Office rental rates expected to fall
Athens Plus, 21 May 2010

Professional properties in Greece, and particularly small offices and stores, are to see their leasing rates drop after recent moves by the Finance Ministry.

An amendment to a bill intended to simplify procedures for setting up a company contains serious changes in the law on rentals that are set to work in favour of the leaseholder and against the owner.

The relaxation of the rules in leasing professional space is certain. The option of serving a notice of contract termination just three months in advance, as opposed to six months today, and the payment of just one monthly rent in advance as opposed to four should the leasing party decide to leave are key steps in that direction. Furthermore, each lease contract can be limited to just one year, according to the bill, instead of the two required today.

The idea behind the amendment is to provide a helping hand to the small and medium-sized enterprises that are already in serious trouble due to a drop in consumption. There are also benefits for companies that lease offices, as it is virtually certain that their owners will have to accept the ever-increasing demands for the lowering of rental rates.

As a result, the businesses considering office development will likely postpone their plans until the market regains its balance.

A recent report by Danos, partnered with BNP Paribas Real Estate, showed that in the first quarter of the year, no more than 15,000 square meters of office space obtained new tenants, with 6,000 sq.m. of that concerning the deal by Siemens to lease the office block that used to host the Eleftheros Typos newspaper and belongs to the Angelopoulos family. In the same period last year, some 24,000 sq.m. of office space had been leased, with the total for the entire year reaching 60,000 sq.m.