C&W: Paris and London defy banking sector slowdown

Paris and London both recorded increases in banking sector office take-up in the first quarter of 2008, defying the slowdown in the rest of Europe where take-up fell 6% compared with the last quarter of 2007 as the credit crunch continued to take its toll, according to the latest research report by property consultant Cushman & Wakefield (C&W).

Around 222,000 m² of transactions were concluded in the first quarter by the banking sector in Europe's top 15 banking locations. Take-up by banks accounted for more than 10% of all office take-up in the first quarter, according to C&W.

Paris-Ile de France was the most active market in the first quarter with take-up of 85,000 m² compared with 53,000 m² in the final quarter of 2007, followed by Frankfurt at 35,000 m² (48,000 m2) and London's City & Docklands sub-market at 25,000 m2, which rose from its low point of 3,500 m² in the last quarter of 2007. Paris-Ile de France also recorded the most significant deal in the first quarter, with the leasing of 60,000 m² by Le Crédit Lyonnais in the southern Parisian suburb of Villejuif.

'Take-up has continued to move down in the first quarter of this year as banking activity slows. However, much of this activity comes from a small number of large transactions initiated before the onset of the economic uncertainty. Encouragingly they have now completed, despite fears that they may have been stalled by the credit crunch,' said Guy Douetil, head of the EMEA Banking Group of C&W.

A number of 'legacy' deals, initiated prior to the credit crunch, were behind the rises in some European cities, however, in general the banking sector across Europe remains subdued. On a positive note, there is little evidence of banks putting surplus space on the market, C&W said.

Denis Samuel-Lajeunesse, president of C&W in France, said: 'We are not expecting the banking sector to take strategic real estate decisions in the short and medium term unless there is a firm business or financial reason to do so, or their lease is expiring. The good news, though, is that compared with previous downturns, banks are already using space efficiently, having reappraised their requirements following the Asian financial crisis in the late 1990s and the dot-com crash in 2001/2, which means that there is unlikely to be a great deal of sub-let space come onto the market in the short term.'

In Warsaw, the banking sector leased over 66,000 m² of office space last year, which accounts for about 13.5% of total take-up. C&W expects this year's volume will be lower, although several banks are currently looking for new office space to occupy within the next three years. 'Their demand is estimated at approximately 70,000 m2, but some of the transactions will not be completed until next year,' said Jakub Marszalek, analyst at C&W's office in Warsaw.