“There will be a long-term adjustment in how we think about our location strategy…the notion of putting 7,000 people in a building may be a thing of the past,” Barclays CEO Jes Staley said in late April, back in the early days of the UK’s lockdown. One possible solution under consideration is to move investment bankers and other back-office staff into branches, Staley said at the time.
The prospect of a mass exodus of large corporate tenants from landmark buildings terrifies major commercial property owners. It also worries their creditors, which, ironically, include big banks such as Barclays and RBS. According to public filings, the UK’s Big Four, which are rounded out by HSBC and Lloyds, had £49 billion in outstanding U.K. commercial real estate loans at the end of 2019.
Non payment of rents is also on the rise. According to research by Remit Consulting, only 53% of office rents were paid on the June quarter day and 12% was still outstanding from the March quarter day. Ominously, large tenants are demanding concessions from their landlords more than smaller tenants.Work-from-Home Unleashes Nightmare for Office Landlords & Surrounding Businesses. Global Banks at the Forefront | Wolf Street