With profitability under pressure, banks are seeking to further cut real estate costs.
There is little proactive leasing underway in the banking and financial services sector. Some firms must transact because of a pending expiration date, but most prefer to wait until the impact of Dodd-Frank on capital requirements and profit margins is clarified.
The leasing activity that is underway largely comprises renewals for similar sized space. An analysis of 111 recent banking and financial service lease transactions is indicative of this trend with 53.0 percent being renewals – most with no change in square footage. Renewals with expansions are somewhat misleading in some cases in that, although a bank may lease additional floors in one building, it is part of a larger portfolio-wide consolidation strategy.
Those firms that can invest the capital into relocating are taking advantage of the opportunity to consolidate and right-size.