Rise of the Media Sector

Metropolis has been undertaking research into the rise in office demand from the media sector in London.

Analysis of office lettings over the past two years shows that media and IT sectors have done much to drive the resurgence of office demand, alongside latterly financial, professional and business services.

The Metropolis research estimates there are currently 80 medium/large office requirements by media firms (advertising, marketing, public relations and broadcasting) in central London, including Sony, ITV and AKQA. Current demand totals 2m sq ft of office lettings over 2015 and 2016 if all current searches come to fruition.

Nearly 1.2m sq ft of central London office space was let to media firms in 2014 including: Havas taking 183,000 sq ft at 3 Pancras Square, Kings Cross; Omnicom’s 168,000 sq ft letting at Bankside 2 Southwark Street; and Euromoney taking 48,000 sq ft at 8 Bouverie Street, EC4.

There is a moderate supply squeeze in supply of new London office space in 2015, with a number of large developments due to complete in 2016. Consequently, finished developments are coming under closer scrutiny and a number of media companies are under offer on recently completed space.

In addition there are a large number of smaller media firms currently based in buildings set for demolition in the next two years. Discussions with Metropolis research suggest a large number of decisions are due to be made in summer 2015.

Looking ahead, Metropolis forecasts that with the combination of lease expiries, expansions, mergers and new market entrants; media sector office moves could reach an average of nearly 1m sq ft per annum in central London over the next few years.

Law firms intensify demand

A recent report by property consultant CBRE underlines recent Metropolis research on the law sector in London.

The report highlights law firms efforts to use their space more efficiently as well as using lease events to rebuild IT networks and change working methods. The report also estimates there are currently 24 medium/large office requirements by law firms in central London (Metropolis is currently tracking 28 searches over 10,000 sq ft in London), including DLA Piper, Withers and Ashurst.

Nearly 800,000 sq ft of central London office space was let to law firms in 2014 (a similar level to 2013) including: Mishcon De Reya taking 116,000 sq ft at Africa House, Kingsway; HowardKennedyFsi’s 54,600 sq ft letting at 1 London Bridge; Ropes & Gray’s 45,000 sq ft pre-let at One New Ludgate; DWF’s 43,000 sq ft deal at 20 Fenchurch Street. In addition, Boodle Hatfield took 23,000 sq ft at 240 Blackfriars, and Radcliffe’s le Brasseur agreed a deal to take 29,000 sq ft at 85 Fleet Street.

In addition, a wave of law mergers has led to a number of firms bringing two previously separate operations together under one roof. There are currently over a dozen mergers at various stages and some recent examples include Locke Lord and fellow US law firm Edwards Wildman; Morgan Lewis and Bingham McCutcheon, as well as Charles Russell and Speechly Bircham.

Looking ahead, a number of firms are saying they plan to re-gear leases at impending renewal including Simpson Thatcher & Bartlett, Dechert, Watson Farley & Williams, and Kirkland & Ellis. There has been a gradual trend to dispose of surplus space in recent years. However, there is nearly 5m sq ft of lease expiries and break options, amongst law firms, approaching in the next five years, so activity looks likely to be brisk and deliberations often start early. CBRE’s survey work indicates that discussions may begin four or five years ahead of any lease event, with the broadest possible consultation among the firm’s partners and lawyers.

Metropolis forecasts that with the combination of lease expiries, expansions, mergers and new market entrants; law sector office moves could reach an average of nearly 1m sq ft per annum in central London over the next few years.

Newcastle goes out of town

Office take-up in Newcastle reached 772,000 sq ft in 2014 according to a recent report by consultant BNP Paribas. The figure was 14% above the 5-year average, but 8% down on the 2013 total.

Much of the activity was in the out of town business parks with 546,000 sq ft of transactions outside the city centre according to the property group. For example Utiltywise took 77,000 sq ft at the Cobalt 22 Business Park, while Siemens also took 39,000 sq ft at Cobalt and Cofely took 26,000 sq ft at Quorum.

In town the largest deals were University of Newcastle taking 34,000 sq ft at 89 Sandyford Road and Teleperformance taking 28,300 sq ft at Baltic Place.

Stephenson Quarter’s 34,000 sq ft ‘Rocket’ scheme is the only scheme under construction.

Metropolis is currently tracking around 20 office requirements and forthcoming lease expiries in Newcastle which total around 200,000 sq ft in both city centre and business parks.

Birmingham Boost

A recent report on the Birmingham office market from property adviser BNP Paribas revealed that office take-up in 2014 reached 710,000 sq ft, in the best year for deals since 2008.

Major deals included HSBC Private Bank taking 37,000 sq ft at 120 Edmund Street, Vodafone taking 23,000 sq ft at Colmore Plaza and DAC Beachcroft lease re-gearing at 9 Brindleyplace for 32,261 sq ft. However the stand out deal was HS2 taking 98,000 sq ft of new offices at Two Snowhill for its HQ.

There is very little office space under under construction with the first scheme likely to complete in the city being Brockton Capital refurbishing 50,000 sq ft at the MailBox for late 2015. However, there are a number of outline planning consents in the city centre which could attract occupier demand in the medium-term. rents for the best space are expected to reach £30 psf.

Metropolis has around 400,000 sq ft of office demand listed in Birmingham for 2015, together with a considerable number of lease expiries where tenants are currently making up their minds.  PWC, Deloitte and Browne Jacobson are all taking or finalising deals on space in Birmingham.

Good year for Sheffield

A recent report by property consultant Knight Frank has revealed office take-up of 270,000 sq ft in Sheffield in 2014, compared to 235,000 sq ft in 2013.

The report highlights recent deals such as health technology company Servelec taking 20,700 sq ft at The Straddle building, Westfield Health taking 40,000 sq ft at Milton House and the establishment of a European HQ and contact centre for health assessments by Instant offices into 11,000 sq ft at Northbank.

In addition, it features PwC’s relocation into 7,000 sq ft at No. 1 St Paul’s Place; XLN Communications’ move into 14,500 sq ft at Northbank and Places for People into 7,000 sq ft on the top floor of Saville House.

Metropolis reported on 25 Sheffield moves in 2014 and is tracking 12 companies looking for office space in the city and Rotherham in 2015. Many of the deals involve offices below 5,000 sq ft. Telecom, recruitment, medical and charity sectors are currently the most active. Local agents estimate that there is currently demand for about 225,000 sq ft of offices in the city.

The construction of the St Paul’s scheme remains the only major pipeline development in Sheffield due to complete in spring 2015 which will add 73,600 sq ft of grade A office stock to the City’s supply and is likely to attract some high profile moves.

Metropolis Office Requirements – Q3 2014

9.5m sq ft of demand

Our team here at Metropolis researched over 370 UK company office requirements in Q3 2014, representing 9.5m sq ft of office demand.

6m sq ft of this demand was for space in Greater London and 4.9m sq ft was demand for space in central London.

Demand for City of London space continued to be strong during Q3, with 2.4m sq ft required in over 60 planned relocations. Three of the top five largest requirements in the City were searches by technology and media companies. EC2 demand made up 37.5% of the total space required.

1.4m sq ft of demand was identified in the West End of London, split equally between requirements for space in London SW1 and W1. Again three of the top five largest requirements were searches by technology and media companies, with two significant searches by financial service sector companies identified.

Mid Town office demand was largely focused on London WC2, with 100,000 sq ft of the 300,000 sq ft required in this postcode attributed to media sector requirements.

Just over 0.6m sq ft of demand was researched in London’s Southbank, 200,000 sq ft of which was triggered by an energy company’s requirement for additional space in the area.









Similar to H1 results, the Banking & Finance sector is leading the demand for new UK offices, with 1.4m sq ft of requirements in the UK, just over 0.4m sq ft of which is sought in the City of London.

Requirements from media sector companies represented just over 1m sq ft of demand, a 300,000 sq ft requirement in London W1 significantly boosting this figure. Technology & Telecom sector requirements came a close third with 0.9m sq ft of demand. The law sector accounted for 0.8m sq ft of demand and the insurance sector 0.5m sq ft.









Simon Sluszny October 2014

Copyright Metropolis Property Research Ltd

Manchester – Some Years Are Bigger Than Others

A recent report by Savills on the Manchester office market highlighted an increase in office take-up in Q1 2014. Office space transacted in Manchester rose from 215,000 sq ft in the last 3 months of 2013 to 317,000 sq ft in the first quarter of 2014 in 69 deals. Metropolis looks at recent deals and future forecasts.


Barclays took 80,000 sq ft at Carlyle’s 4 Piccadilly Place scheme and Trader Media took 60,000 sq ft at Ask Development’s No1 First Street. Costain, the construction group, identified new regional office space of 3,437 sq m (37,000 sq ft) to relocate to at Goodman’s 1500 Aviator Way on Manchester Business Park. While Emirates Airways took 2,323 sq m (25,000 sq ft) at Goodman’s Building 1000, also on Manchester Business Park.

Despite the large deals it is the smaller, often sub-5,000 sq ft, moves in Manchester, which make up the majority of the market activity. Local agents put this down to a two tier office market, which includes a large amount of second hand available office stock, whereas newly built or refurbished grade a stock is in short supply.

The Manchester office market is split by local agents into five areas:

  • Core
  • Spinningfields
  • Piccadilly
  • NOMA/Victoria
  • St Peters Square

Manchester’s national and international profile has enabled it to register around 1m sq ft of take-up every year. Local agents believe that there is close to 800,000 sq ft of requirements in the market in Manchester. Metropolis is currently tracking over 40 Manchester searches by local and national companies including PWC, Ticketmaster and Age Concern. If the current pace of lettings is maintained the office take-up total for 2014 could again top 1 million sq ft.

Pre-lets growing

Last year we noted the pick-up in the number of companies pre-letting new or refurbished office space prior to completion. In the last 12 months the trend has picked up pace, with some 23 pre-lets announced in 2013 and a further 7 announced in the first three months of 2014. Recent examples include ING Bank at 8-10 Moorgate, EC2; Google at 6 Pancras Square, N1 and Estee Lauder at Fitzroy Place, W1.

Agents are reporting, backed by Metropolis monitoring of current requirements, is that space under offer in central London, suggests that a large number of pre-let deals will be completed in Q2 2014.

There is a trend for office occupiers to move relatively long distances across central London to pre-let the best quality space. High profile examples include Capita moving from the West End to 104,000 sq ft at 10 Aldermanbury in EC2; Hachette moving to 135,000 sq ft in EC4 from Euston; Ramboll moving to 30,000 sq ft at 240 Blackfriars Road in SE1; EY and Shell moving from Southbank to Docklands.

These figures taken from the Metropolis database illustrate the pre-let rise:


Signs for the remainder of 2014 look encouraging, with some 4m sq ft under offer to companies such as Havas and Mizuho on various schemes currently under construction in central London. In addition, there are more than 500 lease expiries approaching on over 6m sq ft of offices in central London this year. The only question is will there be enough space to move into?

Aberdeen tipped for growth

A recent survey by the Bank of Scotland has predicted that 39,000 new jobs are expected to be created in the UK oil and gas industry in the next two years,.

The survey predicted that the “largest share” of the extra positions would be based in Scotland.

The survey of 100 companies is the bank’s third annual report on the oil and gas sector, with UK firms questioned about their future prospects for 2014 and 2015.

The survey also commented: “With most of the UK’s oil and gas firms clustered in Aberdeen and the north-east, Scotland should reap the largest share of these new jobs, however other parts of the UK will also benefit from expansion plans.”

Metropolis is currently tracking over 20 firms looking for office space in Aberdeen, including a number approaching lease expiries in 2014 and 2015. Examples include Amec and Premier Oil. Aberdeen has an office vacancy rate of only 3.5% making some searches protracted.

The largest mover of 2013 was EnQuest’s pre-purchase of ‘The Grande’ from Drum Property for a new HQ building of 120,000 sq ft. There are five large speculative office schemes in the pipeline.

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:

West London

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.



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.