Banking sector leasing levels accelerate across Europe: C&W

The European banking sector is gaining strength based on high levels of office leasing activity in the last year, with take-up of office space being 20% above the five year average over the past 12 months, according to a report from Cushman & Wakefield (C&W).

With over one million m² 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 m² 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 m² of take-up, 27% of the European total. This was heavily skewed by the large UBS pre-let of 65,000 m² 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.

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.