M25 Office Market Predictions

Knight Frank has published its Q1 2018 report on the M25 office market.

The report looks at the polarisation of the market into small moves and lettings which is pushing landlords towards the subdivision of buildings into smaller units, alongside the expected emergence of 10-12 large 100,000 sq ft requirements in 2018, many of which will come from technology companies. Knight Frank predicts that many of these searches will end in pre-letting of planned office schemes.

Metropolis is currently tracking some 30 south-east occupiers looking for 25,000 sq ft or more, with a further 20 large companies around the M25, approaching lease events over the next two years. Overall, Metropolis has reported on over 500 office moves in the South East and outer London in the last year.

Knight Frank say the South East office market has a history of occupational demand from the technology sector. In fact, the tech sector has accounted for, on average, 23% of annual office take-up over the last five years and has absorbed some 3.8 million sq ft during that period.

Similarly, occupiers drawn from other sectors have been transformed by the application of new technology to business processes, often fuelling new property requirements.

There were around 60 office deals of over 5,000 sq ft in towns around the M25 in Q1 2018. In west London financial and business services firms account for the largest proportion of take-up over 10 years, 27%. This percentage rises to 29% if considered over the past two years. Most notable is that flexible office providers have quickly gained a strong presence, taking just short of 200,000 sq ft since the beginning of 2016.

Knight Frank conclude that the M25 linked hotspots for office deals over the next year are Brighton, Croydon, Watford and Reading.

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The Lighter Side – Part 2

Amongst the hundreds of phone calls and meticulous research work, tracking down around 120 UK firms with plans to move each week, there are some lighter sides to the job of putting together our brand of intelligence-led property business leads every 7 days:

Catch 22: We called one large London company and spoke to the head of operations about a major requirement the firm was rumoured to have: he said he would have no idea who would be dealing with it, we asked to be put through to facilities, he said they have no facilities department, we asked to go to Operations, he said he was Operations, but didn’t deal with “those Operations”

Sometimes you can’t fault companies for their optimism. Metropolis spoke to the owner of one central London building who confirmed that the building would be demolished the following year. Metropolis then spoke to 8 of the 9 tenants who confirmed they were searching or about to search for alternative premises. Initially the junior staff and the 9th firm accepted they would be moving, but despite repeated attempts Metropolis was unable to speak to the office manager. The firm, based on the 2nd floor of the condemned building, was eventually run as a lead, whereupon the evasive office manager complained that he had no had no intention of moving and would renew his lease regardless of the planned demolition.

Then there are the firms which list their address on the their website and when we call them, they say: “oh we moved out of that address months ago”. There is at that point a temptation to then ask if they hold many meetings on the premises and if so, have they noticed an unexplained fall of in the number of attendees?…

One company asked if the company could get someone to call the researcher back. The researcher replied that would be fine and to ask for ‘Sam’. “How do you spell that?” was the follow up question… ‘S’…’A’.. Reasonable question.

One slightly depressing conversation ran along the lines of: Researcher: “I see your lease is due to expire in June 2015, do you have any plans to look at other properties?” Tenant: “No plans at all”. Researcher “Do you think that you’ll negotiate a refurbishment from your landlord as part of the deal to stay?”. Tenant: “Oh no, we wouldn’t want to put him to any trouble..”

When asking one company: who deals with its office, one receptionist said “oh thats Mr Briggs, he’s the caretaker and he changes the loo rolls and everything.” Ok let me put that another way..

When asking when a company is planning to relocate it is surprising how many tenants do not have any idea. One helpfully said “at some point in the future”

Temporary staff are often poorly briefed by the company for whom they are working. Researchers will outline why they are calling and ask to speak to the office manager. The Temp will say “do you have a name?” The researcher will say “I was hoping you could tell me.” To which the temp will say “I don’t know anyone’s names or job titles here I’m just the temp”. I’m guessing that the company’s phones were unusually quiet that morning.

Lease renewals falling

Recent research from Metropolis conducted over the last 3 months indicates that the number of companies planning to renew their lease in 2014 has dropped from 60% in spring 2013 to 55% in summer 2013. In time, this should lead to more office searches.