costs per area
vs london
west end
L
o
n
d
o
n
C
i
t
y
o
r
D
o
c
k
l
a
n
d
s
4
0
%
C
H
E
A
P
E
R
N
E
W
Y
O
R
K
5
0
%
C
H
E
A
P
E
R
3.4.2. The role of real estate
The clustering of business and the growth of real estate
markets to support these businesses and their staff is a
critical factor for growth. The major financial cities are also
those which have sizable office markets
(Figure 4)
. New
York, Tokyo and London all have office stock in excess
of 20m sq m (215m sq ft) and the ability to meet the
demands of the international banks with specific building
requirements, specifically large floor plates.
The focus of demand in key cities has also pushed rents
and total occupational costs to high levels, with the major
financial centres now in the top 30 of 138 markets globally.
This has been a trend for some time, even 10 or 15 years
ago all these cities were considered the most expensive.
Occupiers have adapted, and many now choose to locate
in less expensive ‘villages’ such as the City or Docklands in
London, where costs are more than 40% lower than the
most expensive West End locations. Even in New York,
occupancy costs on a per workstation basis are more than
50% less than the most expensive global location, which is
London’s West End
(Table 2)
.
Cost is not the overriding factor; these cities are also highly
productive. Companies are therefore willing to trade cost for
being situated in the most desirable locations which provide
the necessary talent pool that their business relies upon.
Improving space utilisation (the average space per
workstation or per individual office) is one key method that
companies can use to offset higher square footage costs.
In the major financial centres we see a wide range of space
usage (excluding trading functions) from 10 sq m (107 sq ft)
in the City of London to 19 sq m (204 sq ft) in Frankfurt. Of
course local regulations can also impact the extent to which
companies utilise space
(Figure 5)
.
Over the last ten years the average space per worker globally
has shrunk from 16.6 sq m (178 sq ft) to 12 sq m (129 sq ft)
representing a decrease of 25%. There has also been this
downward trend in the majority of financial centres, the
exception being Hong Kong
(Figure 6)
. In a number of cities,
notably in the US there is scope to offset costs through more
efficient use of space. In cities such as London and Singapore,
we see more limited scope. These cities are already efficient.
Therefore occupiers need to implement more innovative
workplace strategies, as well as considering the location of
certain functions.
28
The future of the financial workplace
|
September 2014
