occupier
SPOTLIGHT banking
However, Jane Hollinshead, property
sector head at law firm Addleshaw Goddard, says: “This is just a reflection of how the financial services sector is thinking more tactically about its premises strategy. It doesn’t threaten the status of London as a global leader in the financial services market.” Since the UK government introduced a
tax on bankers’ bonuses in 2009 (see panel) and threatened a bonus cap of 100% of salary, there has been plenty of speculation, although little tangible evidence, that banks might move jobs from London to competing centres. “The top traders are pretty international
– they’re not a working a nine-to-five job in Walthamstow – so are potentially able to transfer their domicile,” says Mark Lethbridge, head of Deloitte Real Estate occupier advisory team. “But they account for a relatively small number of posts, so we’re unlikely to see mass migration.” What all of this boils down to for
occupational activity in London’s property market in the coming year is: limited take-up. “Banks are demanding much greater efficiency – some are looking at a ratio as low as one person per 60 sq ft,” says Simon Crotty, head of City agency at Colliers International. Equally significant are reports from London agents that the capital is awash with spare offices let to banks that are unlikely to be sub-let, as banks seek to avoid dormant space showing up on their balance sheets. Although CBRE’s Smith believes that
just over one-third of bank-related lease events between now and 2016, totalling around 2m sq ft, could result in a move (see table, below), he notes: “Most of these deals are likely to result in either a reduced footprint or a 10-15% headcount increase in the new space.”
BYE-BYE BONUS
The glory days of whopping bank bonuses are long gone. Figures from the Centre for Economics and Business Research show the dramatic plunge in bonus pools (see table, above). As a result, average individual bonuses have slumped to £6,400, a massive 80% drop from £33,000 in the heyday of 2008. CEBR points out the drop in bonuses in the last year is partly attributable to the
collapse in City activity in summer 2012. Equity trading, international orders for equity trading, gilts trading, M&A activity – both UK and international – as well as activity in the derivatives sector are all down by 5-33%. But, adds Bill Peach, chairman of Cushman & Wakefield’s City office, the fall in
bonuses also reflects the banks’ attempts to bypass bonus limits by implementing rolling contracts and higher base salaries. Financial services recruitment specialist Morgan McKinley confirms that average salaries rose by 14% during 2012 and expects the figure for 2013 to be similar. There is, Peach warns, a downside to this: “It could lead to higher fixed costs, which reduce competitiveness and increase the volatility in employment levels.”
FINANCIAL SERVICES TAKE-UP AND AS A % OF CENTRAL LONDON TAKE-UP 2007-2012 (SQ FT)
0 1 2 3 4 5 6
KEY BANKING LEASE EVENT-DRIVEN REQUIREMENTS 2013-2016
Year Law firm 36% 22% 17% 25% 2007 2008 Source: EGi London Office Database 13 April 2013 2009 2010 14% 12% 2011 2012 2013 Mizuho 2014
Lloyds Banking Group Barclays Bank
2015 Lloyds Banking Group HSBC Bank
Financial Ombudsman Service
2016 ING Barings Mizuho Liffe
Source: CBRE
www.estatesgazette.com 77
Requirement (sq ft)
113,000 35,000
Financial Ombudsman Service 105,000 Lloyds Banking Group
215,000 100,000 155,000
82,000 74,000
232,000 166,000 106,000
POOLS 2007-2017 Year bonus paid
(£bn)
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
2017
£11.6 £5.3 £7.3 £6.7 £4.4 £1.6 £1.4 £1.3 £1.3
£1.3 Source: CEBR
LONDON CITY BONUS Bonus pool £11.4
sq ft millions
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