Financial firms take London office leasing to decade-plus high

HQ moves by big banks and growing demand to set up shop in the Square Mile have taken financial services office leasing deals in London to their highest level in more than a decade. A new report from DeVono, a tenant-only agency, said activity from financial services occupiers has been buoyed by “more transactions, larger deals, greater activity from the banking sector and an upturn in demand for City space”. Occupiers leased 3m sq ft of space in 2023, DeVono said, up by 9% year-on-year and the highest annual volume since 2010. “The financial industry in London stands as a formidable force, its influence not only dominating the city’s skyline but also resonating across global markets,” the report said. “London’s financial sector is a vibrant ecosystem where traditional banking meets cutting-edge fintech innovations and dynamic investors. In recent years, the financial industry in London has undergone significant transformations which have influenced workplace decisions on space size, quality and location.” DeVono’s tracking of deals was dominated by HSBC’s decision to leave Canary Wharf for the City. The bank has prelet 556,000 sq ft at Orion Capital Managers’ Panorama scheme on Newgate Street, EC1. The City and Mayfair have proved the most in-demand locations for financial services occupiers, although Soho is a notably popular choice for financial and investment advisory firms. “The City of Westminster and the City of London continue to serve as the main office markets that the financial sector calls home,” DeVono’s team said. “Even with the arrival of challenger/neo banks, more tech-orientated investment houses, there has been little shift in where business opt to go… However, the quest for the best spaces and greater amenities will force some businesses to look beyond the traditional.” Close to 60% of space leased last year was Grade A, up from 55% a year earlier. Most of this was driven by prelets, which rose 13% year-on-year to 1m sq ft, largely thanks to HSBC’s deal. “As firms navigate the complexities of 2024, several factors are poised to shape the strategies and operations of financial firms in the coming months and years,” DeVono said. “Whilst there are a number of challenges ahead, there are also a good number of opportunities, all of which will influence workplace and workforce decision making… “Crafting an office space that aligns with the multifaceted needs of businesses, employees, and clients is no small task. While some larger firms opt for new, custom-built facilities that seamlessly fulfill their wishlists, others must navigate compromises with available spaces.”