Anyone who saw the news yesterday would have felt positive about the idea of Google committing more jobs to the UK despite the impending exit from the European Union. However, thoughts that all are well in this post-Brexit climate may still be premature.
That’s because financial services groups are, in some cases, reducing their property footprint in the city – with the latest to announce a change, being global reinsurance giant
Swiss Re.
According to a
Financial Times report, the company wants to sublet 85,000sq ft of office space at the iconic London Gherkin building, at which it is the main tenant. The report states that 17,000sq ft has been made available immediately with the rest to follow in 2017. The sublease is priced at £69.50 per square foot – which is above the level of rent that the reinsurer pays for the space, according to
Financial Times sources.
The idea behind reducing its office space is not a sign that jobs will be cut however, with a spokeswoman telling the publication that it is simply a matter of efficiency.
“We have introduced agile working, which means a lot of our colleagues no longer have an assigned desk in the London office,” she explained. Instead, you have a home area where your team sits and you take one of the available desks.
“We have reshaped the floors and we now have available floor space to rent out … If you see that your occupancy rate of the individual desks is not high, why would you pay for office space in such a prime location — that’s not very efficient.”
While Swiss Re clearly has an explanation for its decision, cost cutting appears to be a trend across the financial services sector. Swiss Re noted a drop in profits during the first half of 2016, while the insurance sector in general has been hit by low interest rates.
Meanwhile, elsewhere in the financial sector, the likes of Citigroup and JPMorgan are also sub-letting space in London in an effort to reduce costs. It is also believed that the Brexit vote may be deterring some occupiers from making decisions about the future of their own office space.
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