The Next Big Thing ?

Recent reports from CBRE and Lambert Smith Hampton have highlighted bounceback last year in the volume of office deals in the Thames Valley (broadly West London along the M4 motorway to Swindon, plus parts of the M3 to Basingstoke and west Surrey). The office deals increase saw volume of office floorspace let grow by nearly 60% in 2013 to nearly 2.6m sq ft, compared to 1.6m sq ft in 2012. Agents also report around 3m sq ft of active unfulfilled office demand in the region.

Over the past 12 months, Metropolis has reported on more than 150 medium and large office deals in the Thames Valley, totaling around 2m sq ft. Some of the bigger deals just announced include lettings to BMW, Rackspace, Dunnhumby, Nexen, Tesco and PWC. The database currently details over 100 current office requirements, with a wide variety of companies searching for over 2m sq ft in the Thames Valley; including space under  offer to companies such as GE Capital, Weightwatchers and Avnet.

In terms of area, the most popular towns are:

Reading
West London
Slough
Bracknell
Basingstoke

Followed by Guildford, Woking, Maidenhead, Uxbridge and Staines. All locations provide ready access to Heathrow. In general, technology companies are drawn to Reading and Bracknell, engineering firms show a preference for west London, with conglomerates preferring Surrey.

Thames

 

Analysis of the reasons for relocation, suggests that the importance of the lease expiry is falling from around 70% of office moves two years ago, to less than half now. During the same period there has been a rise in the importance of corporate expansion and the establishment of new operations by overseas companies, to give a broader base to relocation triggers

Looking ahead, there is another bulge of office lease expiries approaching between 2015 and 2017, which will cause decisions to be made over the next two years. In addition, the resurgence of the technology sector worldwide has seen a wave of, particularly US and far eastern corporations, establishing European operations with R&D, engineering  healthcare, software and robotics at the forefront.

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London’s latest movers

London office take-up in January 2014 paused for breath after the deals frenzy of late 2013. Just over 600,000 sq ft was let in 33 deals over 5,000 sq ft, compared to a monthly average of over 1m sq ft in 2013.

There were still some large deals as law firm Macfarlanes inked-in its much-anticipated pre-let of 48,000 sq ft at 98 Fetter Lane and SEI Investments pre-let of 62,000 sq ft of offices at ‘Alphabeta’ Finsbury Square, EC2.

In terms of take-up by sector, the TMT sectors lost their top slot to the recovering financial sector this month, followed closely by professional services.

Grade A (recently completed or refurbished space) accounted for 345,000 sq ft of lettings, or over 50% of the month’s deals, illustrating that the construction surge of the last two years is now translating to some high value office relocations. Some 600  London based companies are expected to make relocation decisions in 2014. A full list is available on Metropolis.

Office Boom in Leeds

A recent office market report on Leeds by Lambert Smith Hampton highlighted a surge of letting activity towards the end of 2013. Office take-up for the year reached 250,000 sq ft for the quarter and the total of office deals for 2013 reached nearly 1.3m sq ft.

Despite a number of recent high profile transactions in 2013, most of which were tipped in advance by Metropolis, including Leeds City Council pre-letting 50,000 sq ft, Lowell Group taking 80,000 sq ft, HSBC (60,000 sq ft), Squire Sanders (50,000 sq ft), NHS Leadership Academy (22,000 sq ft) and KPMG taking 28,000 sq ft at Broad Gate, some 60% of deals were for lettings of less than 5,000 sq ft.

The Metropolis database reveals 40 outstanding office requirements in Leeds including Sky and PWC both looking for 60,000 sq ft each. In total, the forty firms are currently searching for over 500,000 sq ft of office space in the city, with another 30 firms due to make decisions ahead of lease expiries in 2014 and 2015.

Leedspie

The availability of grade A office space, newly constructed or refurbished, has fallen to a five year low at 6.6%. Total office availability in Leeds is 10%. agents are forecasting top office rents of £26 psf in 2014 with £30 psf in 2015.

Recent development news includes Town Centre Securities gaining consent for the next 375,000 sq ft phase of its Whitehall Riverside scheme; MEPC’s 35,000 sq ft 10 Wellington Place scheme was recently topped out and a number of medium/large refurbishments such as Minerva and 15 Park Row are planned or underway.

Top 10 London Business Sectors in 2013

Banking & Finance leads the way

Banking and finance leads dominate the London business sector top ten for the fifth year running. The largest office requirements emerging from this sector are focused on the London EC2 postcode area.

Top 10 London Business Sectors

 

 

 

Similar to the UK picture, Technology, Media and Telecoms (TMT)  sectors make up a sizable portion of the top ten in London (33.5%). The largest relocation and refurbishment projects in this sector are focused on London N1 and SE1.

Law and Insurance sector leads saw an increase on 2012 numbers. Unsurprisingly law sector relocation activity centers on London EC4 postcodes, although there was also significant demand for new space in London EC2. Insurance sector office demand centered on London EC3, with close to 700,000 sq ft of space required in this postcode last year.

London office deals reached 12.2m sq ft in 2013, up 37% on 2012’s result. According to our research, over 450 requirements for new space in London were active in the last six months and over 1,300 occupier lease expiries are due in the next two years. We expect to see office demand in London grow further this year, buoyed by improving economic conditions.  There is currently close to 7m sq ft of office space under construction in central London expected to be delivered before the end of 2014.

 

Toptenchart