New York - International banks are getting serious about moving staff to Frankfurt after last year’s Brexit vote spurred a competition among European cities to lure jobs away from London.
“Nothing concrete happened last year, but that all changed in the first quarter of this year,” said Carsten Ape, head of office leasing for Germany at US property broker CBRE Group. “Banks are now looking in earnest at specific locations.”
The uncertainty triggered by Britain’s decision to leave the European Union has prompted banks to consider setting up new hubs in the EU to secure continued access to the bloc. Goldman Sachs Group and Citigroup are considering choosing Frankfurt as their EU base, people with knowledge of the situation said in January.
Part of Frankfurt’s appeal is that it’s the cheapest major financial center in the European Union to live and work, according to property broker Savills Plc. The combined annual cost of renting an apartment and the per-employee office space expense totaled just under 30 000 euros ($33 000) in the German city, less than half that of Paris.
“There won’t be enough for everyone,” said Juergen Schmid, who leads Savills’ property-investment business in Frankfurt. “That will in turn increase the demand for offices in less attractive locations, and the rent that can be charged for them.”
Frankfurt is among European cities that include Dublin and Madrid that are jockeying for position as banks consider where to establish a base on the continent.
Read also: Morgan Stanley, Citi plan Brexit job moves
JPMorgan Chase & Co is scouting for office space in both Frankfurt and Dublin, people with knowledge of the matter said in March, while Standard Chartered and Barclays are also considering the Irish capital.
London could lose 10 000 banking jobs and 20 000 financial-services positions as clients move assets out of the UK after Brexit, according to the Bruegel think tank. Other estimates range from 4 000 to 232 000 jobs.
In Frankfurt, many prospective tenants from the financial-services industry are looking for large, well-designed buildings in prime locations, Ape said. Benjamin Remy, who’s responsible for Savills’ office-leasing business in Frankfurt, has also seen a pick-up in demand.
“Some large banks have actually reserved some office space already,” said Stephan Braeuning, head of office letting at Colliers International Group's Frankfurt branch. “Nothing’s been signed yet, though.”