London Movers Uncovered

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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Cardiff Demand

In a recent report by Cushman & Wakefield, local agents reveal that Cardiff office occupiers are pushing on with move plans and that no deals have fallen through since the Brexit vote. There is also a strong demand for new space with a number of large requirements active in the city centre.

Office take-up volumes in Cardiff reached 192,000 sq ft in the six months to July 2016 , a 31% increase on H1 2015. HMRC signed a five year lease for 55,000 sq ft across four floors at Brunel House; Cardiff School of Journalism took 2,730 sqm (30,000 sq ft) at No 2 Central Square, Cardiff University took 29,000 sq ft at Friary House and Opus Energy took 1,161 sq m (12,500 sq ft) of offices at 2 Capital Quarter as well as deals to RBS and Studio TRI. In August, MotoNovo Finance took a larger than expected 6,600 sq m (71,000 sq ft) on five floors at the recently completed One Central Square.

Metropolis is tracking around twenty medium or large size office requirements in Cardiff, including Geldards, PWC and Network Rail. In addition there are a further twenty medium/large companies about to make lease decisions in Cardiff.

Legal & General has announced it was closing its offices in Surrey and relocating its workforce between Cardiff and Hove

Grade A office space availability remains low in the city centre which is putting upward pressure on prime rents at £25 per sq ft. JR Smart has started construction of 75,000 sq ft of new offices at 3 Capital
Quarter following the success at 2 Capital Quarter. While buildings such as  2 Kingsway and Golate House are tipped for refurbishment.

From next year, the city will benefit significantly from the electrification of the Great Western Main Line, improving east-west links with London and Bristol.

London offices leading the economy?

Market updates by four London agents this week suggest the London office letting market is becoming one of the most positive indicators that the UK economy has started recovering.  Just-released data from Knight Frank, Cushman & Wakefield, CBRE and Jones Lang LaSalle points to a second consecutive quarter of above 3m sq ft of office lettings.

The reports use phrases such as “a new cycle” and “the tipping point of the market is close” as part of an upbeat assessment, which includes predictions of a further 1.2m sq ft of deals due to be signed in the next two months, leading to nearly 7m sq ft predicted to be transacted in the City alone, this year, together with a 5% increase in rents.

Metropolis letting figures for London back this up, with office take-up nearly 20% ahead of the same point in 2012 and an increase in the number of central London requirements for 2014 and 2015. However, this is slightly tempered by a shortage of deals in regional cities, which continues to subdue the overall office market activity for the whole UK.