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Boost in Banking Sector Office Leasing Across Europe
1 Jun, 2011, China
- Banking sector office leasing levels across Europe 20% above five year average
- Leasing activity in Prague and Warsaw particularly strong
- Chinese banks continuing to expand throughout Europe
- European and US-based international banks more active in Asia Pacific markets
The European banking sector is gaining strength based on high levels of office leasing activity in the last year, according to a report from Cushman & Wakefield. During that time (April 2010 – March 2011), take-up of office space by banks across Europe has been 20% above the five year average.
With over one million sq.m of office space leased, activity levels have bounced back from the low points in 2009 and 2010 when less than half that amount was let. The number of lettings comprising more than 5,000 sq.m was higher in the last six months than the previous six months.
The major banking centres of London, Paris and Frankfurt continue to dominate, accounting for just over 55% of total banking office leasing in Europe over the past year. London was the most active, with nearly 300,000 sq.m of take-up, 27% of the European total. This was heavily skewed by the large UBS pre-let of 65,000 sq.m in Q3 2010.
Office leasing was particularly strong in the cities of Warsaw and Prague. Warsaw, which is establishing itself as the regional banking hub for Central and Eastern Europe, saw take-up soar almost 63% higher than the five year average. Leasing levels in Prague during the last year have been just over 25% above.
Lack of high quality supply in a number of locations across Europe has resulted in the trend of owner occupier continuing. This is particularly true of London and Moscow. With prime rents starting to rise in many European cities, tenants are no longer able to lock-in value through a pre-let as they were six-nine months ago. None of the larger deals between October 2010 and March 2011 were pre-lets unlike two of the largest transactions that took place mid-2010.
Key leasing deals in the European banking sector (April 2010 – March 2011)
|
City |
Submarket |
Location |
Tenant |
Deal type |
Size (sq.m) |
Date |
|
London |
City & Docklands |
25 Bank Street |
JP Morgan |
Owner occupation |
97,545 |
Q4 2010 |
|
Frankfurt |
Europaviertel/ Messe |
Theodor-Heuss-Allee 2 |
ING Diba |
New Lease |
38,731 |
Q4 2010 |
|
London |
City & Docklands |
Building B1, King's Cross Central |
BNP Paribas |
Owner occupation |
32,515 |
Q4 2010 |
|
Moscow |
ZAM |
Letnikovskaya ul., 2 bld. 4 |
Bank Otkrytie |
Owner occupation |
25,038 |
Q4 2010 |
|
Moscow |
CTY |
Krasnogvardeyskiy 1-y pr., vl. 15 (site 13) |
VTB |
Owner occupation |
16,000 |
Q1 2011 |
|
Milan |
Edge of Centre |
Ferrante Aporti - Block B |
State Street Bank |
New lease |
9,700 |
Q4 2010 |
|
Madrid |
M-30 |
Isabel Colbrand, 4 |
BBVA |
New lease |
8,900 |
Q1 2011 |
Source: Cushman & Wakefield 2011
The trend of Chinese banks expanding in Europe is continuing as they identify opportunity in a developed but currently undersupplied lending market and take advantage of caution amongst local competition. One of the first movers was the Industrial and Commercial Bank of China (ICBC) which opened offices in London, Moscow, Luxembourg and Frankfurt. ICBC has now announced a further five offices will open in the next year in Paris, Amsterdam, Brussels, Madrid and Milan.
A reverse trend is European and US-based international banks growing their presence in Asia Pacific markets. JP Morgan has pre-committed to expand in Sydney, Lombard Odier and the Spanish bank BBVA recently took space in Hong Kong while Barclays Capital, BNP Paribas and Bank of America have all relocated to permit expansion in Singapore. Other activity includes Bank of America, RBS and HSBC leasing significant space in India. Russia’s largest bank Sberbank became the first Russian bank to expand outside Europe, opening an office in India and now looking to establish a foothold in China.
Key leasing deals – European and US-based banks taking space in Asia Pacific (April 2010 – March 2011)
|
Country |
City |
Location |
Tenant |
Deal type |
Size (sq.m) |
Date |
|
China |
Hong Kong |
2 International Finance Centre |
BBVA |
- |
1,413 |
Q1 2011 |
|
China |
Hong Kong |
Two Exchange Square |
Lombard Odier |
- |
697 |
Q1 2011 |
|
Singapore |
Singapore |
Marina Bay, Financial Centre, Tower 2 |
Barclays Capital |
Relocation/ expansion |
23,2226 |
Q1 2010 |
|
Singapore |
Singapore |
Ocean Financial Centre |
BNP Paribas |
Relocation/ expansion |
13,935 |
Q1 2011 |
|
India |
Mumbai |
Nirlon Knowledge Park |
Citibank |
Relocation/ expansion |
8,910 |
Q3 2010 |
|
India |
National Capital Region |
Unitech Infospace |
Bank of Amercia |
Relocation/ expansion |
11,148 |
Q3 2010 |
Source: Cushman & Wakefield 2011
Matthew Knight, Associate in Cushman & Wakefield’s EMEA banking group, said: “The European banking sector is continuing its recovery with a marked improvement in sentiment in the occupational office market. However, banks still face significant uncertainty deriving from a number of issues. Possible restructuring of sovereign debt in Greece will have significant knock-on effects for banks in the country as well as international banks exposed to Greece, notably German banks with nearly €20bn exposure. It may also have a knock-on effect on Ireland and Portgual.”
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