Athens Office Market Report 2014

Macro-Economic Overview
The first quarter of 2014 confirmed the positive signs highlighted in 2013
for the Greek Economy. The surplus in the Government Budget led to the
decrease in the spread between the Greek Government Bond and the
German Bund at 500 bps, the lowest since 2009. Furthermore the
announcement of Greece returning to the money markets after 4 years
with the issuance of 5 year Gov. Bonds in Q1 of 2014 reduced the spread
to 450 bps and reinforced confidence in the Greek Economic recovery.
Office Market Overview
The steady improvement of the Greek Economy is gradually affecting
the Real Estate Market. Rents and Yields for the CBD and most of the
traditional office locations in Athens remained stable in 2013. Between
Q1 of 2013 and Q1 of 2014 the property market in Athens witnessed
several office relocations of big companies to bigger and better space.
Tenants with negotiation power were the first to take advantage of Grade
A quality accommodation at lower rent. Owners/investors are now
negotiating lease terms and rent and offer better incentives to potential
tenants. As the Athens office market is starting to recuperate, the
opportunity of refurbishing part of the large amount of Grade C and D
office space is becoming more apparent.
Athens Office
Market Report
2014
MARKET SNAPSHOT
Macroeconomics Indicators
Grade A Office Market - 5 years Overview
Current
€ 25
8.00%
€ 20
7.00%
8.25%
8.25%
8.25%
9%
8%
7.50%
7%
6%
€ 15
5%
GDP (Q4 2013)
-2.3%
CPI (April 2014)
-1.30%
Unemployment
(Q4 2013)
27.50%
Change from
Last Period
4%
€ 10
3%
2%
€5
1%
0%
€0
2009
2010
2011
Rent (€/m2 /month)
Source: NAI Hellas
2012
2013
Office Market Indicators
Q1 2014
Yield
May 2014
Grade A
Prime Office Rent
€ 16/m2
Grade A
Prime Office Yield
8.25%
Grade A Prime
Office Vacancy Rate
2.00%
4, Nikitara & Psaron str.
152 32 Chalandri
Athens, Greece
tel +30 210 6811760
fax +30 210 6811722
www.naiglobal.com
Change from
Last Year
ATHENS OFFICE MARKET HIGHLIGHTS
Significant Transactions Q1 2013 - Q1 2014
Transaction Costs
on Rent
Sales
Grupo Dolphin agreed to a Sale of a 4,400m2 office building in
Kifissia for €4.5 mil at an implied yield of 10%.
Dolphino Capital bought the ex BNP Paribas Office of 6,000m2 on
Vas. Sofias Av from BNP Bank for €10.3 mil at an implied yield of
10%.
Eurobank Properties REIC and the Hellenic Republic Asset
Development Fund (Taiped) moved forward to a 20 year Sale &
Leaseback of 14 public buildings for €145.81 mil. The total gross
area leased was 189,000m2 for an annual rent of €14 mil, implying
an investment yield of 9.6%.
Pangaea REIC completed a 20 year Sale & Leaseback of 14
public buildings from the Hellenic Asset Development Fund
(Taiped) for €115.5 mil. The total gross area was 200,000m2
leased for an annual rent of €11.5 mil implying an investment yield
of 10%.
Lettings
Monumental Plaza on Kifissias Av, Marousi in 2013 welcomed
Leroy Merlin in 1,000m2 and Pharmathen in 4,000m2.
Sony Hellas SA moved to 1,500m2 at the Arcania Business Centre
on Amarousiou-Chalandriou Str., Marousi.
Ernst & Young rented 6,000m2 in the ex Unilever Building on
Chimaras Str, Marousi.
Kraft Foods relocated to 19/21 Aristotelous str, in Metamorfosi on
4,000m2.
Mars Hellas moved to the Intracom complex in Paiania, Lavriou
Av.
Diolkos Building on Kimis Av, in Kifissia, in 2013 welcomed
Unilever in 4,400m2, Leo Pharma in 2,000m2 and BMW in
2,000m2.
BBDO relocated to 2,000m2 on Marinou Antipa in Herakleion.
Globo Technologies rented 2 floors on Ethinikis Antistaseos,
Chalandri of 1,000m2.
Vodafone rented ayxiliary space in Lykovrysi in a converted
industrial building of 6,000m2 in total.
Athens Office Market – New Construction 2014
Anangel Shipping SA is waiting for its new building in Kallithea,
Southern Athens of 10,000m2.
Diamantidis Shipping are also preparing a second building in
Palaio Faliro of around 5,000m2.
Attiki Technodomiki will deliver a 2 floor building on 247 Kifissias
Av in Kifissia by the end of 2014.
Vagenas Construction & Famous Estate SA has started
development of a plot of land on Kifissias Av. 345 in Kifissia of a
two-floor and a three-floor office block.
Agency 1 to 2 months' rent or 8% to 12%
of annual rent
Lawyer ½ month to 1 month rent
on Sale
Agency 1% to 2%
Lawyer 0.5%
Notary Public 1.25%
Taxation
on Rent
VAT 23% of rent (some can be recoverable)
or Stamp Duty 3.6% on rent
Local Tax via the Electricity bill
on Sale
Transfer Tax 3%
Capital Gains Tax 15%
Owner's Incentives
Up to 4 month's rent free period
Some contribution to fit out work
Service Charges
€ 2 to € 4 per m2 per month for average
Grade A, B office space
€ 5 to € 7 per m2 per month for above
average Grade A office space with security
Acharnes
Petroupoli
N
Pallini
W
Chaidari
Office Stock Allocation Per Area
(Grades A & B)
Kifissia
Ag. Paraskevi
C
Keratsini
Pikermi
Piraeus
Athens International
Airport
Vironas
P
Paiania
S
Athens Centre (C)
Athens West (W)
Koropi
Markopoulo
Athens North (N)
Athens South (S)
Piraeus (P)
Glyfada
Source: NAI Hellas on-site inspections
ATHENS OFFICE MARKET
Athens Centre (C)
Athens West (W)
Athens North (N)
Athens South (S)
Piraeus (P)
City Centre
National Rd
Kifissias Av.
Sygrou Av.
Akti Miaouli Av.
Alexandras Av.
Petrou Rali Av.
Mesogeion Av.
Faliron
Akti Tzelepi Av.
Patision Av.
Iera Odos Av.
National Rd
Vouliagmenis Av.
Akti Kondili Av.
Piraeus Av.
Thivon Av.
Attiki Odos
Poseidonos Av.
Kononos str.
Vas. Sofias Av.
Athinon Av.
Piraeus Av.
Ag. Dionisou str.
Ampelokipi
Kastoros str.
Supply & Demand
In the greater Athens area the total Grade A and B office stock is c.1.8 mil m2 mostly concentrated north and in the wider CBD
area. The consecutive fall in rental values since the credit crunch in 2008, led to Grade A and Grade B office accommodation in
prime locations becoming more affordable. The outcome of this imbalance created an increase in Demand for Grade A quality
space in prime locations and an excessive supply of Grade C and Grade D space. Potential tenants that cannot find suitable
office space in Grade A buildings are turning to Grade B by upgrading the space to their requirements in return for rent free
periods, prolonged escalation period and/or reductions in rent. As such there is little supply of and high demand for Grade A
and B offices in the city of Athens, especially in prime locations, while on the other hand there is large supply of and almost zero
demand for Grade C and D office space. Vacancy rates of Grade A and B buildings are much lower than the vacancy rates of
ageing Grade C and D offices.
500
9%
450
8%
400
7%
350
6%
300
5%
250
4%
200
3%
150
100
2%
50
1%
0
Athens Centre (C)
0%
Athens West (W)
Grade A (m2)
Source: NAI Hellas on-site inspections
Athens North (N)
Grade A (m2)
Athens South (S)
Grade A (%)
Grade B (%)
Piraeus (P)
Vacancy Rate (%)
Stock (000's m2)
Athens Grades A & B Stock, Vacancy Rate
ATHENS OFFICE RENTS & YIELDS Q1 2014
Rent (€/m2 /month)
Minimum Characteristics
of Grade A and B Offices
Yield
Grade A
Grade B
Grade A
Grade B
Athens Centre (C)
€ 21.00
€ 13.00
8.25%
9.50%
Athens West (W)
€ 13.00
€ 8.00
11.00%
11.00%
Athens North (N)
€ 16.00
€ 11.00
8.25%
9.50%
Athens South (S)
€ 15.00
€ 11.00
8.50%
9.50%
Piraeus (P)
€ 13.00
€ 10.00
9.00%
10.00%
ATHENS OFFICE SELECTIVE LOCATIONS RENTS & YIELDS
Q1 2014
Rent (€/m2 /month)
Yield
Grade A
Grade B
Grade A
Grade B
€ 21.00
€ 13.00
8.25%
9.50%
Kifissias Av.
€ 17.00
€ 13.00
8.25%
9.00%
Mesogeion Av.
€ 16.00
€ 11.00
8.25%
9.50%
Sygrou Av.
€ 15.00
€ 11.00
8.50%
9.50%
Vouliagmenis Av.
€ 13.00
€ 10.00
9.00%
10.00%
Poseidonos Av.
€ 16.00
€ 11.00
8.50%
9.50%
Piraeus Av.
€ 13.00
€ 10.00
9.00%
10.00%
Akti Miaouli Av.
€ 18.00
€ 16.00
8.25%
9.00%
Athens Centre
Grade A Office Space
in terms of Age
MODERN i.e. new built or recently
redeveloped / thoroughly refurbished to
adapt to modern standards
in terms of specification
Column free large floor plates and flexible
layout
High quality finishes
Raised flooring and suspended ceiling of
at least 2.7m from raised floor to false
ceiling.
Double glazing
Effective central air-conditioning
Good lift service
in terms of facilities
lobby
security
parking facilities
professional property management
Grade A Offices are the most prestigious
buildings in an area competing for premier
office users and achieve above average
rent.
Source: NAI Hellas
Grade B Office Space
in terms of Age
Older stock up to 25 years old partly
refurbished
in terms of specification
Average sized floor plates
Reasonable quality finishes
Screed floors and suspended ceiling
Single/double glazing
Central or free-standing air-conditioning
Adequate lift service
in terms of facilities
some parking facilities
average property management
Athens Office Market 2014 Outlook
Rents
Yields
Demand
Supply
Grade B Offices are buildings competing
for a wide range of users in an area and
achieve rents in the average range.
Grade A
Grade B
Disclaimer
Contacts
All data contained in this report has been compiled by NAI Hellas/AVENT S.A. and is published for
general information purposes only. While every effort has been made to ensure the accuracy of the data
and other material contained in this report, NAI Hellas/AVENT S.A. does not accept any liability (whether
in contract, tort or otherwise) to any person for any loss or damage suffered as a result of any errors or
omissions. The information, opinions and forecasts set out in the report should not be relied upon to
replace professional advice on specific matters, and no responsibility for loss occasioned to any person
acting, or refraining from acting, as a result of any material in this publication can be accepted by NAI
Hellas/AVENT S.A.
Thomas Ziogas Business Development Manager
[email protected]
© NAI Hellas/AVENT S.A. June 2014
Eleni Makri Research
[email protected]
Tim Hughes Agency
[email protected]