Prime bank office real estate in London most active in Europe over 2Q, 3Q

LONDON: The take-up of banking office space over the last six months in the UK’s capital city has been the best-performing in Europe, which has seen a 53% decline in take-up in 2Q and 3Q, says global property consultants Cushman & Wakefield.

According to its European Banking Briefing, while most European capitals can expect subdued performance in terms of banking office take-up, the wider sector can expect to see things look up, especially in the UK where new entrants to the market are expected.

“Whereas previously the London market saw the biggest drop in activity in the six months to end-1Q2009, the UK capital has remained relatively healthy and was the most active European market in the last six months,” said the report.

“Major lettings were concluded which included 49,000 sq m to Nomura in the City and 20,000 sq m to Macquarie on the City fringe.

“After 12 months of darkness with almost no take up from the banks, we are beginning to see some light at the end of the tunnel,” said Cushman & Wakefield’s head of EMEA banking group Guy Douetil.

“Banks are now beginning to make major decisions where significant opportunities exist to consolidate or save money in their HQ locations. London has been the first to benefit and we expect other Western European capitals to follow in 2010.”

The report said banking take-up was subdued in markets such as Paris, which saw only 1,000 sq m transacted over the last three months.

It added that banks in the UK had begun to take advantage of their positions to negotiate for attractive terms on new buildings to consolidate a number of buildings into one or to upgrade the quality of their accommodation.

“Although property costs account for only a small percentage of overalls costs, savings are still available,” it said. “However, the window of opportunity is closing in order to maximise the savings via renegotiating leases.”

The property consultants added that it expects the better capitalised and Asian banks to be among the movers to the UK over the next 12 months.

“New entrants to the UK retail banking sector could include brands such as Allianz, Generali and Zurich or established domestic brands such as Virgin Money and Tesco Finance,” it said.