Banking’s London office footprint shrinks, whilst insurers grow has been saved
Banking’s London office footprint shrinks, whilst insurers grow
18 March 2015
Finance and insurance firms remain the largest occupiers of office space in central London, according to a comprehensive study of office occupation by Deloitte Real Estate. Despite the impact of the financial crisis, the financial sector continues to account for a third of all office floorspace in the capital.
“Our research shows the banks’ share of London’s office space actually fell over the last 10 years, but the financial sector still remains the biggest occupier. We’re seeing an increase in overseas banks, as well as growth from investment management and financial advisory firms.” says Ben Thomson, head of City of London tenant representation at Deloitte Real Estate.
The second report in the London Business Footprint series identifies trends across the banking, investment, insurance, trading and financial advisory industries. The office markets of the City and Docklands continue to be the main base for the financial sector. 80% of the office space used by these types of businesses are located here, but other locations are gaining in significance too. Financial businesses have increased their presence in the West End by almost a third over the past decade, partly fuelled by the growth in investment firms seeking Grade A office space close to wealthy clients.
Insurance firms have increased their footprint in the capital, with a 20% rise in the past five years alone. Insurance is also one of the most geographically concentrated sectors, choosing to favour the EC3 postcode. Unlike the trends seen in almost every other business sector, this concentration has been increasing.
Finance and insurance businesses play an important role in supporting the development of new office space, consistently leasing more than 60% of Grade A space annually. Thomson continues, “There’s no doubt that financial sector occupiers demand high-quality office space to support large staffing numbers and operational assurance. This is a key driver of new development with over one million sq ft of office space currently under construction already being pre-leased by the sector.”
Martin Laws, head of client growth and markets at Deloitte Real Estate, adds, “London's financial sector will face some far-reaching and fundamental changes over the coming years. Advances in technology are already affecting the way businesses operate, their ability to attract and retain talent, and the types of activity that need to be accommodated. Our research suggests firms are looking to work their real estate harder and the finance sector is not immune. With London’s office occupiers diversifying, and a decline in location loyalty, the industry will need to continue to evolve to maintain its position as one of the world’s leading financial centres.”
Notes to editors
About the London Business Footprint
The London Business Footprint is a series of reports released by the Deloitte Real Estate Insight team throughout the year, exploring the central London office markets from a business perspective.
The dataset covers three points in time (2004, 2009 and 2014), allowing us to see how the characteristics of the offices that businesses occupy have evolved over the past decade. Data supplied by EGi.
The report analysed the records of over 18,000 businesses located in central London. The results show that during this time, businesses in London have changed the amount, type, quality and location of office accommodation that they require: in all of these respects, the space they have today is different to that of 10 years ago. We then use these findings to outline what we believe are the main drivers for further change in the market.
Financial sector research definitions:
Banking – Building Society, Clearing Bank, Foreign Bank, Investment Bank
Investment – Asset, Investment and Fund Management, Investment Trust, Holding Company, Pension Fund, Property Investment
Insurance – Insurer, Insurance Broker
Financial Advisory – Financial Services, Corporate Finance, Specialist Services
Trading – Commodities, Shipping Broker, Stock Broker and Securities House
Other – Other Financial Activities, Regulatory Body
About Deloitte Real Estate
Deloitte Real Estate redefines the concept of a full-service real estate business, offering a breadth of capability and an innovative approach unequalled in the market.
Our team combines traditional property services with financial and business advisory expertise to deliver integrated solutions on the most simple assignment to the most complex. We apply a depth of insight drawn from our understanding of all industries and sectors to advise occupiers, lenders, investors and the public sector on every aspect of real estate in an increasingly complex world.
Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.
The information contained in this press release is correct at the time of going to press.
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