Banks had been moving out of the well-known thoroughfare before the pandemic. But now they are back and office space is in heavy demand. What gives?
Pictet, which moved from the Freigutstrasse to the «Leuenhof», is probably the best embodiment of what is going on. When asked in 2021, the Geneva-based private bank said it was both strengthening and upgrading its presence in the city at the same time.
(Image: finews.com)
It is clear why. They want to be able to meet the main Zurich-based institutes head-on. And Pictet has actually managed it by moving to one of the world's most expensive shopping streets - and a prestigious banking center.
Revival Underway
Pictet is not only housed in one of the most beautiful examples of an Art Nouveau building in the city. It also faces Credit Suisse and UBS on Paradeplatz and sits just beside Julius Baer. Leuenhof's other businesses are skewed towards fine gastronomy and luxury shopping. It was originally the headquarters of Bank Leu, which was established in 1755 but was integrated into Credit Suisse in 2011 as Clariden Leu. Its eventful past is now only evidenced by the name of the building (Leu meaning lion in English).
«There is a tradition in the city behind banks having a representative presence in the proximity of Paradeplatz», says Jan Eckert, CEO of Jones Lang LaSalle (JLL) Switzerland, an international real estate services company, to finews.com. Eckert is known as one of the most knowledgeable experts in the local market for commercial property.
He added that locations in the city are seeing a revival and that it has become difficult to find enough space.
Having Employees in View
«The attractiveness of the location is not only important for clients but it plays a large role for employees», Eckert continues. It is really hard to find 3,000 to 4,000 square meters of space at the moment. «There are no new projects in the city center. There is practically only remodeling or complete renovation work going on.»
Goldman Sachs is going through a wholesale renewal. The Swiss branch of the U.S. investment bank is likely to be moving to Bahnhofstrasse 3 in 2024 (image below) where it is taking up the top three floors. It had already made it clear last year that it wanted to leave its premises on Claridenstrasse.
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There is a great deal of construction work going on at the new address to transform the neo-classical building into a modern office and retail space. They are even adding a couple of stories on top of the building. It used to be the office of Liechtenstein's VP Bank, which has since moved to Talstrasse.
(Rendering of the current plans for Bahnhofstrasse 3, Partner Real Estate)
Competing with Google
Banks are competing with big tech for office space in the middle of the city. Companies such as Google are looking to be near ETH Zurich and the associated cluster effect from it. But law firms and other wealth and asset managers also rate a location on or near the Bahnhofstrasse highly.
Demand and prices are high. It can cost up to 900 Swiss francs ($965 U.S. dollars) per square meter in rent according to some. That makes small but nice the new maxim. «We are seeing a trend where companies are looking for less space but want higher-quality appointments», says JLL's Eckert. That makes sense for many companies given the new post-pandemic hybrid working models out there.
Banque International à Luxembourg (BIL), which is controlled by China's Legend Holdings, has also moved from Beethoven- to Bahnhofstrasse 20. It employs about 70 people in Zurich, 30 in Geneva, and about half a dozen in Lugano.
Double-Digit Investment
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The move to the seminal address in the heart of Zurich is part of a comprehensive investment program costing roughly 85 million francs, according to some. The funds were promised by the Chinese owners as a way to reposition the bank in Switzerland.
(Image: finews.com)
But the Bahnhofstrasse also has kept many of its traditional finance houses. Zurich's Cantonal Bank is headquartered at the other end of the street and the tram station still bears its name in front. UBP has also been in the same area for decades now in the sought-after street number 1, meaning that the Geneva-based private bank will soon count Goldman Sachs as a neighbor.
(Image: finews.com)
Budding Cluster
Together, all four banks form a new cluster near the lake, just adjacent to the Swiss National Bank's office on the Börsenstrasse.
(Image: finews.com)
But the moves are more than a simple change of address. In most cases, they have intentions to grow in Zurich and the German-speaking region of the country. Pictet is once again representative of all that. It still had the capacity for another 100 workspaces when it moved to the Leuenhof. That is sending a very clear signal to all the other long-established Bahnhofstrasse banks.
It remains to be seen, however, that with the trend towards a work-from-home model, nice new offices will be enough to lure employees back to the office on a full-time basis, thwarting these ambitious plans.
