London Fit-out Market Growing

Recent research from Metropolis suggests that central London grade A lettings and thus prime fit-out opportunities, have grown by 10% over the first 9 months of 2015, compared to the Jan-Sep period in 2014.

Midway between the Metropolis Fit-out Report of Spring 2015 and the planned Metropolis Fit-out Report for Spring 2016, interim figures suggest the interiors market based on central London tenants signing for space in newly constructed or recently refurbished buildings, has grown by 10%, from 5.4m sq ft of top grade lettings in the first 9 months of 2014, to 6m sq ft for the first three quarters of 2015.

Some of the largest grade A deals agreed so far in 2015 have included: The Financial Conduct Authority at the International Quarter, Stratford; Deutsche Bank at 10 Upper Bank Street, E14; Ashurst at London Fruit & Wool Exchange, E1 and Facebook at 1 Rathbone Square, W1.

In terms of which firms are winning the most fit-out business, data is muddied by the reluctance of many contractors and architects to report appointments, but some notable contract wins have included:

  • ING Barings appointed Overbury for its new 120,000 sq ft HQ at 8-10 Moorgate, EC2;
  • Paragon Interiors appointed on SEI Investments new 58,000 sq ft base at Alphabeta building on Finsbury Square, EC2;
  • Brit Insurance appointed ISG on its 66,000 sq ft fit-out at Leadenhall Building, London, EC3;
  • Network Rail appointed Willmott Dixon Interiors for its 100,000 sq ft refurbishment of One Puddle Dock, Blackfriars, EC4;
  • Hewlett Packard appointed Overbury for its 68,000 sq ft interiors at 1 Aldermanbury Square, EC2;
  • Zurich Insurance appointed ISG n its 70,000 sq ft fit-out at 70 Mark Lane, EC3;
  • CHP Consulting appointed Maris for its 19,000 sq ft fit-out at Moor Place, EC2;
  • Euromoney using FSL Interiors at on its 48,000 sq ft at 8 Bouverie Street, EC4;

Penson, HLW, HOK, Gensler, Pringle Brandon Perkins+Wil and MCM are among the architects to be appointed on large London fit-outs this year.

Looking ahead, recent research by Cityoffices, showed that although in 2015 London office construction paused slightly to around 11m sq ft of projectswith main contractors currently on site, there is now a wave of a further 7m sq ft of office projects at demolition or site clearance stage, where a construction start in early 2016 is expected. In addition, Metropolis figures for companies with London office requirements currently top 11m sq ft.

 

 

 

 

Central London Office Deals – September 2015

Central London office lettings registered a small rise to 840,000 sq ft of transactions in September 2015, spread across 52 deals during the month.

September was characterised by 10 deals over 20,000 sq ft, including Deutsche Asset & Wealth Management taking 90,000 sq ft at the Zig Zag building, Victoria Street, SW1; Mediobanca at 62 Buckingham Gate; Universal Music at 4 Pancras Square, N1 and Seven Investment Management at 55 Bishopsgate, EC2.

Financial services topped the table of lettings by sector, helped by Deutsche and seven Investment Management deals office, followed by media boosted by Universal Music’s pre-let. Office deals under offer (including RBC in the City) fell slightly to 3.8m sq ft.

By area, the City accounted for a little under half the deals (21) but only 30pc of the floorspace let in the month as other areas saw a lettings boost. Current London office demand is calculated to be around 6m sq ft in the City and 3.7m sq ft in the West End. Availability fell to 9.6m sq ft, but a large number of new schemes are at demolition stage and soon to be marketed.

The volume of grade A (newly built or refurbished office space) let during the month reached 557,000 sq ft (66% of the total), as transactions for newly developed or refurbished space took a large part of the total.

Metropolis is about to publish a new report on upcoming London office schemes for autumn 2015.

London West End Autumn 2015 – A Preview

Significant Demand In The Pipeline

This Metropolis blog breaks new ground with an attempt to give clients an insight into the ‘work in progress’ on forthcoming office requirements in the London West End market. In the spirit of those TV autumn trailers, we set out below a flavour of some of the stories we hope to bring Metropolis clients over the next two months.

Some Background

Outstanding, unsatisfied, named office requirements in central London are now estimated by Metropolis to be over 10m sq ft, which is the highest figure since the recession. This can only be an approximate figure as ‘requirements’ cover all types of searches from urgent ones involving tenants in buildings where the lease expires ahead of demolition to half-hearted searches by occupiers who are 90% sure that they will renew the lease, but want to compare the market in order to put some pressure on the existing landlord.

Many of the larger requirements (over 20,000 sq ft) are in advance of lease expiries in 2017-19. However, smaller searches below 10,000 sq ft, are often launched less than 18 months before lease expiry. In many cases the occupier is only looking because it needs more space, has a lease end, or it is affected by redevelopment. The costs of relocation tend to limit the number of ‘sideways moves’ involving a company relocating from one building to another, whilst keeping its occupancy size the same.

Recent West End Activity

Office relocation  activity in London’s West End has been a little muted so far in 2015. Figures compiled by Metropolis show Central London take-up in the 8 months to August was 7.6m sq ft, of which only 2m sq ft was to office space in the West End. Some 140,000 sq ft has been pre-let, 450,000 sq ft is grade A newly completed space, with the remainder secondhand.

Some of the larger deals have included Marshall Wace Asset Management’s 43,000 sq ft pre-let of 131 Sloane Street in Knightsbridge; Richemont’s 38,000 sq ft deal at Walmer House on Regents Street and just last month King.com’s letting of 65,000 sq ft at the recently-completed Ampersand Building on Oxford Street. Facebook is also set to confirm its 217,000 sq ft pre-letting of the under construction Rathbone Square in London, W1, which will be the largest West End letting this year.

What’s Coming Up

We are currently researching a number of promising West End leads which look likely to result in 40 named requirements and potentially 1.6m sq ft of office deals.

The majority of office requirements are for a move in 2016 (29), with the remainder lining up moves for 2017 or 2018. Some 23 occupiers are citing expansion as the trigger for their move, while 16 have lease events and the remainder are consolidating fragmented buildings or downsizing.

In terms of the sector, as the graph below shows, it is the media sector which dominates, followed by IT/e-commerce and financial services, including hedge funds and asset managers. The business services sector also remains important with a steady stream of new requirements from serviced office operators.

 

WE Requirements

 

 

 

 

 

 

Around a quarter of companies are looking in the core areas of Mayfair and St James’s, with a further quarter searching in Victoria. A further 25% are searching Soho and north of Oxford Street up to Kings Cross and Euston with the remainder looking in fringe areas such as Camden or Hammersmith.

By size, around half of the 40 requirements are below 20,000 sq ft, with a third between 20,000 and 50,000 sq ft and the remaining five searches are over 100,000 sq ft.

In Conclusion

There is a healthy pipeline of new requirements being launched in London’s West End this autumn. As would be expected, media companies, hedge funds and asset managers are very active, but these have been joined by some of the large e-commerce and social network companies and business service providers to increase the competition for space. Metropolis is working to research the details of these requirements and will be publishing these online for clients shortly.

 

Copyright Metropolis Property Research Ltd 2015

Newcastle boost

A recent report from property consultant BNP Paribas highlighted a rise in office relocation activity in Newcastle, with office take-up of over 363,000 sq ft in the first half of 2015. This was a 19% increase on the first half of 2014.

Although 95,000 sq ft of offices was let in Newcastle city centre in the first 6 months of the year, it was the out of town market which saw the most activity with 270,000 sq ft of offices let.

Office deals included iParadigms 19,000 sq ft move to Wellbar Central and Performance Horizon taking 9,800 sq ft at the West One building. Gardiner & Theobald, Adecco and Office Angels all took smaller offices. Out of town, CHP took 17,000 sq ft at Quorum Business Park; Bede Gaming at Great Park, Hewlett Packard and DNV took a combined 21,000 sq ft at Cobalt Business Park.

During Q3, Accenture has signed for a further 50,000 sq ft at Cobalt Business Park and Greggs has agreed a deal to a new 25,000 sq ft HQ at Quorum Business Park.

Current medium/large requirements being tracked by Metropolis include a tech company, a housing association and public sector bodies.

Late 2015 will see the completion of 35,000 sq ft of grade a offices at the Rocket office scheme at Stephenson Quarter in the city centre.

Cityoffices – Offices Taking Off

The 15 year old website http://www.Cityoffices.net is the sister leads provider to the market leading Metropolis Property Research.

With the office construction sector booming in London and awakening in UK regional cities, there is a huge volume of tenders being sought and awarded as every role from architects, planners and engineers to service consultants, letting agents and acoustic consultants are being appointed on a daily basis.

Looking back over September 2015 this Cityoffices bulletin just looks at news of some of the schemes (there are 120 schemes at either construction or demolition stage in London, with over 200 planning consents in the pipeline) which have progressed in the last month and some of the schemes which developers are likely to progress in the next 2-3 years. The 25 London news stories and many regional updates in September, are backed up with full project details, including teams where appointed, on the database and included:

In London

  • Demolition started at a major mixed use site in Victoria, SW1;
  • a Southbank office block was put up for sale, with tenants vacating in mid-2016, Development team to be appointed;
  • a new planning application for a mid-size refurbishment close to the Bank of England;
  • a new start on a mixed-use scheme in Bloomsbury;
  • a historic island site demolition in Midtown to provide a new office scheme;
  • consent for a refurbishment of a large former publishers office in EC4;
  • a major Mayfair office development gets underway;
  • news of the latest major pre-lets on office schemes in central London

Outside London

  • Consent for major central Birmingham scheme;
  • Liverpool sees its largest Grade A letting of the year;
  • Manchester application to redevelop a former law firm’s offices;
  • application for a Bristol science research centre building;
  • contractor appointed to refurbish a Glasgow office scheme;
  • new application in Leeds to refurbish and extend a block due to be vacated in 2016;
  • phase 2 of a successful Newcastle scheme
  • major Edinburgh scheme is pre-let

These are just a sample of the many office projects that Cityoffices reports on each month and backed up with full histories and contact names and numbers where available. No other information provider can match a fraction of Cityoffices’ coverage.

If you would like to know more about annual Cityoffices subscriptions from only £750 email Andy King at andy@metroinfo.co.uk