The GMGap Blog

According to a recent study conducted by Cushman & Wakefield, it has come to light that banks have cut down on renting spaces greatly in 2009. The reasons for the trend are mainly the repercussions of global economic meltdown, which have left most banks’ business and operations greatly affected and reduced. Banks in London, Warsaw and Moscow, have reported decrease of office space take up by as much as 80% in the first quarter of 2009.

In the UK, the office space take up by banks declined by as much as by 90%, with the Q1 2009 number being a small 43,000 sq. m. as against some 400,000 sq. m. in the first quarter of 2008. Much of the increase in take up in 2008 was due the purchase of 1.9m sq. m. land by J. P. Morgan in Docklands.

Several banks have now resorted to real estate sale and leaseback to raise money for their operations. One of the biggest components of the operational cost of the banks is the real estate cost and hence, it becomes important for them to keenly assess and reconsider usage of space efficiently to save costs. An option largely being adopted is desk space rental (click her for more info on desk space). Many banks have also initiated renegotiations of their rental leases to get the benefit of the current low real estate rental rates. Even the landlords are willing to cooperate, as it is better to have tenants than none in the current market.

The banks are also expected to release a significant amount of office space, however, this is likely to happen gradually as still a lot of the recently merged banks are assessing their operational requirements right now.