LONDON — Germany’s financial centre, Frankfurt, could run out of office space as the movement of banks looking to set up new EU headquarters outside London after Brexit puts a squeeze on the city’s commercial property sector.
That’s the warning given by the real estate brokerage unit of French banking giant BNP Paribas in a report circulated on Thursday.
“For Frankfurt, where the vacancy rate has slipped below the 10 % level, there is a growing shortage of large-unit premises in the central areas,” the release from BNP Paribas Real Estate said.
“In view of the anticipated increase in demand by banks in connection with Brexit, this shortage looks set to intensify in the months ahead.”
Banks from across the world are currently assessing their options when it comes to Britain’s impending exit from the European Union. Most lenders from Japan and the USA currently have their European bases in London, but are expected to shift those operations to continental Europe to maintain an EU presence after Brexit.
So far Frankfurt is one of the biggest beneficiaries, with three major Japanese banks, Nomura, Daiwa, and Sumitomo Mitsui all announcing new EU HQs in the city. American giant Citigroup also confirmed this week that it will send some staff to Frankfurt, while Morgan Stanley is also expected to move staff.
Germany’s biggest bank, Deutsche Bank, has also said that it is likely to shift some of its London staff to its global HQ in Frankfurt.
Financial centres across the EU — including Frankfurt, Paris, Dublin, and Luxembourg — are battling to attract financial services work moving out of London as a result of Brexit as a result of expected legal changes that will make operating in the EU out of London tricky.
Britain is expected to lose financial passporting rights, which allow banks with a base in the UK to sell products and services to customers and financial markets across the EU.