Demand for office space set to heat up in Europe
Frankfurt, Paris, Amsterdam and Dublin could benefit from jobs moving out of London after Brexit
Regus, the world’s largest provider of serviced offices, is speeding up expansion plans in Frankfurt ahead of an anticipated surge in inquiries from financial firms leaving London. In Amsterdam, demand for its workspaces is already rising.
“It will be a big opportunity for us to give banks a temporary home,” said Daniel Grimm, head of German development at Regus. “We were planning to grow strongly even before Brexit, since we barely have enough capacity to accommodate new tenants, and now it’s a race against time.”
As cities including Paris, Amsterdam and Dublin try to lure banks away from London following Britain’s decision to leave the European Union, landlords are hoping to benefit from increased demand. Companies including Regus are preparing for the influx and forecasting that rents and property values will rise in response.
As many as 100,000 financial-services jobs could be lost in the UK by 2020 because of Brexit, according to an estimate by PricewaterhouseCoopers. If those jobs end up in mainland Europe – as firms move functions including securities clearing and derivatives trading to the EU – demand for new office space could reach 10.8 million square feet, Capital Economics estimates.
Office vacancies across continental Europe have been high since the financial crisis, ranging from 13 per cent in Amsterdam to 9 per cent in Dublin, according to data compiled by Savills. That compares with about 4 per cent in the City of London financial district and 2.2 per cent in Hong Kong.
In Frankfurt, about 1.2 million square metres of offices are empty, about 9 per cent of the total. Developers including Tishman Speyer Properties are set to build another 450,000 square metres in the next three years, according to data compiled by property consultant Bulwiengesa.