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Brexit pushes up office rentals in Frankfurt

Published 2017-11-01, 08:16 a/m
© Reuters.  Brexit pushes up office rentals in Frankfurt
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By John O'Donnell

FRANKFURT, Nov 1 (Reuters) - Property firms in Frankfurt have seen an increase of more than 20 percent in office space rentals over the past year as the uncertainty over Britain's divorce from the European Union prompts banks to look at moving to Germany's financial capital, the city's chief promoter said on Tuesday.

The companies all saw an increase of more than a fifth in total office space rented out in the city at the end of September, compared with a year earlier, according to a poll of four large property investors and agents by Frankfurt Main Finance, which promotes the city and helps banks relocate.

The poll revealed that rents during the same time had risen slightly.

The rise in demand highlights a gradual trend towards more London-based banks looking for a foothold elsewhere in the European Union, with the slowness of Brexit negotiations between Brussels and London leading to a growing nervousness about future trading relations.

Frankfurt, small compared to London or Paris, has appeal because it is in the centre of Germany, Europe's strongest economy and most populous country.

"Brexit has reached Frankfurt," said Markus Kullman of JLL JLL.N , adding that the vibrant German economy had also led to higher demand.

"It is not a question of a full-scale relocation ... but of incrementally building up. It will not be an exodus from London to Frankfurt but more a case of hiring locally."

In the study, BNP Paribas (PA:BNPP) Real Estate, one of the four companies asked, said 477,000 square metres of office space had been let at the end of September, an increase of more than a quarter on the previous year.

10,000 square metres provide space for about 500 people.

The three others, Colliers International CIGI.TO , JLL and Savills SVS.L calculated that there had been a jump of at least a fifth during that time.

Goldman Sachs (NYSE:GS) GS.N has agreed to rent the top eight floors of a new 37-storey tower now being built, making it one of the city's biggest wins since Brexit. Morgan Stanley (NYSE:MS) MS.N has also signed a lease for offices.

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