Deutsche Bank AG (DBK) wants its traders and asset managers to collaborate more closely to boost profits. In Frankfurt, that means moving in together.
Tishman Speyer Properties LP will spend about 230 million euros ($315 million) building a 32,500 square-meter (350,000 square-foot) complex to house the bank’s investment bankers and money managers, who are now at separate locations, said Michael Spies, Tishman’s head of Europe. Deutsche Bank’s new offices will be smaller than its current space, said Christian Lanfer, a Jones Lang LaSalle Inc. (JLL) broker who advised the bank on its move.
“This represents a consolidation of two major functions in the bank,” Spies said. “It’s a trend toward a more efficient operation.”
Deutsche Bank is among at least three financial-services companies that are reducing their space in Germany’s financial capital by moving into new or renovated buildings with open layouts that improve communication and allow more people. The demand for new offices is helping push construction in Frankfurt to the most in 10 years, even though the city’s vacancy rate is one of the highest in the country.
Developers plan to build 310,000 square meters of offices in Frankfurt this year, 51 percent more than in 2013 and the most since 2004, according to data compiled by Jones Lang. That’s after average rents for the best offices rose by 6 percent in 2013, the first increase in three years, the firm estimates.
The European Central Bank’s new double-tower headquarters on the site of a former indoor wholesale market, are set for completion this year and will account for a third of the new space.
Deutsche Bank asset managers will begin moving into the complex on the corner of Weserstrasse and Mainzer Landstrasse next year, two people with knowledge of the plan said. Traders will follow in 2017, said the people, who asked not to be named because the information is private. The new offices, which will replace three buildings, are a five-minute walk from the iconic headquarters known as the Deutsche Bank Twin Towers.
Germany’s biggest bank is trying to reduce its costs by 4.5 billion euros a year by 2015. About 300 million euros of those savings will come from cutting workspace by 15 percent and moving support staff out of expensive cities such as London, New York and Tokyo, Henry Ritchotte, Deutsche Bank’s chief operating officer, said in a June presentation.
Klaus Thoma, a Frankfurt-based spokesman for Deutsche Bank, declined to say how much the company will save by consolidating offices.
Co-Chief Executive Officer Anshu Jain appointed Michele Faissola, one of his top lieutenants at the company’s investment banking unit, to lead its asset and wealth management unit in 2012. Faissola told investors in September of that year that he would tap the expertise of the firm’s investment bankers to advise clients and encourage the sales teams of the two divisions to cooperate.
“We will work together better at this new building,” Thoma said by phone.
Deutsche Bank’s old Frankfurt offices, some dating from 1971, weren’t being used efficiently, Jones Lang’s Lanfer said.
“Buildings here are considered old after 10 years,” he said. “On average, banks are taking 20 percent less space, but they’re raising the quality of their facilities and using space more intensively.”
Other firms are making similar moves. JPMorgan Chase & Co. (JPM), which employs about 450 people in Frankfurt, will move out of 10,000 square meters in the Junghof Plaza building as early as September after signing a lease for 8,000 square meters at the TaunusTurm skyscraper, Axel Luedeke, a spokesman for the bank, said by e-mail. Tishman completed the tower in December.
UniCredit SpA (UCG) will move into 4,500 square meters of space in the TaunusTurm next month. It’s vacating 7,700 square meters in two buildings including the 10-year-old Die Welle building, according to a UniCredit spokesman.
ING Groep NV (INGA) in June moved into the renovated “Leo” tower, bringing together teams from two separate locations, and Allianz Global Investors, an asset management unit of the German insurer, moved into the Triton building after a gut renovation.
The construction surge, and banks’ growing preference for smaller spaces, will probably push Frankfurt’s vacancy rate up to 11.5 percent in 2014 from 11.1 percent at the end of 2013, Lanfer said. That would be the first year-on-year increase since 2010.
Frankfurt’s vacancy rate is the second-highest among Germany’s big cities and compares with a 5.4 percent rate in London and 7.5 percent in Paris, according to Jones Lang data.
The share of empty offices soared to 14 percent in 2003 from 3 percent in 2001, according to Jones Lang, after developers flooded the market during the Internet boom. Since then, the rate hasn’t fallen below 10 percent.
Deutsche Bank, which owns its properties on Grosse Gallusstrasse, will hold talks with investors and Frankfurt planners to determine how the area can be developed, according to a statement on Dec. 27.
“For years we’ve been wanting to open the banking district to a wider variety of uses, in order to enliven the area outside of office hours,” said Mark Gellert, a spokesman for the city of Frankfurt. “That mix includes apartments, retail and other uses.” Gellert declined to comment on Deutsche Bank’s properties.
At Deutsche Bank’s new location on Weserstrasse, Tishman is turning three buildings into one with a glass and stone exterior, and floor-to-ceiling windows. The project is near other construction sites where developers including Hochtief AG and Hines Interests Limited Partnership are contributing to the building boom with at least four properties.
“There’ll be a huge dust cloud there,” said Lanfer. “The old mustiness will be gone and something chic will replace it.”
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