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UK: JPMORGAN TO OUTSOURCE WORLDWIDE.
Estates Gazette
4 Dec 1999
US investment bank JP Morgan is planning to outsource all its occupational property around the world, starting with London.
It has invited companies to propose schemes to transfer the ownership of its portfolio in exchange for a contract that would provide for all its accommodation needs.
A single payment would include accommodation, facilities management and support services.
The bank says it is looking for a more dynamic approach from the property sector and that the move has been driven by changes in technology and working practices.
The move is to be pioneered in London, where JP Morgan occupies 61,906m2 (666,373 sq ft) in nine buildings. Much of the space is leasehold, but it owns the freehold to the 36,231m2 (390,000 sq ft) 60 Victoria Embankment, EC4.
One source at the bank said: "We want flexibility, there's not much more to it than that. We don't want to be tied down on a lease for 25 years and we would like people to be managing this for us." JP Morgan employs around 16,000 people worldwide, with around 6,000 in Europe, including 5,000 in London. The source added: "It really revolves around how difficult it is for us to accurately predict what the head count is going to be in the future."
The deal is loosely modelled on government property outsourcing under the PFI, and the bank is already in discussions with PFI-bidding consortia including Mapeley, which bid on the outsourcing of the DSS estate, and Trillium, which won that bid.
These groups are looking at London first, but could extend the contract to Europe, which would involve up to 139,350m2 (1.5m sq ft) of property. The source added the idea is being considered for all the bank's property worldwide. "We are certainly thinking of similar types of thing in other parts of the world," he added.
Robin Priest of Mapeley said: "This is the type of transaction in which we are very interested, and we may well pursue it. "The benefit for them is focusing on their core competencies. Owning and running buildings is not investment banking." He added that people in the property industry are best placed to get the best out of the bank's occupational portfolio.
Copyright Reed Business Information 1999
Not Available for Redissemination.
Edward Simpkins
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