grocery store is a click away), banking transactions do not require a counter, work is expanding into hybrid forms and entertainment & information have been digitized without return”.
Prices – Independent Buildings (old)
Old independent office buildings, with parking spaces on main road axes: The prices marked for independent office buildings with parking spaces are, on the axis of Kifisias Street 13.66 euros/sq.m./month, on the axis of Vouliagmeni Street 12.23 euro/sq.m./month, on the axis of Mesogeion Avenue 11.30 euros/sq.m./month while finally on the axis of Syngrou Avenue 10.12 euros/sq.m./month.
Old Independent office buildings, without parking spaces in the center of Athens: In the center of Athens, in the area around (not on) Syntagma Square the prices recorded are at 16.64 euros/sqm/month and in the Kolonaki area at 22, 78 euros/sqm/month.
Old stand-alone office buildings, without parking spaces on main road axes: On the road axis of Kifisias Street the prices are 12.79 euros/sq.m./month, on the axis of Mesogeion Street 10.80 euros/sq.m./month, on the axis of Vouliagmeni Street 9.32 euros/sqm/month and on the Syngrou Avenue axis 7.94 euros/sqm/month.
“Especially important are the results of the time-deep analysis that we have carried out over the last 10 years. 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 in relation to the values of 2015”, reports Geoaxis, under Yiannis Xylas.
Prices – Horizontal properties (old)
Old Horizontal properties with parking spaces: The highest possible rental prices are presented by Kolonaki with 16.88 euros/sq.m./month and the axis of Kifissia Street with 16.36 euros/sq.m./month. Next is the axis of Vouliagmeni Street with 12.50 euros/sq.m./month, the axis of Mesogeion Street with 9.56 euros/sq.m./month and finally the axis of Syngrou Street with 9.42 euros/sq.m./month.
Old Horizontal properties without parking spaces: The highest possible rental price is presented by the Syntagma area (not on the Square) with 15.90 euros/sq.m./month, followed by the Kolonaki area with 13.67 euros/sq.m./month, the axis of Kifissia Avenue with 10.47 euros/sqm/month, the axis of Vouliagmeni Avenue with 9.8 euros/sqm/month, the axis of Syngrou Avenue with 8.04 euros/sqm/month and finally the Mediterranean with 7.03 euros/sqm/month.
As noted, from the results of data processing over the last 10 years, it appears that there is an average increase of 46% in horizontal properties without parking spaces and 54% in horizontal properties with parking spaces, compared to the values of 2015.
Features of buying office space in Attica
According to the historical database that we maintain on the evolution of the values of office spaces in Attica, surveys that have been carried out as well as relevant meetings that have been held by RICS and ELIÉ on the course of the real estate market, in the commercial real estate (office) market the in recent years are recorded:
· Extremely limited inventory and high demand for modern, high-quality, green offices, independent of location, recording rents at the level of 30-35 euro/sq.m./month.
· Absence of foreign capital mainly related to the size of the product available and the rigid framework of the market.
· Start of recovery of Northern Suburbs values (Marousi-Kifisia).
· Significant increase in newly built stock in the North (Noval, PwC, TEE, nightingales) in the coming years.
· Placement of Piraeus, as a location for possible installation of 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-sized 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 locations.
· Continued increase in construction / financing costs and reluctance to develop new small-scale investment projects.
Mid-term trend – Three speeds
As noted, today, the office market is characterized by three different speeds.
First gear: 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%.
Second gear: 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%.
Gear three: Older or unrenovated offices that cannot be rented even for 10 euro/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 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 buying packages with real estate collateral is a factor that can hardly be predicted in terms of further increase in supply, although the percentage of offices in the portfolios sold to date 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 increase in rents 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 increase, borrowing, bad loans, unemployment, brain drain etc. .a.) remain problematic.
“As a general trend, we believe that the different speeds in the office market will continue into 2024/2025, with a) stabilization in values for older offices in secondary locations, b) an increase in older refurbished display offices and c) a halt in rate of increase in values in modern, green, location-independent offices,” the survey states.
