LONDON — Banks and tech companies in London are subletting enough office space for 21,000 workers as they delay moves and expansion plans in light of the uncertainty around Brexit.
According to a note by BNP Paribas Real Estate cited by the Financial Times, take-up of new office space in London so far is 30% below the same period last year.
More than 2.1 million square feet of office space was available for subletting in October.
BNP Paribas Real Estate analysts note that banks and technology companies in particular are driving the subletting trend. For example:
- Deutsche Bank — 1 Appold Street near London’s Liverpool Street station, 126,000 square feet.
- Citigroup — 25 Canada Square in Canary Wharf, 96,000 square feet.
- Swiss Re — The iconic “Gherkin” tower, 85,000 square feet.
- Microsoft — Holborn-based office building that used to house its Skype headquarters, 89,000 square feet.
Dan Bayley, head of central London office agency at BNP Paribas said in the note that this could also have “some impact on pricing across the market due to the large amount of supply available.
Furthermore, he noted that companies are trying to cut costs, delay expansion plans or move as the country waits to see what a Brexit deal will look like.
Britain voted to leave the European Union on June 23 but Prime Minister Theresa May still needs to trigger Article 50 to officially start the two-year negotiation process for a Brexit. She said she would trigger Article 50 within the first quarter of 2017.
However, at the beginning of this month, the government lost a case in the UK’s High Court which ruled that May must seek a vote from parliament before it triggers Article 50, the formal legal mechanism a country must use to announce it will leave the EU within two years. The government has appealed and the case will be heard in the Supreme Court next month.
But this all means great uncertainty over when Article 50 will be triggered and of course what a deal for Britain will look like when the negotation process actually happens. Until that process ends, nothing actually changes for Britain in terms of its EU membership.
This, however, does mean that some companies are choosing to temporarily shelve expansion plans and investment until Brexit terms become more concrete.
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