London Office Lettings in April 2018

Central London office lettings in April 2018 reached almost 800,000 sq ft from 35 mid-large size transactions (5,000 sq ft+) during the month. The April 2018 figure is broadly in line with the current monthly average of 1m sq ft.

April was characterised by 13 office deals over 20,000 sq ft, which included Berwin Leighton Paisner’s 125,000 sq ft letting at Governor’s House, 5 Laurence Pountney Hill; St James’s Place’s 57,000 sq ft pre-letting at 30 Lombard Street, EC3 and KKR’s pre-let of 57,000 sq ft at 18 Hanover Square, W1.

Professional Services topped the table of lettings by sector, underpinned by BLP and KKR deals. This was followed by business services underpinned by a number of lettings by serviced office operators. Financial services, technology and media were also well represented. Office deals ‘under offer’ in central London increased to 3.6m sq ft, and pending deal volumes are healthy in nearly all sub-markets, with over 25 deals pending.

By area, the City accounted for 54pc of the office floorspace let in April 2018 at 433,000 sq ft. The West End saw 140,000 sq ft of take-up. Midtown contributed 80,000 sq ft of lettings, plus 45,000 sq ft of Docklands deals. Current London office demand is calculated to be around 3.3m sq ft in the City and 2.7m sq ft in the West End.

The volume of grade A (newly built or refurbished office space) let during the month reached 375,000 sq ft (47% of the monthly total), as transactions for new space resumed their recent strong showing. Availability is dominated by secondhand space in all London markets.

Metropolis research is currently monitoring 635 ‘live’ London requirements, with deals for space of up to 1.8m sq ft due to sign in the next few months.

Cityoffices is working on its current ‘Skyline Survey’ in London. Further details of office scheme planning applications and consents, with scheme by scheme detail are listed on the Cityoffices.net website. Details on the report and the Cityoffices database from Andy King at andy@metroinfo.co.uk

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M25 Office Market Predictions

Knight Frank has published its Q1 2018 report on the M25 office market.

The report looks at the polarisation of the market into small moves and lettings which is pushing landlords towards the subdivision of buildings into smaller units, alongside the expected emergence of 10-12 large 100,000 sq ft requirements in 2018, many of which will come from technology companies. Knight Frank predicts that many of these searches will end in pre-letting of planned office schemes.

Metropolis is currently tracking some 30 south-east occupiers looking for 25,000 sq ft or more, with a further 20 large companies around the M25, approaching lease events over the next two years. Overall, Metropolis has reported on over 500 office moves in the South East and outer London in the last year.

Knight Frank say the South East office market has a history of occupational demand from the technology sector. In fact, the tech sector has accounted for, on average, 23% of annual office take-up over the last five years and has absorbed some 3.8 million sq ft during that period.

Similarly, occupiers drawn from other sectors have been transformed by the application of new technology to business processes, often fuelling new property requirements.

There were around 60 office deals of over 5,000 sq ft in towns around the M25 in Q1 2018. In west London financial and business services firms account for the largest proportion of take-up over 10 years, 27%. This percentage rises to 29% if considered over the past two years. Most notable is that flexible office providers have quickly gained a strong presence, taking just short of 200,000 sq ft since the beginning of 2016.

Knight Frank conclude that the M25 linked hotspots for office deals over the next year are Brighton, Croydon, Watford and Reading.

Southbank attracts relocations

Hubble, the office and co-working provider, reports that tech startups and other growing SMEs in London are leaving the capital’s best known tech hotspots, including Shoreditch and Soho, while favouring the Southbank. Hubble’s search data suggests that London Bridge (29 percent of all searches) is now the most popular location in London for companies searching for flexible office space in 2018 (a sharp rise from 3.7 percent of searches in 2017), beating Shoreditch with 27 percent of all searches.

Additionally, analysis by Metropolis shows nearly 50 medium or large occupiers launching or renewing searches for offices in London, SE1 since January 2018, compared to 40 in Soho, 30 in Clerkenwell and 25 in the Shoreditch area.

Hubble say that more than 37 percent of searches were for office space in south London, counting London Bridge and the Southbank (8.5 percent). Startups and SMEs are branching out to different creative “hub-spots” within London, but most prominently is an unprecedented shift to south of the river. Searches for London Bridge specifically make up 29 percent of all searches and the Southbank, as a whole, making up 37.5 percent of all search queries.

Meanwhile Soho’s market share dropped from 45.2 percent in 2017 to 23.5 percent in 2018 while Clerkenwell dropped from 26.7 percent to 2 percent.

Hubble’s data is backed up by a recent Knight Frank report which named the Southbank as London’s newest commercial hotspot and claims: “South Bank has followed the trend in brownfield regeneration. Former industrial buildings have been put to new uses”. High quality offices have been developed in recent years, and new transport infrastructure built, which has opened up the market to businesses seeking new headquarters buildings.” Knight Frank say London has seen a 41% increase in small and medium enterprises (SMEs) since 2010, much of which has been driven by a marked increase in funding from venture capital. The growth of the gig economy has led to an increase in freelancing and contract based working. 70% of all transactions to TMT firms in the past five years (by number) have involved units smaller than 5,000 sq ft.

Looking ahead, Metropolis is tracking 140 occupiers of all sizes, which have lease expiries approaching in the next two years in the Southbank area, with a further 800 in neighbouring City and Midtown postcodes.

Leeds Office Market Q1 2018

Take up of Leeds city centre office space has grown by 83 per cent in the opening months of 2018, according to the Leeds Office Agents’ Forum (LOAF).

Office leasing figures released by LOAF have revealed that 191,861 sq ft of office space was taken up by occupiers in the city centre in first quarter of 2018 as part of 28 office deals. This represents an 83 per cent increase on the same period last year and the strongest first quarter recorded for five years.

Of the 28 city centre transactions to complete, the largest was the 76,000 sq ft acquisition at 33 Wellington Street by Walker Morris and the letting to the Dart Group (Jets2) of the remaining 48,272 sq ft at The Mint was the only other city centre transaction above 10,000 sq ft. Both deals came after long searches. Out of town the largest deals were Balfour Beatty and Call Credit.

Leeds remains an attractive city for ‘northshoring’ attracting a number of companies looking to set up back office operations, whilst serviced office providers are becoming increasingly interested in opening new centres in Leeds.

There remain a healthy number of live requirements within the market. Metropolis is tracking up to 40 companies searching and a further 100 occupiers approaching decisions on upcoming lease expiries over the next two years

 

London Office Lettings in March 2018

Central London office lettings in March 2018 reached almost 1.02m sq ft of deals from 63 mid-large size transactions (5,000 sq ft+) during the month. The March 2018 figure is in line with the current monthly average of 1m sq ft and Q1 lettings reached just over 3m sq ft.

March was characterised by 11 office deals over 20,000 sq ft, which included CBRE’s 78,000 sq ft letting at 61 Southwark Street, SE1; Charles Taylor’s 66,000 sq ft pre-letting at 3 Minster Court, EC3 and SNC Lavelin/WS Atkins took 65,000 sq ft at Nova North, SW1.

Professional Services topped the table of lettings by sector, underpinned by CBRE and Paul Hastings deals. This was followed by insurance services mainly underpinned by Charles Taylor’s pre-let and another deal to Argo. Office deals ‘under offer’ in central London remained at 3.5m sq ft, but pending deal volumes are healthy in nearly all sub-markets, with over 30 deals pending.

By area, the City accounted for 40pc of the office floorspace let in March 2018 at 400,000 sq ft. The West End saw 290,000 sq ft of take-up. Midtown contributed 93,000 sq ft of lettings, plus 84,000 sq ft of Docklands deals. Current London office demand is calculated to be around 3.1m sq ft in the City and 2.8m sq ft in the West End.

The volume of grade A (newly built or refurbished office space) let during the month reached 624,000 sq ft (62% of the monthly total), as transactions for new space resumed their recent strong showing. Availability is dominated by secondhand space in all London markets.

Metropolis research is currently monitoring 645 ‘live’ London requirements, with deals for space of up to 1.9m sq ft due to sign in the next few months.

Cityoffices is working on its current ‘Skyline Survey’ in London. Further details of office scheme planning applications and consents, with scheme by scheme detail are listed on the Cityoffices.net website. Details on the report and the Cityoffices database from Andy King at andy@metroinfo.co.uk

Metropolis Office Movers in March 2018

Metropolis ran 621 business leads on ‘office movers’ in March 2018. If all reported moves were added together the total would exceed 20 million sq ft of office searches and transactions, researched by Metropolis’ unique market led intelligence research team. London was the largest region with 275 business leads during month, but there were also strong showings from the South East (72),  North West (44), Yorkshire (43) and Scotland (26) .  Financials services were the largest business sectors planning relocations or agreeing moves during the month.

The business leads covered the whole UK and provided details of the size of the office occupier, company likely move dates, a description of the reasons for the move, its business sector and full contact details including an address for written inquiries, at least one telephone number and in most cases an email address. Some of the largest planned moves and top picks amongst the 621 March leads, included those on occupiers Bank of America, Cleveland Clinic, BT, Morgan Stanley and PWC.

The March 2018 leads included 160 ‘identified requirements’, including 81 in London. Which means that the company confirmed to researchers that it has current or future plans to search for alternative office space. Of these 156 searches, 102 were new office searches, not previously notified to clients.

The most recent research also included 198 ‘potential movers’ which were mainly longer-term leads on occupiers, considering a relocation, but the occupier has yet to make a final decision on whether to search.

Most of the remaining stories covered companies that have just signed for new office space and have set a move date, including some large pre-lets and companies inviting tenders for fit-out contracts. The shortest planned move date is just over a month away, whilst the longest was late 2020.

Recent research by Metropolis concluded that a conservative estimate of ‘live’ business tender opportunities on the database in recent months, exceeded £1bn of business.

If you would like some information on flexible Metropolis subscription packages, then please email Andy at andy@metroinfo.co.uk

Thames Valley Office Market Update

JLL’s just published Western Corridor office market report concludes that the Thames Valley enjoyed a solid start to 2018. Take-up across the region totalled approximately 516,000 sq ft, representing an increase of 31% on the corresponding quarter of 2017.

The first quarter of 2018 was characterised by smaller deals, according to JLL. The the majority of activity (80%) taking place in the 10,000 sq ft to 50,000 sq ft size band. Deal numbers increased by 50% from 24 deals in Q1 2017 to 36 deals in Q1 2018.

Metropolis reported on over 30 planned relocations in the M4 corridor in Q1 2018, such as FM Global taking 57,000 sq ft at Voyager Place in Maidenhead; Black+Decker taking 49,000 sq ft at 270 Bath Road, Slough; Panasonic taking 41,000 sq ft at Maxis office scheme in Bracknell; Fora Space taking 28,000 sq ft at Thames Tower, Reading; JDA Software taking 23,000 sq ft and Riverbed Technology 16,000 sq ft at Maxis office scheme in Bracknell; GiffGaff taking 23,000 sq ft in Uxbridge; Quest Software taking 13,000 sq ft at Arlington Square, Bracknell and MBNL at Thames Tower, Reading.

JLL say that supply of office space is flattening, falling below 10m sq ft and this is expected to moderate further over 2018.  JLL also think that availability will decline in 2019 and 2020 as the number of active speculative development schemes reduce.

James Finnis, head of south east office agency at JLL, said: “The Q1 take-up figures represent a solid start to 2018. The 50% increase in the number of deals in Q1 illustrates growing occupier confidence. Occupiers are focused on the best space and there is widespread evidence of tenants trading up but taking less overall sq ft. Flexibility remains important with occupiers wanting to build in options to either grow or downsize. The addition of serviced or co-working space into multi let buildings is a natural extension of this, providing on site swing space.

Metropolis is currently tracking around 50 office searches of various sizes along the Thames Valley and talking to over 100 occupiers with approaching lease expiries in the area.