Real Estate: New Growth in Office and Logistics Rentals - Economic Courier

Countering what is happening in the office markets of Western Europe, the domestic segment of office spaces is showing a positive growth rate, and the logistics market in Greece is also on the rise, reflecting the dynamics of the country's commercial real estate. The lack of quality, modern, green spaces has become an advantage, as demand exceeds supply, and the Greek market for offices and warehouses, both in the current period and considering its direct prospects, shows positive expectations. Despite the fact that the absorption of office spaces decreased in the fourth quarter of 2023, the annual growth rate of the office market for 2023 closed with an increase of 22%, according to a study by Cushman & Wakefield - Proprius.

Specifically, absorption in the fourth quarter of the year totaled 20,000 square meters, bringing the total office sales area for the year to 160,000 square meters. Overall performance is, of course, 12% lower compared to the peak performance of the office market as recorded in previous years. The average rent for premium properties has risen to 29 euros per square meter, with some deals exceeding the threshold of 30 euros per square meter, marking a 12% increase compared to 2022. The volume of investments in office buildings by the end of 2023 reached 165 million euros, up 15% compared to the same period last year.

Main deals

The largest rental deal in the fourth quarter involved the Wully Building of the Greek Parliament, with a total area of 13,460 square meters located at 20 Amalia Street, in Syntagma Square, where the offices of the Greek Parliament will be relocating. In terms of sales, a notable transaction was the sale of the building where a new courthouse will be constructed in Piraeus, with a total development area of 36,000 square meters from Dimand to the Judicial Buildings Financing Fund (ΤΑΧΔΙΚ) of the Ministry of Justice. The price was €80.9 million. Additionally, Trastor acquired offices in the Politeia Business Center at 109-111 Mesogeion Street. The offices are leased to Italgas, which now owns DEPA Structures.

Additionally, in the fourth quarter, Prodea Investments announced the completion of the transfer of 22 office and commercial properties to the National Bank, which had been leased by the bank until recently. The deal was valued at 110 million euros. The remaining 20 properties are expected to be transferred in the first half of 2024 for a total price of 43.5 million euros.

Warehouse rental prices are at their peak.

The lack of modern products also sets the tone for the logistics market in Greece, thus keeping premium warehouse rents high. By the end of 2023, each square meter of modern warehouses rented for 5.25 euros per month, with a forecast of upward movement within 12 months, and while in 2020, during the pandemic, when demand was in the red zone, it was around 4.25 euros per month per square meter. As for yields, it was 7%, with the assumption of a further downward trend within a year, as noted in the Cushman & Wakefield study.

Investments of 60 million euros

The key indicators of the industrial and logistics real estate market in Greece remain strong, with an average investment level of around 60 million euros in the fourth quarter of 2023, a period during which 90,000 square meters were absorbed. This represents a 20% increase compared to both the same quarter in 2022 and the fourth quarter of 2023.

Big deals

Among the significant transactions completed in the fourth quarter of 2023 was the acquisition by Trastor A.E.E.A.P of 17,060 square meters of warehouse space in Mandra, Attica, leased to Goldair Cargo for 7 million euros. Additionally, the Sklavenitis chain purchased a 53,000 square meter factory from BSH Hellas, formerly Pitsos, located in the Rentis area. A 14,150 square meter facility on the Thessaloniki - Polygyros road was acquired by the supermarket chain Diamantis Masoutis, while the Iris printing plants (38,752 sq. m.) were sold for 11.5 million euros to Timi Alafouzo.

Goldair acquired a new 14,000 square meter logistics facility in Aspropyrgos, an investment of €13 million, while Samson Logistics acquired a 3,000 square meter warehouse in the Sindou area of Thessaloniki. In addition, Neptune Land Services (NLS) acquired the majority of shares in FERST Logistics, which provides high-value logistics services to the automotive industry in Greece.