UBS sublets London office ‘grey space’ as more staff work from home

Swiss bank UBS has decided to sublet two floors at its landmark London headquarters after its flexible working from home policy left it with too much office space, according to people with knowledge of its plans.

UBS moved into 5 Broadgate, a sprawling 12-storey “groundscraper” overlooking Liverpool Street station, in 2015. It then moved the majority of its 6,200-strong UK workforce into the building, which is one of the biggest in the City.

But last summer, the bank rolled out a global flexible working policy that allows up to two-thirds of its 73,000 staff worldwide to permanently mix home and office work.

The policy was championed by chief executive Ralph Hamers as a way to gain a recruitment edge over Wall Street rivals, which have taken a more hardline approach on returning to the office.

“Our hybrid working model allows many more of our UK employees to combine home and office-based flexible working, subject to their role,” the bank said.

“This means we need less office space than we did before the pandemic. As such, we will be subletting two floors of our 5 Broadgate office, which continues to be UBS’s centre for all its UK operations.”

It is currently marketing the space to potential tenants, according to people with knowledge of the details.

A number of companies have decided to sublet “grey space” that is surplus to their requirements as a result of the pandemic changing working practices.

The amount of sublet office space available across the City of London and the West End soared from around 3mn square feet in March 2020 to more than double that a year later, according to Savills. The figure has since dropped back to just under 5mn sq ft — with some of the excess being leased and some removed from the market

The two floors at 5 Broadgate are part of a “drip, drip” of office space into the market rather than a flood, according to one leasing agent in the City. He anticipated that the floors would be in high demand because of the location and quality of the building.

But in general, City tenants have found it harder to dispose of excess space, according to Savills. The amount of grey space available in the City has barely dropped in the past year. During that time, the amount available in the West End has halved.

Other banks that moved into new purpose built buildings before the pandemic have also discovered they have excess capacity.

French bank Société Générale took seven floors in the 27-storey One Bank Street Canary Wharf skyscraper in 2019. But last year, it decided to sublet some office space after more staff opted to work from home regularly.

Four years ago, Hong Kong tycoon Li Ka-shing bought 5 Broadgate from UK property company British Land and GIC, the Singaporean sovereign wealth fund, for £1bn as part of a wave of Asian investment in trophy London office buildings.

Li’s CK Asset Holding investment business sold the property this March for £1.2bn to South Korea’s National Pension Service in the biggest London property deal in almost five years.

UBS has signed up to stay at the building until 2035.