With talks about Brexit largely deadlocked, banks have begun putting their contingency plans into action. The focus: Frankfurt.

JPMorgan Chase is nearing a deal to lease additional office space while Citigroup and Deutsche Bank are scouting the market for options, according to people with knowledge of the matter. Goldman Sachs has already signed leases for offices that they won't move into until 2019.

"The Brexit effect is making companies act earlier if they want to secure expansion space," Ben Remy, a director at broker Savills PLC, said in an interview. The law firm Baker & McKenzie signed for a new Frankfurt office in a tower five years before it will be completed, something that's "unprecedented," he said.

International banks are working on plans to shift workers from the U.K. to the European continent to preserve access to the world's largest trading bloc after Britain leaves in 2019. The amount of space being leased in Frankfurt is on track to reach a 10-year high, according to Savills, because the city's existing banking infrastructure has seen it emerge as the top choice for relocations post-Brexit.

The financial district of Frankfurt, Germany.
The financial district of Frankfurt, Germany. Bloomberg News

Here's what the banks are said to be doing:

JPMorgan

The bank is close to a deal to lease an additional floor at its Frankfurt office, two people with knowledge of the plan said. JPMorgan already leases about 8,000 square meters at the Taunusturm building, the people said, asking not to be identified because the deal is not yet public. The bank will probably move its EU investment banking operations to the German city, Bloomberg News reported in March. A spokesman declined to comment.

Citigroup

The lender is weighing leasing additional Frankfurt real estate though Citigroup has yet to determine how much space it needs, two people said. The bank has still not filled all of the space available at its current base in the city, where it has about 350 workers, and it may end up not leasing extra space, one person said. Citigroup said in July that it may create as many as 150 jobs in the European Union after Brexit. A spokeswoman for the firm declined to comment beyond that statement.

Goldman Sachs

Goldman Sachs confirmed last month it has leased about 10,000 square meters in a new development that is expected to be finished in early 2019. The bank has also secured an option to rent a further 5,000 square meters in the building, two people with knowledge of the deal said last week.

Bank of China

Bank of China is also expanding in Frankfurt, though managing director Bernd Meist said it's unrelated to Brexit. The bank recently rented an additional floor at its current Frankfurt office and will soon add another, Meist said by phone. The firm expects to employ about 300 in the city next year, compared with 250 now, he said. If Bank of China decides to apply for a broker-dealer license in Frankfurt then it will take another floor for about 50 more staff, Meist said.

Deutsche Bank

Germany's biggest lender is scouting for space that could hold as many as 1,600 workers as it prepares for Brexit and would be ready for occupation within about two years, two people with knowledge of the matter said last week.

Space race

While the race for space has sent demand and prime rents for offices to a record, investors are more cautious about whether the trend will continue.

"The recent lease signings in Frankfurt show that banks are getting ready for the changes wrought by Brexit," said Marc Weinstock, managing partner at DKS BIG Group, a real estate developer with a portfolio valued at 4.3 billion euros ($5 billion). "But it's too early to say what changes will come and how big they will turn out to be."

The surge in demand is also creating some concern about commercial property values in the city.

"We aren't able to invest at the current levels," Andreas Muschter, chief executive officer of Commerz Real, which manages about 32 billion euros, said in an interview. "You see the Brexit fantasy in the Frankfurt market and it is affecting prices. The real estate people love fantasy and they always pay for fantasy."

Bloomberg News