Wharf suffers as banks seek to sublet space

By Katherine Griffiths
Wednesday 22 January 2003 01:00

Credit Suisse First Boston is one of a growing number of banks keen to let out acres of office space because they no longer have the staff to fill them.

CSFB, the largest office tenant at Canary Wharf, East London, is trying to sublet 225,000 sq ft at 5 Canada Square, a block which has not even been completed yet.

Analysts estimate the size of the building is equivalent to four football fields. As much as half of the 6.6 million sq ft of developments leased at Canary Wharf during the latest boom in financial services might be available for subletting in the next year or so, Morgan Stanley estimated in a research note last June.

Offices are also standing empty in the City because companies are not hiring staff and do not need to expand into new premises.

CSFB has reduced its global headcount by 6,400 since John Mack – renowned for his cost-cutting zeal – joined the investment bank in the summer of 2001.

Collectively, banks based in the City and on Wall Street have slashed staffing levels by about 60,000 in an attempt to cope with one of the most serious downturns in equity markets in the past 50 years.

As well as CSFB, Citigroup, Morgan Stanley and Lehman Brothers have all become tenants of offices in Canary Wharf.

CSFB said it was not using all of the 1.8 million sq ft of offices it has leased from Canary Wharf in recent years. Last year, CSFB sublet half of the 500,000 sq ft building at 5 Canada Square to Bank of America.

The company has been seeking a second tenant for the surplus building since November. Switzerland's second-biggest bank signed the lease on 5 Canada Square in the first quarter of 2001.

In the third quarter, CSFB set aside $65m (£41m) to cover potential losses on excess offices worldwide. Expenses have declined by about $3bn since the third quarter of 2001.

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