Banking and financial firms favour offices in the City
With the banking crisis back in the news, following Northern Rock’s announcement that losses have grown by 24% compared with the first six months of last year, here at officebroker.com we look further into the office space trends of banks and finance companies.
Based on officebroker.com statistics from the first two quarters of 2009, the results show that the EC postcode region took the most amount of enquiries, with over 10% of the entire amount of requests from businesses in the banking and financial sector, out of a total of 101 different requested locations across the UK.
Our graph below shows the top ten most popular locations for banking and financial firms:
Percentages represent enquiries per location, out of all requests from businesses in the banking and finance sector, over the first six months of 2009. A total of 101 UK locations were requested.
The EC postcode area of Central London is located within the capital’s chief financial district, known as ‘The City’ or the ‘Square Mile’. The region claimed over 10% of all officebroker.com enquiries from the industry over the first two quarters of 2009 – making it the clear favourite.
The postcode areas of W (locations including Notting Hill, Kensington and Paddington) and SW (including Battersea, Wandsworth and Hammersmith) were the next most popular behind EC.
Outside of London, Birmingham proved to be the most popular location for banks and financial companies, followed closely by Manchester and Sheffield.
Financial businesses target the City
Home to the London Stock Exchange and the Bank of England, the City is London’s main financial district – also providing the office location for over 500 banks.
While our figures show that many financial companies considered taking up office space in locations outside of the City, 38% of all enquiries preferred offices in Central London. This figure excludes towns and boroughs outside of the centre.
Office space in the City is predominantly targeted by banks and financial companies, which are reportedly the biggest source of employment in this region. Although there are no official statistics on who the biggest employers in this remit are, the most significant according to government figures from Cityoflondon.gov.uk are the likes of Deutsche Bank, UBS, JP Morgan, Goldman Sachs, Merrill Lynch, and Barclays.
In the early 1990s, nearby Canary Wharf – part of the Tower Hamlets – began to establish itself as London’s second financial home, and attracted banks and financial businesses that had previously been located in the City. It’s possible that Canary Wharf’s support – otherwise seen as competition – to the financial sector of the City actually helped keep the offices of large banking corporations within Central London, and helped prevent them from moving to international locations.
However despite the growing popularity of Canary Wharf, which was then better able to accommodate large office properties to house some of the world’s biggest banks, the City steadfastly remains the prime UK office target for businesses from the financial sector.
Successful second quarter for the City’s office space market
In the face of the current decline, the City’s office market has improved in the second quarter of 2009. In a quarterly Central London report by commercial property advisors Knight Frank, office take-up in the City jumped to 1m sq ft in Q2 from 733,000 sq ft in Q1 – suggesting that confidence is growing, led by the banking and financial sector.
The report states: “To date, the City has not seen as much sub-let space come to the market as many expected,” adding: “RBS is known to be appointing agents, though press reports suggest some banks and brokers are recruiting again.” Despite concerns that office take-up is still well below the long-term average, positive signs abound that the low point of the market has now been surpassed.
This improvement in office lettings could be partially attributed to low rental values of offices in the City, as rents for Q2 were down on Q1. Knight Frank reported that prime rents in the City were ┬ú44 per sq ft in Q2, compared to the slightly higher rate of ┬ú46.50 per sq ft in Q1. Despite the continuing impact this is having on office providers and landlords in the City, it’s good news for businesses seeking office space in the financial district.
In addition, the investment market in the City is taking a boost, as international investors are using the weak pound and low rents to their advantage by snapping up cheaper than average properties in London’s Square Mile.
If you’re one of the thousands of banking and financial companies that contact officebroker.com every year for help with your search for office space, and you’re looking for more details on office space in the City, other areas of London or anywhere else in the UK, visit our website at officebroker.com to find and compare offices in a huge variety of locations. You can also speak direct to one of our consultants, for free expert advice and guidance throughout the process.