Banking and the Office Market

CBRE has just published its report: “Why We Can Bank on London 2018” which looks at subsectors within London’s financial services ‘ecosystem’: investment and retail banks, fintech firms, traditional asset managers and private equity firms and hedge funds. The intentions of occupiers in these sectors make up a large part of the Metropolis weekly office leads output.

The financial sector accounted for 27% of active space requirements by sq ft in autumn 2018

CBRE say Since the EU referendum, banks have continued to commit to London with Deutsche Bank taking 550,000 sq ft and SMBC taking 161,000 sq ft, while Wells Fargo took 220,000 sq ft for its new European
headquarters. However, banks have also been ‘nearshoring’ (moving staff to regional hubs in the UK) with Bank of America, JP Morgan and Deutsche Bank all announcing plans in late 2012 to move 3,000 jobs away from London.

The UK has been ranked first globally for the strongest fintech sector since 2016. It’s largest companies include Funding Circle, a peer-to-peer financing platform for companies and mobile banking service Revolut is achieving ‘unicorn’ status in April 2018 on reaching a valuation of $1.7bn (both companies’ intentions recently featured on Metropolis).  Fast growing Nutmeg is the first firm to offer an online discretionary investment management service in the UK. Fintech firms are dispersed but have tended to cluster in areas such as Canary Wharf and the City, where initiatives such as Level39 provide provide space. The typical lifecycle of a fintech firm begins in low-cost flexible space, usually in fringe locations. Typically, the firm then moves to a larger and more corporate space as it matures. Metropolis has run nearly 40 leads on fintech companies recently.

Private equity and hedge funds. London is the second largest centre globally for hedge fund managers  Over the past 10 years, firms other than banks or traditional asset managers have accounted for 61% of the sector’s total take-up of 27m sq ft in Central London. There are currently over 200,000 sq ft of office requirements live in this sector in central London. Metropolis has brought subscribers over 30 stories about hedge fund companies office move intentions in recent months.

CBRE conclude by forecasting the rise of agile working becoming more widely adopted in the banking sector, increasingly shifting towards more open plan offices and policies such as working from home. Firms are also increasingly considering an area’s wealth of amenities and transport links. For private equity firms in particular this could become a growing trend as they move away from prestige locations such as Knightsbridge and Mayfair to better connected locations.

Metropolis has run over 500 leads on London-based financial sector occupiers relocation intentions in 2018.

Merry Christmas to all Metropolis blog readers.

Paul Ives, Metropolis Head of Research. December 2018

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