Monday, 3 September 2012

Banking Space for Rent

London banks are facing hardship in space according to recently released reports by property consultant Cushman and Wakerfield. According to the reports banks are being forced to cut property cost in order to save funds fully aware that such property cuts may result in loss of jobs.

Findings show over 107 Financial organizations are being forced to cut property space and 54% are seeking to sub-let their available office space. Banks such as the Japanese bank Nomura is seeking occupiers to fill in vacancies in their prestigious building located near London Stock Exchange. This current vacancy to the Nomura bank was caused by their September 2008 purchase of European operations of Lehman Brothers where they were forced to move into larger premises due to increase in number of employees.

Banking Space for Rent
In the past 18 months the London main Financial District has been offering flat rates of 55 pounds per square foot for prestigious office space. Such is a result of July reports by CBRE that show a 7.4 percent increase in vacancies, the highest vacancy number since late 2009. Bank of America located at the heart of the east London's Canary Wharf district is considering relocating and removing back-office staff in order to cut-cost and save 3 billion pound a year. Although no decision has been made, such actions will result in loss of 30,000 jobs by 2014.

Citigroup located in Canary Wharf occupies a 45 storey tower, has been recruiting employees in Belfast and North Ireland as they search to cut nearly a third of their rent amount being paid for their Canary Wharf London location. More landlords are searching beyond the West End Streets of London for cheaper space options.

BNP Real Estate data shows vacancy rates in Frankfurt have decreased by 2% causing to the Bank of Frankfurt. This can be a result of lower numbers of investment bankers and traders. Furthermore, ownership of property Deutsche Bank and Commerz Bank are located at Frankfurt HQs, do not share similar flexibility in relocation as other banks in the district.

Credit Suisse announced their plan to raise 500 million Swiss francs by selling property and moving jobs to existing complexes such as the Uetilhof building near Zurich, who already employees 8,000 people. Such move may cut cost but might not cut employment as jobs are being said to move in out-of-town complexes owned or rented by Credit Suisse.

Through sales and leaseback from Qatari investors, banks have received 330 million pounds through Canary Wharf offices. Such funds are available for banks to utilize and prevent fleeing current locations. However, the search for flexibility within the buildings architecture by creating "hot-desking" areas that allow multiple employees to utilize the space at different times instead of having individual workstations.

Due to 25 year leases many London based banks are unable to relocate, unlike mainland European banks. Currently leas signings do not exceed 11 to 15 years. Nat West and Midland Bank never considered failure, so they build a skyscraper and emblazoned the name in stone. Hence, Nat West is currently part of RBS and Midland Bank is part of HSBC.

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