Many high-end real estate areas in the world's major financial centers have been hit hard by forced consumer spending cuts and rental closures, writes Bloomberg.
European business centers have been hit particularly hard. High-rise financial districts have been hit hard by the crisis that has gripped the office real estate market around the world, and with rising vacancy rates and falling real estate valuations, this blow will be felt more strongly.
London-based HSBC, for example, was forced to close and may soon be followed by Credit Suisse (SIX:CSGN). DekaBank has decided to leave its residence in the Frankfurt Ensemble, while La Defense in Paris is losing one tenant after another.
As part of the fight against the crisis, banks are no longer opting for expensive skyscrapers, but rather, small plots closer to shops and restaurants. The rejection of wholesale trade also reduces the need for huge trading floors.
Many American-style Western business centers are forced to make massive and sometimes risky investments to avoid becoming ghost towns, and vacant sites require different conditions. For example, they are reaching out to a wider range of tenants, offering not only work space, but also a combination of restaurants, hotels and entertainment centers.
City planners are also having to move away from years of strict planning prescribing only certain uses for buildings in each area, as is the case in the City of London, traditionally oriented towards office space.
City authorities are also facing their own problems because of the crisis. So, the authorities of Frankfurt or Paris are puzzled over what to do with the huge empty buildings of the former business centers, since their renovation is incredibly expensive, and it is far from always clear what level of demand there may be for such space, even if their owners pay for the modernization. .