Thursday 22 February 2018

Deutsche Bank set to shrink London office space after job cuts

Brexit isn't the only challenge for London's office market
Brexit isn't the only challenge for London's office market

Jack Sidders

Deutsche Bank AG plans to move some workers from a City of London office building to the Canary Wharf district and sublease the excess space, according to two people familiar with the plan.

The lender will shift at least half of the back-office staff from its Appold Street property to the docklands office by the end of this year, the people said, asking not to be identified because the plan is private.

The bank currently has about 2,000 desks in the building, one of the people said.

The decision to move workers comes in addition to an earlier plan that involved relocating workers from several London offices to Canary Wharf.

A spokeswoman for Deutsche Bank declined to comment.

Banks were shrinking in London's main financial districts even before the UK's vote to leave the European Union, as they cut staff in a bid to reduce costs.

Deutsche Bank's current business plan includes eliminating about 9,000 employee jobs globally from 2015 through 2018, a 9pc reduction.

Deutsche Bank will be "more ambitious in headcount reduction", Chief Executive Officer John Cryan said on an analyst call last month.

The lender last year extended its lease on the Appold Street building until 2023.

Banks including Barclays Plc and Citigroup Inc. are also seeking to sublet in London.

Axa SA's real estate unit, meanwhile, is proceeding with a plan to build the tallest approved tower in the City of London financial district notwithstanding the UK's decision last June to vote in favour of Brexit.

The company, together with development partner Lipton Rogers Developments LLP, is finalising a construction contract for the 1.4 million sq ft (128,000 sq m) tower.

The firm had decided to review the project after the Brexit vote and asked investors in the project to also consider a delay or a sale, people familiar with the plan said in August.

Office values in the district fell the most in at least seven years after the referendum as investors grew nervous that vacancy rates will rise and rents fall if companies delay expansion or move some workers overseas.

More than 1,900 firms are likely to review their office-space requirements following the vote, real estate researcher DealX said in July.

"We are taking a long-term view of this investment," Pierre Vaquier, chief executive of Axa's real estate unit, said in a recent statement on the proposed development of the City of London's tallest approved tower.

"The decision to proceed underscores our confidence" in the project, "coupled with the anticipated breadth of demand from local and global occupiers for easily accessible space in a prime location," Vaquier said.


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