London Office Market – January 2019

Central London office lettings in January 2019 reached just under 1m sq ft from 44 mid-large size office transactions (5,000 sq ft+) during the month. The January 2019 figure is in line with the current monthly London average of 1m sq ft.

January was characterised by 15 office deals over 20,000 sq ft, which were led by the WeWork’s 159,000 sq ft deal at Merchant Square, Paddington, W2, along with large deals to Alvarez & Marsal in London, EC2; Cinven’s large deal at 21 St James’s Square, SW1; plus Foraspace and ETC Venues at Southwark Bridge Road and 133 Houndsditch, EC3 respectively.

Business services topped the table of lettings by sector, compiled by Metropolis, underpinned by the WeWork deal and several other serviced office lettings. This was followed by financial services led by lettings to Cinven and Gartner. Insurance, professional and media were also well represented.

Office deals ‘under offer’ in central London fell slightly to 3.3m sq ft, and pending deal volumes are healthy in nearly all sub-markets, with a number of deals in solicitor’s hands.

By area, the City accounted for 42pc of the office floorspace let in January 2019 at 400,000 sq ft. The West End saw 355,000 sq ft of take-up. Midtown contributed 74,000 sq ft of lettings and Docklands 50,000 sq ft. Current London office demand is calculated to be around 3.7m sq ft in the City and 3.1m sq ft in the West End.

The volume of grade A (newly built or refurbished office space) let during the month, reached a healthy 420,000 sq ft sq ft (45% of the monthly total), as transactions for new space maintained the recent strong showing. Availability is dominated by secondhand space in all London markets.

Metropolis research is currently monitoring 625 ‘live’ London office requirements, with pending deals for space of up to 1.5m sq ft due to sign in the next few months.

Paul Ives Metropolis paul@metroinfo.co.uk

Advertisements

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.

graph1

 

 

 

 

 

 

 

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.

 

graph2

 

 

 

 

 

 

Simon Sluszny October 2014

Copyright Metropolis Property Research Ltd

UK Office Requirements H1 2014

bphoto1

 

 

 

 

Banking and Finance leads the way

The UK office market continues to show promising signs of recovery.  Office deals in London could exceed 13m sq ft by the end of this year and Metropolis H1 2014 research has identified over 300 companies actively searching for central London office space.

Over half of the 10m sq ft required in central London is fueled by the City, where 169 companies search for a total of 5.7m sq ft.  Notable City of London requirements include a 300,000 sq ft search by a UK investment and asset management firm and a 250,000 sq ft law firm search prompted by consolidation of two offices.

Demand for space in the West End, once again the most expensive office location in the world (CBRE Global Research), was 1.3m sq ft in the first six months of 2014, with 1.2m sq ft required in Mid Town. Two of the top three West End requirements by size originate from major advertising companies.

Law and media sector requirements dominate Mid Town demand, with over 200,000 sq ft required by law firms and 250,000 sq ft required by media agencies.

1.4m sq ft of demand was researched in Docklands and 0.4m sq ft of demand was researched in South Bank, where rents on new schemes have recently reached £50 psf.

Our UK research as a whole identified over 700 companies searching for a total of 20m sq ft, 16m sq ft in the South of the UK and 4m sq ft in Wales, Midlands, North and Scotland.

The Banking & Finance sector is leading the demand for new UK offices, with just over 3.6m sq ft of requirements in the UK, 2.6m sq ft of which is sought in the City of London. The Technology and Telecoms sector accounts for 2.1m sq ft of UK demand, Law 2m sq ft and Media 1.8m sq ft.

 

OD sq ft by sector

 

 

 

 

 

 

OD sq ft by London postcode

 

 

 

 

 

 

1m sq ft of office demand was identified in the North West, 0.6m sq ft of which was attributed to Manchester.  The Manchester office market is looking lively, with take-up reaching 800,000 sq ft in H1, making it the strongest regional performer.

Just under 1m sq ft of demand was identified in the Yorkshire and Humberside region, with 70% of searches focused on Leeds. Notable requirements in Leeds include a 70,000 sq ft law firm search and a 60,000 sq ft search by a major accountancy firm.

Just under 500,000 sq ft of demand was identified in both Birmingham and Edinburgh. Two of the largest requirements in Birmingham were law firm searches for about 30,000 sq ft and a major accountancy firm was also linked with a requirement for 50,000 sq ft.

In Edinburgh, the majority of office requirements were for less than 10,000 sq ft, although a 75,000 sq ft requirement from a computer games studio and a 40,000 sq ft law firm search were notable exceptions.

After an encouraging start to 2014 UK office demand looks set to comfortably outstrip its 2013 levels. In central London, notable office searches include requirements from Societe Generale, Wells Fargo and National Grid.

In Manchester, H1 office deals include lettings to Slater Gordon, Trader Media and Barclays Bank. Bristol and Edinburgh also saw a better than average six months, with a number of requirements, including Ovo Energy in Bristol due to come to fruition in the second half of 2014.

Birmingham also has a number of requirements from law firms and accountants including BDO. In Glasgow, searches by Cigna and National Rail are expected to complete soon. Cardiff has seen some activity at its new schemes, while Liverpool has seen a number of midsize deals.

 

OD sq ft by region

 

 

 

 

 

 

Simon Sluszny 2014, (C) Metropolis Property Research Ltd

 

 

 

London office deals surge

Central London office take-up surged in March 2014, reaching over 1.6m sq ft for the month. Large deals included Transport for London taking 250,000 sq ft at Canary Wharf, HCA taking 70,000 sq ft at the Shard and Google taking 160,000 sq ft at Kings Cross Central.

Some 76 office deals of over 5,000 sq ft were recorded during March, of which 30 or 800,000 sq ft were for Grade A newly built or refurbished space, many of them pre-lets.

The most active districts were the City and Docklands, with 600,000 sq ft and 400,000 sq ft respectively. The highest rent was a 6,000 sq ft letting to a hedge fund at 33 Davies Street in Mayfair, W1. Lease lengths were mostly ten years with a break in year five.

After a sluggish start to the year, the surge of deals in March rescued Q1 2014 to bring the quarterly total to a respectable 3.1m sq ft and keep the Metropolis forecast of 12m sq ft take up in 2014 on track.

Occupiers go footloose

A recent market bulletin by property consultant JLL mentioned the trend for London office occupiers to move across the central area in the search for the right office space.

Research by Metropolis for its April 2014 London fit-out report bears out the point. Amongst the large grade A lettings completed in the last 12 months, some 25% of them involved companies taking space in different London districts to the one they are currently located in.

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; Google moving from Victoria to 730,000 sq ft at Kings Cross; EY and Shell moving from Southbank to Docklands. There are many more smaller examples among last year’s 12m sq ft of office deals in central London.

A review of the current near 700 outstanding requirements for office space in London suggests only 60% of occupiers are looking in only their existing office district, or adjoining areas, with as much as 40% of London tenants prepared to consider anywhere in the central area.

Conversations with tenants suggest that the quality of the office space has become more important than micro location, when considering London office moves. In addition, there have been relatively few new office schemes completed in the West End in recent years which, in combination with high rents, has pushed tenants towards other areas.

Looking ahead, recent deals in Q1 2014 suggest the process is speeding up with lettings at The Shard in SE1, Pancras Square in Kings Cross and a raft of deals in Canary Wharf, E14 showing a movement to good quality space in what could be considered slightly fringe areas. We expect this trend to continue through 2014 and 2015 based on the footloose searches by London tenants currently out looking.

Docklands Debate

News that the London Borough of Newham is willing to move out of its 22,297 sq m (240,000 sq ft) Building 1000 at the Royals Business Park, Royal Albert Way, Docklands, London, E16, which it only occupied in 2008, is surely a sign of the times.

The council says it cannot find tenants for the 24 buildings it vacated back in 2008 and to save money it would rather give up its shiny new HQ, than keep maintaining a lot of empty town hall space.

Development Securities’ and Standard Life’s building  was completed in early 2004 and took over 3 years to find Newham as its tenant.

Currently Metropolis is tracking only a small number of office requirements in East London big enough to fill the building so a deal doesn’t look likely in the short term.