Bristol Offices Bounceback

Office take-up in Bristol reached nearly 300,000 sq ft in the first half of 2014, including 180,000 sq ft of deals in Q2. This compares to only 500,000 sq ft let in the whole of 2013 and local agents are tipping 2014’s total could reach 700,000 sq ft. Recent large deals have included PricewaterhouseCoopers at Glass Wharf, HSBC at Redcliff Quay, Tribal Group at Kings Orchard, National Friendly at Queen Square and Mapfre Abraxas at a undisclosed address in Bristol.

Ovo Energy is on the verge of signing for 70,000 sq ft and there are also a number of other circulating requirements including AXA, EDF, Alcatel, TSB and KPMG. Metropolis is monitoring around 25 companies in Bristol that have medium or large searches either active or potential.

There is around 170,000 sq ft of new grade A offices due for completion by early 2015, including 2 Glass Wharf (92,000 sq ft), 66 Queen Square (59,000 sq ft) and Narrow Quay House (26,000 sq ft). There are also plans to revive the 400,000 sq ft Glassfields office scheme in 2015. However, there are already a number of firms positioning themselves with requirements of 20,000 sq ft upwards positioning themselves to take the space due to be completed in the next 9 months.

Secondhand space has proved popular, especially as Grade A space has been in short supply and office availability overall has fallen to a five year low, causing average office rents to rise 10% to nearly £20 psf.

The outlook is for more Bristol deals as the number of requirements chase a dwindling supply of top grade offices, while a considerable number of lease expiries are expected over 2015-16.

London Lettings – August 2014

Central London office lettings in August 2014 reached 807,000 sq ft in 43 medium or large deals, following the traditionally slower August deals month.

However the yearly total to date of 9.6m sq ft is comfortably above the same point in 2013. August deals were characterised by large lettings to Lloyds Bank, Havas and Zurich Insurance amongst others.

The financial, media and insurance sectors topped the table of lettings by sector. By area, the City accounted for more than half the deals. The West End saw a larger share of transactions than recent months.

The volume of grade A (newly built or refurbished office space) being let again topped 500,000 sq ft. This is from the smaller 800,000 sq ft August total transacted which was newly completed or refurbished.

There are now over 700 active London requirements on the Metropolis database and a further 2-3m sq ft of potential requirements in the pipeline.

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Tenants facing competition

A recent report by Jones Lang LaSalle highlights a small letting in Mayfair has just achieved £115 per sq ft.

JLL is predicting that City rents will hit £65 this year. Fellow property consultant Gerald Eve has revealed that large floor plates, exceeding 20,000 sq ft, are in particularly short supply. The current London office development pipeline suggests that no more than four of these will become available between 2015 and 2017.

At Canary Wharf, demand has not reached the peaks of the City or West End, but nonetheless DTZ says vacant space has halved to 860,000 sq ft over 15 months. In the first 8 months of 2014 over 150 office deals for grade A space in central London were completed. Some 4m sq ft has been taken off the availability lists according to Metropolis research.

In their increasingly desperate search for decent space at an affordable price, tenants are looking outside core office areas.

Amazon has chosen space on Holborn Viaduct. Google has gone to King’s Cross and Principal Place in Shoreditch. The Financial Conduct Authority has decided to go to Stratford.

Non-core area rents are hitting £50 per sq ft and previously unfashionable areas such as Southbank and North of Oxford Street are vacuuming up deals

Alan Carter, real estate researcher at Oriel Securities, said he had never seen an office letting market quite as buoyant.

Tenants are facing blows to the bottom line as rents continue to escalate.

Which helps explain why some investment bankers and law firms are scouring Birmingham and Manchester for a property deal that they can actually afford.

Metropolis finds movers a year early

Metropolis has analysed the 143 prime, grade A London office deals for new and refurbished office space in signed in the first seven months of 2014. It has then followed the trail of each ‘mover’ to see when its requirement became apparent and how early the original requirement was picked up by its researchers.

The average was reduced by a proportion of firms which made late decisions to expand, despite having no impending lease event. At the other end of the scale, some companies have been tracked through searches which have lasted up to four years

Looking at our prime central London requirements and lettings of high value Grade A space in 2014:

• 143 deals amounting to 4m sq ft so far in 2014

• Metropolis on average ran a story on each of the relocating companies over 11 months before deal was signed. Giving clients prior warning of requirement

• In some cases tracking company and property contacts 2 or 3 years (or in two cases 4 years) in advance of move

• Most of the requirements picked up from detailed research into future lease events

• Some 600 future London requirements remain on the Metropolis database

Some examples include:

The Doctors Laboratory was first identified as on the look-out for a 75,000 sq ft pre-let by Metropolis in October 2011. It eventually signed to take 80,000 sq ft at Stanhope’s 1 Mabledon Place (Halo Building), London, WC1 in July 2014.

Mishcon de Reya, the midtown law firm, was first reported by Metropolis to have a search underway for a new central London HQ in January 2011. After many intervening updates, it eventually signed to take the whole of Africa House in Kingsway, London, WC2 in July 2014.

Tibco Software first told Metropolis that it was looking to relocate its 6,000 sq ft City of London office in November 2011. It signed to take 12,000 sq ft at Salesforce (Heron) Tower in July 2014.

Angel Trains was identified in November 2010 as a company that would need to relocate in advance of a plan to redevelop its London HQ. In July 2014, Angel Trains told Metropolis that it has signed to take nearly 1,580 sq m (17,000 sq ft) of offices on the 5th floor of 123 Victoria Street, London, SW1, for a late 2014 move.

Euromoney first revealed that it was looking to bring together three fragmented office locations into one London HQ in February 2012. In June 2014, it signed for a new headquarters of 4,459 sq m (48,000 sq ft) at 8 Bouverie Street, and 1,672 sq m (18,000 sq ft) at 4 Bouverie Street, London, EC4.

Enyo Law LLP, the commercial law firm, has told Metropolis in October 2012 that it had started a search for 10,000 sq ft. In June 2014, Enyo told Metropolis that it had signed for 845 sq m (9,100 sq ft) of offices on the 6th floor of Blackfriars Court, Pilgrim Street, London, EC4.

In conclusion, the majority of high-value London office moves, which have taken place in 2014, were tipped on average a year in advance by Metropolis. In future, a further 600 companies are likely to choose new offices (both new and secondhand) over the next two years.