Has the office sector reached a dead end?
Has the office sector reached a dead end?

Has the office sector reached a dead end?

Office yields are being compressed and this remains a challenging issue for this real estate sector.
Eirini Theofanidou

The impact of the global coronavirus pandemic on commercial real estate and in particular on the office sector has been severe, resulting in the "loss" of 255 million full-time jobs in 2020, according to official UN figures.

Analysts claimed that "this is four times the cost imposed by the global financial crisis in 2008", a revealing view for the magnitude of pandemic's impact.

New developments have been resumed after a challenging year for the construction industry and it is estimated that in a short period of time Class A spaces will be delivered in the market and in their majority will be sustainable buildings.

Many measures have been taken by the Grek government to support the real estate sector that have rekindled the interest in the market. However, as Cushman & Wakefiled Proprius agents told ered.gr, "yields will remain compressed for premium properties for this quarter."

Tenants are more "active" from the second quarter of the year compared to previous quarters in terms of the number of companies looking for places to relocate and there are also international players in the market.

The difficult "equation" between supply and demand, however, remains to be solved as tenants are wary of leasing and property ownership. According to its latest report, C&W Proprius, unveils that most of the deals for office real estate are for properties located in northeastern suburbs of Athens, while rental prices for class A spaces are circa € 24 per square meter / month.

While COVID19 vaccination process is been developed around the world, bringing the pandemic under (partial) control, workers are returning from the teleworking regime to their physical offices. "The increase in remote and flexible work has had a further impact on the office market, but today the majority of business employees are considered safe to return to their office, although this is still a matter of debate," experts said.