Commercial Real Estate in Athens: Offices, Retail and New Developments

Reading time: 15 minutes

Table of Contents

• Introduction
• Economic Overview of Athens
• Office Market Trends
• Retail Real Estate Landscape
• Industrial and Logistics Sector
• New Developments and Urban Regeneration
• Investment Opportunities and Challenges
• Conclusion
• FAQs

Introduction

Athens, the historic capital of Greece, has been undergoing a significant transformation in its commercial real estate sector. As the country emerges from a prolonged economic crisis, the city’s property market is showing signs of robust recovery and presenting intriguing opportunities for investors. This comprehensive analysis delves into the current state of commercial real estate in Athens, examining key sectors such as offices, retail, and new developments. We’ll explore the economic drivers, market trends, and future prospects that are shaping the landscape for both local and international investors.

Economic Overview of Athens

Before diving into specific real estate sectors, it’s crucial to understand the broader economic context in which Athens’ property market operates. The Greek economy has shown remarkable resilience in recent years, with GDP growth outpacing many European counterparts. This economic resurgence has had a direct and positive impact on the commercial real estate market in Athens.

Key Economic Indicators

Recent data paints an encouraging picture:
– GDP Growth: 5.9% in 2021, with projections of 3.5% for 2022
– Unemployment Rate: Declined from a peak of 27.8% in 2013 to 12.8% in 2022
– Foreign Direct Investment: Increased by 74% in 2021 compared to the previous year
– Tourism Recovery: Visitor numbers approaching pre-pandemic levels, boosting retail and hospitality sectors

These indicators reflect a broader economic stabilization that is creating a more favorable environment for commercial real estate investment. The labor market’s improvement, in particular, is driving demand for office space and supporting retail consumption.

Office Market Trends

The office sector in Athens has been experiencing a significant transformation, driven by changing work patterns and an influx of international companies establishing a presence in the Greek capital.

Demand Dynamics

– Prime Locations: Areas such as Syntagma, Kolonaki, and Kifissia continue to be highly sought after for Grade A office space.
– Emerging Districts: Neighborhoods like Piraeus and the former airport site at Ellinikon are seeing increased interest due to ongoing redevelopment projects.
– Sectoral Demand: Technology, financial services, and professional services firms are leading the demand for high-quality office space.

Supply and Vacancy Rates

– Limited New Supply: The lack of new, high-quality office developments has kept vacancy rates low in prime areas, hovering around 8-10%.
– Refurbishment Trend: Many investors are focusing on refurbishing older buildings to meet modern standards, particularly in terms of sustainability and digital infrastructure.
– Flexible Workspaces: The co-working and serviced office segment has seen rapid growth, with international operators expanding their presence in Athens.

Rental Trends

– Prime Rents: In top locations, office rents have been steadily increasing, reaching €20-25 per square meter per month for Grade A space.
– Yield Compression: Prime office yields have compressed to around 6.5-7%, reflecting increased investor confidence in the Athens market.

Retail Real Estate Landscape

The retail sector in Athens has shown remarkable resilience, adapting to changing consumer behaviors and the challenges posed by e-commerce.

High Street Retail

– Prime Locations: Ermou Street remains the premier retail destination, with rents reaching €275 per square meter per month.
– Tourist-Driven Demand: Areas popular with tourists, such as Plaka and Monastiraki, continue to see strong demand for retail space.
– Luxury Segment: High-end retail in areas like Kolonaki has shown strong performance, driven by both local and international luxury brands.

Shopping Centers

– Occupancy Rates: Major shopping centers in Athens are reporting high occupancy rates, often exceeding 95%.
– Experiential Retail: There’s a growing trend towards creating more experiential shopping environments, with a focus on leisure and dining options.
– Redevelopment Opportunities: Older shopping centers are being redeveloped to meet modern consumer expectations and incorporate mixed-use elements.

E-commerce Impact

– Omnichannel Strategies: Retailers are increasingly adopting omnichannel approaches, integrating physical stores with online platforms.
– Last-Mile Logistics: The growth of e-commerce is driving demand for urban logistics spaces to support quick delivery services.

Industrial and Logistics Sector

The industrial and logistics sector in Athens has emerged as a standout performer, driven by e-commerce growth and Greece’s strategic position as a gateway to Southeast Europe.

Market Dynamics

– Location Preferences: Areas with good transportation links, such as Aspropyrgos and Magoula, are seeing strong demand for logistics facilities.
– New Development: Several large-scale logistics projects are underway, aiming to address the shortage of modern, high-quality warehousing space.
– Port-Related Demand: The privatization and expansion of Piraeus Port have boosted demand for nearby logistics facilities.

Investment Activity

– Yield Trends: Prime logistics yields have compressed to around 7-7.5%, reflecting increased investor interest in this sector.
– International Capital: Global logistics players and institutional investors are increasingly active in the Athens market, recognizing its growth potential.

New Developments and Urban Regeneration

Athens is witnessing several large-scale urban regeneration projects that are set to reshape its commercial real estate landscape.

Ellinikon Project

– Scale: The €8 billion redevelopment of the former Athens airport site is one of Europe’s largest urban regeneration projects.
– Mixed-Use Vision: The project includes plans for offices, retail, residential, and hospitality components, along with extensive green spaces.
– Economic Impact: Expected to create 75,000 jobs and significantly boost Athens’ appeal as a business and tourism destination.

Piraeus Tower Renovation

– Revitalization: The renovation of this iconic 22-story building aims to create a modern, mixed-use development in the heart of Piraeus.
– Office Focus: A significant portion of the tower will be dedicated to Grade A office space, addressing the shortage in the local market.

Sustainable Development Initiatives

– Green Building Certifications: There’s a growing trend towards LEED and BREEAM certifications for new commercial developments.
– Energy Efficiency: Many older buildings are undergoing retrofits to improve energy efficiency and meet modern sustainability standards.

Investment Opportunities and Challenges

The Athens commercial real estate market presents both exciting opportunities and unique challenges for investors.

Opportunities

– Value-Add Potential: Many older properties offer significant value-add opportunities through refurbishment and repositioning.
– Yield Premium: Athens still offers higher yields compared to many other European capitals, attracting yield-seeking investors.
– Tourism Growth: The continued growth of tourism supports investment in hospitality-related real estate and retail in tourist areas.
– EU Funding: Access to EU recovery funds is supporting infrastructure improvements and urban regeneration projects.

Challenges

– Limited Stock: The shortage of prime, modern commercial properties can make it challenging for investors to deploy capital at scale.
– Regulatory Environment: Navigating Greek real estate regulations and bureaucracy can be complex for international investors.
– Market Transparency: While improving, the level of market transparency and data availability still lags behind some more established European markets.

Investor Strategies

– Joint Ventures: Many international investors are partnering with local firms to navigate the market more effectively.
– Sector Diversification: Investors are increasingly looking at mixed-use developments to spread risk and capture diverse market opportunities.
– Long-Term Perspective: Given the ongoing transformation of the Athens market, investors with a longer-term horizon are best positioned to capitalize on the city’s potential.

Conclusion

The commercial real estate market in Athens is at an exciting juncture, offering a compelling mix of opportunity and transformation. As the city continues to reinvent itself, blending its rich history with modern urban development, it presents an increasingly attractive proposition for both domestic and international investors.

The office sector is evolving to meet the demands of a changing workforce, while retail is adapting to new consumer behaviors. The industrial and logistics sector stands out as a particular bright spot, benefiting from broader economic trends and strategic investments in infrastructure.

Large-scale urban regeneration projects like Ellinikon are set to redefine Athens’ commercial landscape, creating new focal points for business and leisure. These developments, combined with ongoing improvements in the regulatory environment and market transparency, are likely to further enhance Athens’ appeal as an investment destination.

While challenges remain, particularly in terms of limited prime stock and navigating local regulations, the overall trajectory of the Athens commercial real estate market is decidedly positive. For investors willing to take a long-term view and navigate the complexities of the market, Athens offers the potential for attractive returns and the opportunity to be part of a city’s exciting transformation.

As Greece’s economic recovery continues and Athens further establishes itself as a dynamic European capital, the commercial real estate sector is well-positioned to benefit. Whether it’s prime office space in the city center, modern logistics facilities on the outskirts, or innovative retail concepts catering to evolving consumer preferences, Athens offers a diverse range of investment opportunities.

For those considering entering the Athens market, thorough due diligence and local partnerships will be key to success. As always, investors should carefully consider their risk tolerance and investment objectives. However, for those who do their homework and approach the market strategically, Athens’ commercial real estate sector offers the potential for significant long-term value creation.

If you’re interested in residential properties, you might also want to explore opportunities to buy property in athens for personal use or as an investment.

FAQs

1. What are the top areas for office investment in Athens?

   The prime areas for office investment in Athens include Syntagma, Kolonaki, and Kifissia. These locations offer high-quality Grade A office space and are favored by international companies and professional services firms. Emerging areas like Piraeus and the Ellinikon development site are also gaining attention from investors looking for potential growth opportunities.

2. How has the COVID-19 pandemic affected the Athens commercial real estate market?

   While the pandemic initially caused disruption, the Athens commercial real estate market has shown resilience. The office sector has adapted to flexible working arrangements, retail has embraced omnichannel strategies, and the industrial/logistics sector has seen increased demand due to e-commerce growth. The market has largely recovered, with some sectors even strengthening post-pandemic.

3. What are the main challenges for foreign investors in Athens’ commercial real estate?

   The primary challenges include navigating local regulations and bureaucracy, limited availability of prime assets, and lower market transparency compared to some other European capitals. However, these challenges are increasingly being addressed through regulatory reforms and improved market practices.

4. How is sustainability being incorporated into Athens’ commercial real estate developments?

   Sustainability is becoming increasingly important in Athens’ commercial real estate sector. New developments are often seeking green building certifications like LEED or BREEAM. There’s also a growing trend of retrofitting older buildings to improve energy efficiency and meet modern sustainability standards.

5. What impact will the Ellinikon project have on Athens’ commercial real estate market?

   The Ellinikon project is expected to have a transformative impact on Athens’ commercial real estate market. This €8 billion development will create significant new supply of high-quality office, retail, and mixed-use space. It’s likely to attract both domestic and international tenants and investors, potentially shifting the center of gravity for commercial real estate in Athens and setting new benchmarks for quality and sustainability.

Article reviewed by Devon Bergnaum, Residential Property Consultant | Helping Clients Find Dream Homes, on March 14, 2025