Deutsche Plans to Give Up Office Space in Hong Kong’s Tallest Skyscraper
(Bloomberg) -- Deutsche Bank AG, the struggling German lender that’s in talks about a merger with Commerzbank AG, is weighing giving up as many as three of the 10 floors it occupies in Hong Kong’s tallest skyscraper, people with knowledge of the matter said.
Deutsche Bank signed the 10-year lease in the 484 meter (1,588 feet) International Commerce Centre in 2010 and hasn’t been using all the space, said two of the people, who asked not to be named discussing private information. Landlord Sun Hung Kai Properties Ltd. has asked at least one real estate agency to start looking for new tenants for the floors starting July 2020, another person said.
The lender hasn’t made a final decision on how much space in ICC it will vacate and is in negotiations with Sun Hung Kai, one of the people said. Deutsche Bank may also rent space in cheaper office buildings to house staff including back-office personnel, this person said. A representative for Deutsche Bank declined to comment.
“We are positive about the outlook for the office market, and are discussing with some tenants on their lease agreements,” Sun Hung Kai said in an emailed response to questions, without mentioning Deutsche Bank. “We are confident of reaching an agreement with the tenants.” ICC has a 99 percent occupancy rate, the company said.
A large so-called anchor tenant who rented space when ICC was completed in 2010 would have paid about HK$50 ($6.37) per square foot in monthly rent, according to Savills Plc. The real estate agency estimates the same space would cost about HK$80 per square foot now. By giving up three floors, Deutsche Bank would save about $12.7 million a year, data compiled by Bloomberg using the current market price show.
Deutsche Bank on Sunday said it started discussing a tie-up with domestic rival Commerzbank after years of repeated turnaround efforts failed to stem a slide in revenue. In Asia, the firm saw a surge in turnover in the second half of last year with almost 50 bankers in Hong Kong and Singapore leaving. Most of them were replaced by more junior staff, people with knowledge of the matter said in December.
ICC’s other tenants include Morgan Stanley and Credit Suisse Group AG. It’s also home to the Ritz-Carlton Hotel, Elements Shopping Mall, an ice rink and Hong Kong’s largest cinema complex.
©2019 Bloomberg L.P.