Central London Lettings – May 2017

Central London office lettings in May 2017 recorded just over 600,000 sq ft of deals from 40 mid-large size transactions (5,000 sq ft+) during the month.

The May figure represents a fall on the 800,000 sq ft sq ft of lettings in April, but the number of deals remains close to recent the monthly average.

May was characterised by six office deals over 20,000 sq ft, which included Hearst Publishing’s 71,000 sq ft deal at the LSQ Building in Leicester Square, WC2: WeWork took 70,000 sq ft at 1 Mark Square in London, EC2; Man Group taking 41,000 sq ft at 90 Upper Thames Street, London, EC4 and Petrochina taking 35,000 sq ft at the Adelphi Building in WC2.

Media topped the table of lettings by sector, underpinned by the Hearst Group deal, this was followed by business services bouyed by the serviced office sector and financial services with large deals involving Man Group and Hambro. Retail also performed well, helped by the lettings to Crabtree and Deliveroo. Office deals ‘under offer’ in central London rose to 3.6m sq ft and volumes are rising in nearly all sub-markets.

By area, the City accounted for 50pc of the office floorspace let in May at 300,000 sq ft – similar to the April level. The West End saw 90,000 sq ft of take-up. Midtown contributed 167,000 sq ft of lettings. Current London office demand is calculated to be around 3.2m sq ft in the City and 3m sq ft in the West End.

The volume of grade A (newly built or refurbished office space) let during the month reached 150,000 sq ft (25% of the monthly total), as transactions for new space paused from the recent strong showing.

Cityoffices and Metropolis are shortly to release its twice yearly Skyline report on the London office construction market. The summer report features details of the 100 schemes under construction and the trends for the next wave of schemes. Details on Cityoffices from Andy King at andy@metroinfo.co.uk

Thames Valley gives mixed signals

A new report from Lambert Smith Hampton (LSH) on the Thames Valley office market reveals a mixture of trends.  LSH report 126 enquiries (over 5,000 sq ft) in Q1 2017, an increase of 31% compared with the 96 received in the previous quarter, however these are mainly made up of smaller enquiries and LSH say that requirements for units of over 30,000 sq ft are running well below the long term average.

Take-up in Q1 2017 was 425,352 sq ft, a fall of 3 % from the 439,331 sq ft transacted in the previous quarter and 18.6% below Q1 2016’s total of 522,770 sq ft. The total is below the five-year average take-up of 482,169 sq ft and given the drop in large enquiries, take-up may suffer in upcoming quarters. Large deals included: MediaWorks, White City – 70,000 sq ft acquired by Net-a-Porter and Tor, Maidenhead – 40,000 sq ft letting to Rank Group.  Moves underway include Body Shop, Maersk, Macquarie Bank and EDF Energy.

The active sectors in Q1 2017 were professional (31%), technology, media and communications (25%) and pharmaceuticals (14%).  LSH say that 74% of all office take up in Q1 2017 was centred on just five of the 14 centres – Blackwater Valley, Bracknell, Maidenhead, Oxford and Reading. Reading continues to attract some big names and it’s key Business Parks are home to some of the world’s largest high-tech firms including Microsoft, Oracle, Cisco, Symantec, Logica CMG, Huawei, Veritas and more recently, major corporates such as Bayer and Thales.
Metropolis has published 260 stories about the relocation plans of 260 Thames Valley and South East companies in the last three months; including 75 companies searching for office space. In addition, it has reported on the plans of a further 60 companies that are approaching lease decisions.
The outlook for the Thames Valley seems to be for a slightly muted summer 2017, but with the recent rating revaluation and the nearing of the completion of the Elizabeth line, the near-term will see more occupiers relocating further out of Central London along the Thames Valley from early 2018.

Metropolis Movers May Round Up

Metropolis ran 641 ‘movers’ in the month of May 2017. If all moves were added together the total would exceed 20 million sq ft of office searches and transactions, researched by Metropolis’ unique market led intelligence team. London was the largest region with 296 leads during month, but there were also strong showings from the South East (69), North West (57) and Yorkshire(54). Financial services and media were the two largest business sectors planning relocations or agreeing moves.

The business leads covered the whole UK and provided details of the size of the office occupier, its 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 amongst the 600 leads included leads on Barclays, British Airways, AMEX and HMRC.

The May 2017 leads included 212 ‘identified requirements‘. Which means that the company confirmed to researchers that it has current or future plans to search for alternative office space. Of these 212 searches, 112 were new office searches, not previously notified.

The most recent research also included 173 ‘potential movers’ which were mainly longer-term leads on occupiers which are considering a relocation, but have yet to make a final decision on whether to search.

Most of the remaining stories covered companies that have 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 mid 2020.

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

—————————————————————————————————————————————————————————-

Cityoffices.net, the sister property leads service to Metropolis, saw a further 30 stories posted in May, covering new development opportunities planning applications, consents, construction starts and development teams in London and major cities. The database now covers over 200 office schemes in the pipeline for construction starts in 2017-2020.

For more information on Cityoffices, email Andy at andy@metroinfo.co.uk

Birmingham Upswing

A recent report by specialist Birmingham consultant KWB, reveals that the Birmingham city centre office market recovered in the first quarter of 2017 back to normal Q1 levels.

Office space transactions in the first quarter of 2017 totalling 139,000 sq ft – more than 30,000 sq ft over total transactions in each of the third and final quarters of 2016.  The largest deal of the quarter was by Arcadis’ signing for 22,953 sq ft at Cornerblock which is currently being refurbished, followed by iHub’s 18,378 sq ft new base in Colmore Gate. Recruitment specialist SThree Group was also the first tenant to sign 10,035 sq ft at the newly refurbished 10 Temple Street, on the 4th and 5th floors on a 10-year lease.

KWB say that the first quarter of 2017 was very much on a par with that of 2015. Looking ahead, KWB say that the rest of 2017 looks set fair, with the highest level of office development underway in Birmingham city centre for 15 years (1.4 million sq ft), a good supply of top quality Grade ‘A’ space is coming on stream and should trigger some significant office lettings in the coming months. Schemes include 55 Colmore Row
(160,000 sq ft), Corner Block (112,000 sq ft) and the Lewis Building (110,000 sq ft). The much reported HMRC requirement, which has shortlisted Three Snowhill, Arena Central and Post & Mail building, will see a letting of 200,000-300,000 sq ft and KWB also expect the HS2 halo effect to strengthen the Birmingham city centre office market.

Metropolis is currently tracking over 30 medium and large office requirements in Birmingham. Looking ahead, HS2 will have a major pull in 2017. The city has already seen Laing O’Rourke take 11,000 sq ft at 1 Victoria Square in 2016 and engineering firms and consultants are likely  to be a big sector going for office moves this year. In addition, there are nearly 40 tenants which are approaching decisions on lease or office consolidation plans over the next eighteen months.