HSBC, Europe’s largest bank, announced on 26 June it will leave its self-named Canary Wharf headquarters and move its 8,000 staff members to smaller digs in “The City,” the London district equivalent to New York’s Wall Street.
The move is part of the company’s plan to shrink its global office footprint by 40 percent.
The bank is not alone.
The Canary Wharf business district and its 30 office towers were developed in the 1980s to attract banks needing more space to house their expanding trading floors. Now its vacancy rate stands at 15.5 percent, among London’s highest.
Relatively few workers are in central offices in London five days a week, the Financial Times noted. Transportation data shows offices only 50-percent full on any given weekday, data service CoStar reported.
“There’s a big exodus from Canary Wharf,” managing director Richard Fleming at Alvarez & Marsal, a business consultancy, told the FT. “Bankers are working from home much more. Canary Wharf is one of those places that’s just being pulverized.”
The wharf complex is some distance from the city’s center, where bankers can be closer to their clients and also are finding a more vibrant post-work environment for socializing and meals.
“After-work drinks are more lively in The City,” one worker said to the FT. “There’s no real pubs” at Canary Wharf, he said.
Another worker complained about Canary Wharf’s subterranean shopping complex where workers tend to spend their lunch breaks on cold or rainy days.
“Basically it’s a soulless, horrible place with no character,” she said. “That’s why I hate it.”
HSBC’s move continues the wave of downsizing among Western financial businesses as costs increase and as remote work renders large office spaces burdensome.
Businesses also are moving to updated buildings with “greener” infrastructure and more amenities as they attempt to live up to sustainability goals they have publicized.
About half the world’s largest companies expect to slash their office space by 10 to 20 percent before 2027, according to a recent survey by Knight Frank, a global real estate brokerage and consultancy.
Real estate was Europe’s most troubled economic sector in this year’s first quarter, squeezed by shrinking investment, liquidity, and property values, a study by law firm Weil Gotshal & Manges found.
Sweden has become a case in point, with many commercial property companies having their bond ratings slashed to junk status.
“The genie is out of the bottle,” Andrew Mawson, founder of consulting firm Advanced Workplace Associates told Reuters. “Employees aren’t coming back to the office the way they used to.”
TREND FORECAST: The Trends Journal was the first to forecast an office building bust back in 2020 when politicians forced people to work from home. And we have documented this groundshift in urban economies in our ongoing series Top Trend 2023: Office Building Bust, which has included articles such as:
- “Commercial Real Estate in a Tailspin” (20 Oct 2020)
- “Deloitte Abandons More London Office Space” (26 Apr 2022)
- “GM Softens Back-to-the-Office Requirement After Worker Backlash” (4 Oct 2022)
- “Business Office Bust Begins to Bite” (20 Dec 2022)
- “New York City’s Workforce Sharply Shrinking” (24 Jan 2023)
- “Office Occupancy Half of What It Used to Be” (7 Feb 2023)
- “The Commercial Real Estate Face-Off” (28 Mar 2023)
- “Price of Hedging Interest Rates Wallops Office Landlords”(9 May 2023)