London Office Market Analysis

February 1, 2018 Leave a comment

Estates Gazette has just published in analysis of the London office market in 2017. The main conclusions include:

 

  • Total central London office take up was 12.6m sq ft (all deals) which was up around 2m sq ft on the 2016 total in a relatively strong year and just above the five year average;

 

  • The City core saw just under 3.6m sq ft of deals in 2017, together with 1.8m sq ft in the City fringe. Both figures are down on previous years;

 

  • Lettings in the Midtown, West End and Southbank areas were strongly up by over 40% last year;

 

  • Lettings of Grade A space were up strongly at 52% of all lettings in 2017, compared to 42% in 2016;

 

  • Overall, TMT was the most active sector in 2017 as a whole, accounting for more than 27% of all lettings. The five biggest deals in the quarter were from the TMT, Central and Local Government, Property, and Financial sectors. A proportion of small and medium sized occupiers are being absorbed by serviced office space;

 

  • Some 3.7m sq ft of new office space was started in 2017, but this compares with an average of over 5m sq ft of starts in 2015 and 2016. This means there are lots of speculative completions coming through, which in turn in driving higher take-up;

 

  • Around 8.3m sq ft of new London office completions are planned for 2018 (a ten year high), with over 6.3m sq ft of completions already planned for 2019;

 

  • Overall London office availability has risen from 4.3% in 2015 to 7.4% in late 2017, driven by a rise in secondhand space that now stands at 12.4m sq ft;

 

  • As a result rents overall are edging down, which could encourage more occupiers to relocate;

 

  • 2018 take-up in central London is likely to be driven by new build deals;

 

Metropolis forecasts that the rising volume and proportion of new build letting transactions will sustain the fit-out and office equipment supply markets in 2018-19.

Cityoffices.net forecasts a strong pipeline of new schemes (there are over 200 in the pipeline of 20,000 sq ft or more) seeing construction starts in 2018.

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4000 office moves for 2018-19

January 11, 2018 Leave a comment

Metropolis has broken new records after 7,200 office business leads were published in 2017. If all the office space contained within those leads were added together the total would top 200 million sq ft.

Covering office deals agreed, companies searching for space, those with potential requirements and a small number of key speculative schemes, the 7,200 leads covered the whole UK from the tip of Cornwall to the north of Scotland. Office sizes ranged from 1,500 sq ft for 10 staff to Google’s new 800,000 sq ft London HQ.

Key points:

  • 2,700 company office moves confirmed to have completed in 2017;

 

  • 3,200 office moves are planned for 2018 and 890 office moves already planned in 2019 or later;

 

  • 3,000 companies, including 1,300 with ‘identified requirements’ expect to be making property decisions in 2018 and 2019;

 

IT and media services is the largest sector (800 leads) followed by financial services (600 leads) and professional, including large numbers of accountants and law firms (450 leads). Although the leads are spread over all UK regions, the size of the London office market, means that over 40% of the leads feature relocations, both scheduled and planned in central London. All leads include contact names, telephone numbers and 75% have email addresses, many of which are specific to the decision maker.

Metropolis remains the largest specialist provider of market intelligence led, office market business leads.

Recent research by Metropolis concluded that a conservative estimate of ‘live’ business opportunities on the database in recent months exceeded £1bn of business.

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

 

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Metropolis Christmas Quiz

December 19, 2017 Leave a comment

Just a bit of fun – answers later in the week

 

1. What was the biggest letting in London in 2017?

a) Deutsche Bank, b) Dentsu Aegis, c) Apple

 

2. How many NEW office searches/requirements have Metropolis published in 2017?

a) 1300, b) 1400, c) 1500

 

3) How much office space is under construction in central London according to the winter 2017 Metropolis Skyline report?

a) 14.6m sq ft, b) 13.6m sq ft, c) 12.6m sq ft

 

4) What % of Metropolis leads have an email address attached?
a) 75%, b) 70%, c) 65%

 

5) Vedanta is paying a record West End rent in Berkeley Square, Mayfair W1 of

a) £125 psf, b) £130 psf c) £135 psf

 

6) How many occupiers have Metropolis reported to be ‘under offer’ on office space in 2017?

a) 85, b) 90, c) 95

 

7) The largest office letting in Manchester in 2017 was ?

a) Kelloggs, b) WeWork c) Clyde & Co

 

8) How many pre-lets has Metropolis reported on in 2017?
a) 160, b) 170, c) 180

 

9) Which contractor topped the table of fit-out contractors in the 2017 Metropolis Fit-out report?

a) Overbury b) Como c) ISG

 

10) Metropolis has reported on London office lettings from January to November 2017 of

a) 9m sq ft, b) 10m sq ft, c) 11m sq ft

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Thames Valley Autumn 2017

November 10, 2017 Leave a comment

Recent research suggests that office take-up in the Thames Valley office market fell slightly in Q3 2017 to around 300,000 sq ft. of deals between July and late September. However, further pending deals amounting to over 250,000 sq ft of office space are understood to be under offer. Total take-up to the end of Q3 in 2017 is 1.25m sq ft.

The most active sectors were professional services at 20% and TMT (technology, media and telecommunications) at 19%, followed by pharmaceutical and life sciences sector, with Slough and Uxbridge as the most active towns. US-owned occupiers have around a 40% market share.

In Q3 2017, there were only five deals above 20,000 sq ft, down from nine large lettings in Q2. The largest single letting this quarter was WeWork taking 53,000 sq ft at 12 Hammersmith Grove. McAfee agreed a 19,500 sq ft move from the Bath Road to Slough town centre at the Urban Building. Fiserv signed to take 27,000 sq ft at the Porter Building in Slough, moving from Stockley Park. Some occupiers prefer to take existing space, with recent examples including: McLaren taking of 20,000 sq ft from SAB Miller in Woking and Birds Eye’s move to 40,000 sq ft of space sub-let from BP at Bedfont Lakes.

Occupier requirements have recently been driven by lease expiries, but there is emerging evidence of expansion led demand in the last two quarters.  The majority of current demand is in the sub 20,000 sq ft size band. There has been an increase in occupiers below 10,000 sq ft looking for small and flexible space.

Metropolis has confirmed nearly 150 medium/large office requirements in the Thames Valley since the beginning of 2017. Among some of the larger ‘live’ searches from at least 600,000 sq ft of new requirements in the area, include searches by: Novartis, JDA International and FCA Group. Metropolis is also tracking 140 Thames Valley companies with upcoming lease expiries, which could move in the next two years.

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Opportunities in Serviced Offices

October 13, 2017 Leave a comment

Colliers International has published a new report on the serviced or flexible workspace sector. Colliers outline how the workplace solutions providers have been hoovering up office space in London at a faster rate than any other sector apart from tech and media.

Flexible office providers have accounted for 18% of take-up across London during 2017 date. Central London is now home to over 7.8 million sq ft of flexible workspace from 4.5 million sq ft in 2009. This is a rise of 73% in eight years, although flexible workspace space currently only represents 4% of total London office stock.

2017 is set to deliver up to 15,000 desks by year end. Serviced office lettings appeared to have peaked at 1.4 million sq ft in 2015, however, 2017 is set to see that figure eclipsed with 1.2 million already let and a further 750,000 sq ft under offer.

WeWork has taken over 1.25 million sq ft of office space within the past 12 months. Blackstone and British Land have both begun in-house flexibile solution without leasing space to major providers like WeWork or Regus.

Paddington and City fringe, have seen increasing vacancy rates below 5,000 sq ft, and Victoria and parts of Midtown have seen void periods double in 2017. The City core has held up, but also seen activity from providers such as WeWork, Prospect Business Centres, i2, Regus and LEO.

Metropolis has researched nearly 20 specific requirements for medium/large London serviced offices in recent months. These new searches come on top of 25 recent transactions for space. Opportunities exist for agents recruiting occupiers for the large new flexible work centres, for fit-out contractors refurbishing usually previously vacant space, for furniture providers and removal firms handling the myriad moves to the new buildings.

Colliers say the need for short leases and flexible space, particularly since the Brexit vote, is driving demand for increasing volumes of flexible workspace space. Although, flexible workspace only represents 4% of London office stock, it looks set to become an important slice of the market, not just in London, but increasingly in regional cities too.

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Future Office Demand in Cambridge

September 22, 2017 Leave a comment

Savills has just published a report on the Cambridge market. It reveals that 262,000 sq ft of office and laboratory space was let in the first half of 2017. This includes major deals to Amazon, Heptares and Astex Pharmaceuticals.

Metropolis has recently reported on 30 major planned relocations in Cambridge, including PWC’s pre-let at Station Square, CIE’s huge relocation and a consolidation by Citrix. The Maurice Wilkes headquarters building has a further floor under offer.

In recent years, annual office and laboratory space take-up has reached 620,000 sq ft. Demand is being driven by inward investing and expanding global R&D businesses. With an additional 2,200 office- and laboratory-based jobs forecast over the next five years, some 300,000 sq ft of additional office space is required.

Cambridge’s ability to attract multinational office and lab occupiers in recent years has allowed it to compete with other global cities as a biosciences and pharmaceutical hub.

Recently, £40 million was invested in the cancer treatment firm Bicycle Therapeutics, at Babraham. Of the 10 largest biotech companies in Boston, USA, eight have a Cambridge UK presence.

Savills say that over the next three years, around two million sq ft of office and laboratory developments will be delivered in the Cambridge market. However, only 385,000 sq ft of this is speculative, with the majority lined up for local occupiers. The bulk of speculative space is scheduled to deliver during 2019.

Biomed Realty is developing 108,000 sq ft of speculative grow-on space at Babraham, set to complete during 2019, while more space is also planned at Granta Park. The Bradfield Centre, currently under construction in Cambridge Science Park, will provide 40,000 sq ft of space.

The outlook for the Cambridge office market appears to be continued expansion. Recent announcements and requirements tracked by Metropolis have included growth by the likes of AstraZeneca, Abcam, ARM, Open Cloud, Cambridge Epigenetix, Jellycat, Marshall Aerospace,  CyanConnode and Burall InfoSmart.

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Thames Valley gives mixed signals

June 16, 2017 Leave a comment

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.

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London Movers Uncovered

May 25, 2017 Leave a comment

Cushman & Wakefield has recently published its ‘Movers & Shakers’ report on London office movers in 2016. Metropolis sets the report’s findings in the context of the most recent 140 new, named, London office requirements researched and published on its database over the last three months in 2017.

C&W’s report looks at 249 transactions over 10,000 sq ft in 2016, which accounted for over 75% of all leasing volumes in Central London. These deals totalled 8.1m sq ft and included 160 deals for properties located in the City & East London and the remaining 89 in the West End or West End fringe.

Companies already located in London moved from a total 5.1 million sq ft, taking 8.1 million sq ft, which equated to a net take up of 3 million sq ft or 37% growth. This contrasts with 2015, when companies expanded by 3.2 million sq ft, but overall London take-up was 1 million sq ft higher.

Expansion was evident across all business sectors. The tech sector saw the greatest expansion in 2016, registering 875,000 sq ft of growth. While banking & financial services expanded by 675,000 sq ft. Retail, media, legal and professional also all had a solid year.

Tech companies increased their footprint three-fold in 2016. Apple’s pre-let of nearly 500,000 sq ft of space at Battersea Power Station was backed by deals to Palantir, Adobe, Deliveroo Facebook, Google and Amazon.

The average actual distance moved during 2016 was just over 1.1 miles, which is down on the distances seen in 2014 and 2015.

Aldgate and Whitechapel recorded positive migration, with the area seeing a large increase in in-movers, including 10 moving in. The refurbishment of the White Chapel building and redevelopment of Aldgate Tower were drivers. Elsewhere in the City fringe, the redevelopment of the White Collar Factory and the Bower have continued to attract companies.

Mayfair and St James’s has continually had more out-movers than in-movers, whilst Aldgate and Whitechapel and Canary Wharf and Docklands have consistently had more in-movers than out-movers on balance.

Cushman & Wakefield estimates that companies new to Central London in 2016 accounted for 4% of total transactions by number or 417,859 sq ft and included significant migration from companies such as Salesforce, Amazon and Tableau Software moving into the capital.

Moving onto 2017, 140 companies in central London have confirmed to Metropolis the launching of new office requirements over the last three months. These include 51 from the City, 6 from Docklands, 7 from Southbank, 40 from the West End core, 12 from midtown and remainder from fringe locations.

Again, new requirements saw finance and tech sectors leading the way with more than 20 new requirements each, followed by media, business services and representative bodies.

Some of the largest examples include Hyperion and Deutsche Bank in the City, Misys and American Express in the West End. If all new requirements are combined, then an extra 2.5 million sq ft of new London office requirements were added to the Metropolis database in the February to May 2017 period.

In the new batch of London requirements researched by Metropolis, 60% of the companies searching are looking for more space than currently occupied, suggesting that the net expansion of office space recorded by C&W in 2016 is likely to continue in 2017.

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The Magnificent Seven

April 27, 2017 Leave a comment

A recent report from Savills reveals that for a fourth consecutive year, UK regional city office take-up has surpassed the long term average of 9.1m sq ft. Total take-up in 2016 reached an impressive
9.6m sq ft, despite a year of political uncertainty.

The final quarter of regional office take-up in 2017 reached 2.4m sq ft, the strongest quarter since Q2 2015. Roughly the same level of occupational demand was recorded during the first half and second half
of the 2016, with no post referendum slowdown evident.

The most active of the seven major UK cities in 2016 were Bristol and Cardiff, which recorded take-up improvements of 42% and 10% on 2015’s levels respectively, with Cardiff achieving its highest level of take-up in 15 years. A key driver of occupational demand in these cities was the Government Property Unit (GPU) requirements for consolidating public sector bases into regional hubs. Savills expect the GPU to be the key contributor to acquisitions over 100,000 sq ft in 2017 in cities including Birmingham, Manchester, Leeds, Edinburgh and Belfast, during 2017.

The most active business sectors during 2016 were the insurance and financial services sector, accounting for 1.2 million sq ft (15%) of space taken, which marked a record year. Key deals include: Swinton
Insurance taking 165,000 sq ft at 101 Embankment, Manchester, whilst MotoNovo Finance took 72,000 sq ft at One Central Square, Cardiff.
The tech sector remained an important contributor to take-up during 2016 and accounted for 20% of the number of transactions. This sector has traditionally contributed to the smaller end of the market, but also included Co-op Digital acquiring 45,000 sq ft of accommodation in Manchester, while Micro-chip designer, Cirrus Logic’s 70,000 sq ft letting at Quartermile, Edinburgh marked the largest regional tech deal last year. Edinburgh witnessed the highest proportion of tech take-up of all the UK cities.

Metropolis ran 53 medium and large office requirements for Birmingham in 2016, totalling 1.4m sq ft; the totals for other cities were Bristol 66 requirements and 1.6m sq ft; Cardiff 35 requirements and 1.1m sq ft; Edinburgh 65 requirements and 1.5m sq ft; Glasgow 51 requirements and 1.4m sq ft; Leeds 74 requirements and 2m sq ft; Manchester 90 requirements and 2.5m sq ft.
A shortage of Grade A floorspace in city centres,  prompted occupiers to look out of town as total fringe/out of town take-up reaching 2.8 million sq ft, eclipsing the record level set during 2014. Occupiers were also attracted out of town offices due to availability of larger floorplate stock and cheaper rents, particularly in the Manchester and Glasgow markets. Glasgow was boosted by the University of the West of Scotland’s 225,000 sq ft pre-let of the Eco Campus.

Overall, 44% of the 3.6m sq ft of regional office space currently under construction across the UK regions has been pre-let. Examples include PwC’s part pre-let of One Chamberlain Square in Birmingham
There are 8 million sq ft of known lease expiries over the next five years, there also remains underlying demand for new space, with the likely strongest performers for 2017 predicted to be Leeds, Cardiff and Bristol. There is a shortage of Grade A space, particularly in Bristol and Manchester. Top regional rents remain low relative to Central London.

The Metropolis view is that demand is holding up well in regional cities with 130 new requirements added to the database for the seven largest cities outside London in Q1 2017.

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Metropolis Law Report Launch

November 4, 2016 Leave a comment

Metropolis is launching its Law Sector Office Activity in London and the UK 2017, today, for clients only.

The report covers Metropolis research on over 430 law firm deals, leases and requirements for London and UK office space researched over the last 12 months.

Key findings include:

Across the UK, there are currently 190,000 sq m (2.1m sq ft) of office requirements from 120 law firms;

There are requirements for over a million sq ft of alternative London office space by over 50 medium and large London law firms.

Outside London, law firm requirements reached 76 searches totalling 105,000 sq m (1.13m sq ft).

The report covers law firms with upcoming searches, those approaching lease expiries over the next two years and recently agreed deals, including a large number of named examples. The report also looks at factors triggering law firm moves and the outlook for the future, based on expansions, mergers and property costs.

See more at http://metropolisleads.uk/

For further details on becoming a Metropolis subscriber email Simon at simon@metroinfo.co.uk

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