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News release


Phoenix, Banking & Finance: Metro Ranks Among Top Five in Real Estate Report

PHOENIX, April 15, 2015 – While banks still represent the largest occupiers of trophy Class A office space in most major cities, the financial services industry is changing its office and retail footprints. Banks are consolidating personnel in less expensive locations, new financial tech companies (or ‘fintech’) players are emerging and retail banks are evolving altogether.

However, when it comes to choosing where to set up shop, Phoenix remains high on the list of favorites.

According to JLL’s North America Banking Outlook, Phoenix ranks fifth for the percent of overall market real estate space occupied by the banking and finance industry in North America, falling only behind Charlotte (at 35 percent), Toronto (at 31.7 percent), San Francisco area’s East Bay (at 30 percent), and only one-tenth of a percent behind New York (at 25 percent). In addition, the sector remains one the fastest growing – and largest job producers – in the Valley. (See report page 35 for more details.)

“We’ve gained 10,000 new banking and finance jobs in Phoenix within the past two years alone,” said JLL Vice President Keith Lammersen, who has represented Silicon Valley Bank in numerous local deals. “Some of these gains have occurred through traditional CBD spaces – where we have almost one million square feet of banking- and finance-occupied space. But many more are happening in up-and-coming hubs like Scottsdale, the Price Road technology corridor and the seemingly unstoppable downtown Tempe submarket.”

This activity, according to JLL, has been a key factor in pushing office vacancy rates below 15 percent in “hot” submarkets – approximately 7 percent lower than metro Phoenix’s overall average office vacancy rate.

“These new hubs are all dynamic, mixed-use environments that appeal to a fresh generation of creative, tech-savvy financial employees. They offer Phoenix’s lower cost of doing business without sacrificing the quality of employees or the quality of commercial real estate product,” added Lammersen.

In this vein, the JLL report found that, within the banking/finance arena, the ‘fintech’ sector is one to watch. These financial services firms whose product or service is built on technology saw a 26 percent year-over-year growth nationally in 2014. Global investment in the sector is on track to reach $8 billion by 2018 as the financial industry embraces companies that could guide future mobile, cloud and cyber security developments.

Other key economic, regulatory, security and technology factors found by JLL to be reshaping the financial services industry, and its role in cities across the United States and Canada, include:

1) The front office shrinks, the back office grows and relocations rule the day. Large institutions continue to rein in real estate expenses in response to tight profit margins. Corporate offices are shrinking rapidly, from 52,356 square feet in 2013 to only 44,768 in 2014, with the average office now 14.5 percent smaller than it was in 2013. Much of the space reduction is coming from front-office space. Banks continue to reduce the ranks of research analysts, traders and investment bankers as risk guidelines make these divisions less profitable. In contrast, back-office staff has grown to accommodate increased legal, regulatory compliance and cyber security requirements.

Many are choosing to relocate rather than renew their office leases. In 2014, nearly 46 percent of financial services office transactions involved relocations, mostly in-market, while only 24.8 percent were lease renewals. 

2) Exploiting the market for new office space. One factor driving relocations is new office construction, which surged by nearly 65 percent in 2014 over 2013 and created more locations choices and therefore an opportunity to negotiate favorable lease terms at brand-new Class A facilities. In Minneapolis for example, Wells Fargo opted to construct and lease back a 1.1 million-square-foot campus in Downtown East and consolidate operations from multiple Class B locations rather than renovating a facility currently in its portfolio.

3) Fintech drives growth. The rapid growth of the fintech sector is also fueling the financial industry landscape. London and Silicon Valley are the most active fintech markets, with New York quickly catching up, as the city reached its highest record for fintech deals in early 2014. Like many other technology concerns, fintech companies seek access to talent. WorldPay US, for example, recently relocated from the suburbs to downtown Atlanta to gain better access to the millennial workforce.

4) The bank branch isn’t obsolete—it’s evolving. Despite the growing popularity of mobile and online banking, nearly 80 percent of consumers visited a bank teller in the past year, according to a 2015 FDIC survey. Many are testing new branch formats to focus less on everyday transactions and more on higher-margin advisory services such as wealth management and mortgage lending. 

“Banks continue to be very visible users of retail real estate,” said Joe Brady, Chairman, JLL Banking Industry group. “However, new branch network strategies are changing where and how banks use their branches and are focussing on creating a seamless omni-channel customer experience.”

Download a copy of JLL’s 2015 North American Banking and Finance Outlook report here.

About JLL
JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual fee revenue of $4.7 billion and gross revenue of $5.4 billion, JLL has more than 230 corporate offices, operates in 80 countries and has a global workforce of approximately 58,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3.4 billion square feet, or 316 million square meters, and completed $118 billion in sales, acquisitions and finance transactions in 2014. Its investment management business, LaSalle Investment Management, has $53.6 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit

In Phoenix, JLL is a market leader employing more than 500 of the region’s most recognized industry experts offering office, industrial and retail brokerage, tenant representation, facility and investment management, capital markets, multifamily investments and development services. In 2014, the Phoenix team completed 12.2 million square feet in lease transactions valued at $918 million, directed $75 million in project management and currently manages a 23.1 million-square-foot portfolio. For more news, videos and research resources on Jones Lang LaSalle, please visit or