ARiadni Real Estate Blog

Commercial Store Rentals: Battle of landlords and tenants

27 November, 2020

By Nikos Rousanoglou

Rents and, consequently, the value of department stores are expected to come under strong pressure in the coming months, as the crisis caused by the pandemic is growing, both in intensity and duration, affecting private consumption. At the same time, an increasing number of consumers are turning to e-commerce stores, a trend that seems to be perpetuated after the pandemic, pushing retail chains to adjust their plans in relation to their physical store network. As real estate market executives point out, shops located on very popular shopping streets and inside shopping malls / parks will show greater resilience. However, all other commercial properties are expected to be in front of the "padlock" range, depending on the strength of each entrepreneur, or the plans of each commercial chain. This is a repetition of what happened in the period 2012-2014, when the percentage of empty stores, even in central commercial arteries, had approached or even exceeded 40%. In the meantime, if not to some extent restored the tourist movement, e.g. until the end of the spring of 2021, then it is possible that rent reductions will be recorded even on Ermou Street, which until today is in… "unharmed".

In a recent analysis for the third quarter, the service company Proprius-Cushman & Wakefield, points out that the stores located in the most popular commercial markets "suffer" from the lack of tourist flows and the policy of extensive teleworking. Thus, in some sub-markets there are signs of rent correction, while in the most popular areas, rents remain stable. According to the company's analysts, at the present time, in the worst position are restaurants, such as bakeries, cafes, etc., as well as the entertainment industry. During the third quarter, the first small corrections in rental prices were recorded.

According to the data of Proprius, in relation to the immediately preceding quarter, the rents of the stores in Kolonaki, Glyfada, Piraeus and Thessaloniki (Tsimiski Street) have marked a slight decrease of five euros / sq.m. in a monthly basis. On the other hand, prices on Ermou Street remain stable for the time being, where the average rent for the shops located near Syntagma Square (this is the most popular part of the street) remains unchanged at 285 euros / sq.m. in a monthly basis. However, at the present time it is possible to take advantage of some commercial chains that will want to have a presence in places they did not have before, "betting" not only on greater availability of commercial real estate, but also on greater flexibility on the part of owners, regarding the requested rental prices. After all, the current situation is very negative for the owners, as not only is the retail trade hit hard, but in addition the immediate closure of dozens (possibly even hundreds in the coming months) of bank branches has been launched.

Strike from banks as well

The National Bank has already announced that it will close 41 branches by next January, while Piraeus Bank will close another 53 branches throughout Greece. Banks tend to rent real estate in the most commercial areas of each district. Therefore, this simultaneous movement in the difficult period that the market is going through, is not only expected to make it difficult for the owners of these properties to find new tenants, but at the same time it is considered almost certain that the potential rent for these properties will be lower than what he received until today.

At the moment, the popular "squares" are enduring

Regardless of the developments in e-commerce, the demand for physical stores in popular "squares" is not going to decline. However, it is clear that the chains will push for a reduction in rents and certainly for the "deflation" of the famous "air", especially if the vacant properties start to multiply in the coming months.

During the third quarter of the year, the Cosmos Sport chain opened its new store, with an area of ​​almost 1,000 sq.m., on Ermou Street, while it plans to open another store in Nea Smyrni within the first quarter of 2021. The chain IKEA started operating its first store, with an area of ​​1,800 sq.m., in the area of ​​Piraeus, at the junction of Gounari and Tsamadou streets, while Calvin Klein Jeans opened a new store in the Golden Hall shopping center of the Lamda Development group. The Kiko Milano chain, located in The Mall Athens, also opened its first store in Greece. Respectively, the household goods chain Jysk opened its 39th store, this time in the area of ​​Kallithea. In Thessaloniki, the Zakcret chain and Dust & Cream also opened new stores, both on Tsimiski Street.

Respectively, during the second quarter, among the significant leases that had been made, is included the lease of a store of 365 sq.m. in Kolonaki (20 Kanari Street) from the jewelry chain Anna Maria Mazaraki. Also, Folli Follie leased spaces of 60 sq.m. at 7-9 Levidou Street in Kifissia. In Kifissia, at 36A Kyriazi Street, Anna Riska rented a store of 95 sq.m. In Thessaloniki, the chain specializing in sports shoes Sneaker10 leased a store of 325 sq.m. at 100 Tsimiski Street.

Kathimerini newspaper