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French banking giant BNP Paribas has gone the small-town U.S.A. route, opening up a new hub about 100 miles away from New York City in Chesterbrook, Pennsylvania.
The suburban campus doesn’t signal plans by Paris-based BNP
BNP,
to abandon New York or other global hubs of commerce in response to the pandemic, but rather to build out its network of campuses, including outside of urban enclaves, as part of its “office as a destination” concept.
Many of the world’s largest financial institutions and global companies have been forced to rethink the future of the office in response to the pandemic — sometimes several times — including as the coronavirus’ delta variant has frustrated some banks’ attempts to recall more staff to the office by Labor Day.
Read: Flexibility, plants and good vibes are all part of Salesforce’s return-to-office strategy
Deutsche Bank America’s CEO Christiana Riley told Bloomberg this week that she plans to bring some 5,000 workers back to the German bank’s new headquarters in New York’s Columbus Circle over roughly the next six months.
That plan, however, also will allow some of Deutsche Bank’s
DB,
staff to work 60% of the week remote, a person with direct knowledge of the matter told MarketWatch.
The rise of flexible work arrangements in America has led to concerns that cities could end up saddled with empty office buildings in need of another purpose.
See: Can empty offices become affordable housing? New legislation seeks to try
Sales of trophy office buildings in the past 18 months have been few and far between, leading to lingering questions about what marquee properties might fetch when building transactions pick back up.
Although, shares of several key office REITs have outperformed big U.S. stock indexes this year. Vornado Realty Trust
VNO,
shares were up about 16.7% on the year through Friday, while those of Boston Properties, Inc.
BXP,
were up 18.1%. That compares with Dow Jones Industrial Average’s
DJIA,
12.3% advance and the S&P 500 index’s
SPX,
gain of 16.1% for the same stretch.
Credit rating firm S&P Global warned this week said the recovery in the office sector “could lag given the impact of remote work,” but that the cloudy outlook could also lead to cut cash flows at properties, lower valuations and losses for debt holders, like U.S. banks, insurers and REITs.
Demand for suburban office space has remained strong during the pandemic, pushing prices up 14.8% in August from a year before, according to Real Capital Analytics’ latest commercial property price indices.
But office prices in central business districts have slumped during the extended work-from-home period, posting a 3.7% annual decline in August.
BNP’s Philadelphia suburb office will serve as a “model for our future workplace, with particular emphasis on wellbeing and employee experience,” said José Placido, chief executive officer of CIB Americas at BNP Paribas, in a statement announcing the new campus.
BNP expects roughly 400 staffers to eventually occupy nearly 60,000 square feet of the 3-story building at 735 Chesterbrook Boulevard, including some 300 new hires over the next three years. The property was built in the 1990s in a town of about 4,800 that recently ranked as one of the best places to live in America for its public school, housing, jobs and more.
The French bank operates in 68 countries and has been in the U.S. since the late 1800s.
