Companies considering where to house their global offices would do well to read the latest Global Cities report. The 2018 report compares the costs of employing 100 staff, and renting the necessary office space, in different countries around the world. There are some surprising discoveries.
London, for example, is in the top six for desirability and yet less expensive that its competitors. It costs 25% less than New York where the cost of 100 employees stands at US$ 6,938,000 per year, and 13% less than Hong Kong where the cost totals US$ 5,964,990. As one of the world’s foremost business hubs, it is encouraging that London’s cost stands at US$ 5,228,140. Just another reason why it is increasingly known as the world’s capital city.
One of the reasons for this could be due to the weak pound. Britain’s decision to leave Europe has meant that sterling has dropped significantly in value against the US dollar and foreign investors are getting more for their money. As a result, London has witnessed a foreign investment flush as global firms set up office space and headquarters here. Some examples are: the ‘Cheesegrater’ building at 122 Leadenhall Street, 20 Canada Square in Canary Wharf, the ‘Walkie Talkie’ building at 20 Fenchurch Street and Aldgate Tower have all been bought by Chinese companies; while international technology sector firms have based offices in locations throughout the city: Google in King’s Cross, Apple in Nine Elms, Bloomberg in the City, Facebook in Soho and Amazon in Shoreditch.
The investment isn’t simply due to the weak pound however; London is a leading business and financial hub. Every major international company has to think strategically about the location’s draw for an international workforce; weighing up costs versus the ability to attract and retain the most skilled employees. This works in London’s favour as it excels in both its business and cultural appeal. It is a historic centre that offers a plethora of entertainment and leisure activities; while its well-established business links make it highly desirable to skilled professionals from all over the world looking to further their careers. The standard of London’s offices and residential property for professionals is also of a very high calibre and will be taken into consideration by any company weighing up location costs.
London stands sixth on the Global Cities list behind Zurich, New York, San Francisco, Hong Kong and Boston. Zurich unsurprisingly tops the list as the most expensive place to have offices thanks to its global prominence in the banking and asset management sectors. Based on office costs and average salaries, to set up 100 staff in Zurich it costs an eye-watering US$7,947,260 per year. New York stands at US$6,938,000 and is closely followed by San Francisco at US$6,696,700 where its proximity to Silicon Valley and consequent appeal to the global technology sector has seen costs rise. Hong Kong, where office rents alone are the highest in the world, costs US$5,964,990 and Boston, which is just one place ahead of London, has yearly costs of US$5,936,820. Paris, Dublin, Stockholm, Frankfurt, Amsterdam and other European centres feature on the list too however, their costs are significantly lower than the top six.
So why do so many global companies not just look at cheaper alternatives? As discussed, some cities can command higher costs due to their reputation in certain sectors – Zurich for banking and finance, San Francisco for technology. London too, is a pre-eminent global business centre, especially for finance and technology, with plenty to attract and retain highly skilled professional talent. While the cost of employing and accommodating a skilled workforce is a factor, many global companies see lower cost alternatives as a false economy with fewer benefits. London is a thriving commercial hub that is well connected to the rest of the world and a high standard of property and facilities at a considerable discount to the top five global cities. Other European cities may offer lower location costs than London, they just can’t compete with its position as a global business centre and cultural appeal.
If you would like to discuss finding the best homes for your workforce, or if you are relocating to London and would like to rent a high-end property in your preferred location, then contact our team today or browse our list of properties to rent in London. Similarly, if you are interested in letting to employees of these large corporate tenants then contact us as we have a dedicated corporate services team assisting companies including our Japan desk servicing Japanese company’s employees in London
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