Requirements on the Rise?

Over the first two months Metropolis Property Research has noticed a small rise in the numbers of office occupiers launching new searches for office accommodation.

Some examples researched and published over the past week include:

  • An IT support firm, has told Metropolis that it is currently searching for around 200 sq m (2,200 sq ft) of office space within the South Bank area of London. The firm is planning to move from its current base in the Autumn of 2018;
  • A City of London-based energy consultancy, has told Metropolis that it has appointed an un-named property agent to advise on relocation or lease options in central London, ahead of a late 2018 lease break option. The company currently occupies 465 sq m (5,010 sq ft) of offices with about 35 staff;
  • A computer consultancy firm, has told Metropolis that it is currently searching for around 475 sq m (5,100 sq ft) of office space in the Maidenhead area. Staff advise that a move date has not been set, but that it will likely take place around Autumn 2018.;
  • An energy exploration company, has strongly hinted that it is considering launching a search for alternative London West End offices in 2018;
  • An IT consultancy firm, has told Metropolis that it is currently searching for around 220 sq m (2,400 sq ft) of office space in Bristol. A senior contact has stated that an ideal move date would be around October or November 2018;
  • A Leeds headquartered print management company, is planning to open an office in London by 2020;

Metropolis researches around 140 new office requirements each month in the UK, plus hundred of other companies pondering move decisions and agreeing lettings.


The Magnificent Seven

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.

Leeds market focus

The latest Colliers International report on the Leeds office market revealed a quiet summer 2016 with only 73,100 sq ft of transactions across 25 deals. Some of the larger deals included Plexus Law taking 14,500 sq ft at Joseph’s Well, Slater & Gordon taking 10,000 sq ft at 2 City West, NHS Property taking 10,000 sq ft in Horsforth and Addleshaw Goddard nearly 8,000 sq ft at 3 Sovereign Square.

Total first half take-up in 2016 reached nearly 200,000 sq ft helped by Sky Bet taking 39,600 sq ft at 6 Wellington Place, RSM pre-let 25,000 sq ft at Central Square and Dentsu Aegis secured 13,800 sq ft at the newly refurbished 6 East Parade.

Local agents predict that the Leeds office market will remain slow due to occupier uncertainty and limited upcoming lease events, although there remain a number of active enquiries within the marketplace.

Metropolis is tracking around 40 companies looking for office space in the Leeds area, including HMRC Hub, Willis Towers Watson and Dart Group/Jet2 and some substantial requirements in the professional services sector. In addition, there are around 40 companies approaching lease expiries in 2017 where decisions are yet to be made, including a number of software groups. Further ahead, over half a million sq ft of lease events are scheduled in the next few years

New schemes launched in Leeds earlier this year include 6 Wellington Place, 6 East Parade and 120 Wellington Street. A further 500,000 sq ft has just been completed including 69,000 sq ft at 6 Queen Street, 75,000 sq ft at 5 Wellington Place and 200,000 sq ft at Central Square. Speculative schemes at Kirkstall Forge and Thorpe Park are set to boost grade A availability in the future.


Metropolis Office Requirements – H1

Over 450 companies vie for London space

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Metropolis research identified over 17m sq ft of UK office demand in the first half of 2015. Just over 9.2m sq ft of this demand was for office space in Greater London, with over 450 companies searching for London space. In the rest of the UK Metropolis uncovered 400 requirements for new space representing 8.1m sq ft of office demand.

Central London office demand reached 8m sq ft, 3.8m sq ft (47.5%) of which was focused on the City of London. EC2 was the most popular postcode for companies planning a move,  with 1.4m sq ft of demand emerging in H1.

A significant proportion of total City of London demand (11%) came from two new law firm requirements, each firm looking for 200,000 sq ft. A new 150,000 sq ft requirement from an insurance group was also worthy of note. Demand from the banking and finance sector reached 1m sq ft, 26% of total City of London demand.

Demand for space in the West End, where rents can reach £125 psf, hit 1.8m sq ft. The largest West End requirement (150,000 sq ft) came from a social media group looking for offices in SW1. Just over 400,000 sq ft of office space (26% of total demand) was required by the banking & finance sector, 79% of which (315,000 sq ft) came from hedge funds and private investment firms.

Mid Town office demand reached 0.9m sq ft, pretty evenly split between WC1 and WC2. About 100,000 sq ft of Mid Town demand came from the technology sector and 90,000 sq ft from the media sector. Demand from law firms was just over 120,000 sq ft and demand from the banking and finance sector totalled 110,000 sq ft.

The largest office requirement in the South Bank (SE1) was a 140,000 sq ft search by an engineering and construction firm. Other requirements of note include a US insurance firm switching a 60,000 sq ft search from Maidenhead to London SE1, and a TV Broadcaster looking for 30,000 sq ft to house its news department.

Two big requirements dominated demand for office space in the Docklands: a German investment bank back office requirement for 350,000 sq ft and an information company requirement for 300,000 sq ft, with a sub-let mooted.





















The Top 5 Regional Cities

Manchester – The largest requirement, 400,000 sq ft, was a search by a government department considering space near Piccadilly Station in Manchester. Just over 250,000 sq ft of Manchester office demand came from the legal sector and 300,000 sq ft of demand was attributed to the insurance sector.

Edinburgh – Similar to the picture in Manchester, Edinburgh demand was dominated by a large government requirement for office space (300,000 sq ft), although this requirement could move to Glasgow. In terms of private sector demand, notable requirements included a 100,000 sq ft search by a US Bank and two significant searches from law firms seeking a move in central Edinburgh, one for 50,000 sq ft and the other 30,000 sq ft. There was also significant demand from the accountancy sector, with four firms searching for just over 130,000 sq ft.

Birmingham – A retail bank was linked with the largest office requirement in Birmingham: 170,000 sq ft,  a search now satisfied by space at Miller Developments Arena Central scheme.  Other significant requirements include a potential 100,000 sq ft search from a law firm and a 50,000 sq ft search from a business education group.

Reading – The largest requirement for Reading offices came from a network broadcaster looking for 150,000 sq ft, closely followed by a utility company searching for 140,000 sq ft. Both requirements also consider other Thames valley locations such as Bracknell, Farnborough and Slough.

Bristol – Bristol office demand was dominated by insurance company requirements, with the sector accounting for 56% of total demand (280,000 sq ft). Other notable requirements include an 80,000 sq ft search from a Bristol based law firm planning to combine two of its offices (which may now be a refurbishment and extension of the existing building) and an engineering group searching for 25,000 sq ft.


Top Ten Cities (Excluding London) by H1 Office Demand












Copyright Metropolis Property Research Ltd 2015



Office Rents Return to Pre-Recession Levels

Recent research by Jones Lang LaSalle indicates that as a result of the new office relocation demand and lack of new grade A office space, office rents in most major UK cities are close to their pre-recession levels.

Office rents in Cardiff, Edinburgh, Glasgow, Manchester Central and the Thames Valley from June 2014 have all passed those of late 2007, considered to be the previous peak of the market, prior to the UK recession. Office rents in Bristol and Leeds have previously matched those of the fourth quarter of 2007. Birmingham is the only city where office rents are still lagging behind the 2007 peak.

In central London, the City and the West End office rents for Q2 2014 were just below their 2007 peak. Rents for the City are £6 psf below and rents for West End are £10 psf. below their previous high point.

The two London markets were hit the worst by the financial crash, with rents in the West End falling 34.7% to £75, and rents in the City dropping 31.8% drop from late 2007.

Monthly letting analyses by and Metropolis suggest that in some cases individual deals are already surpassing previous peaks with KPMG rumoured to be paying £125 psf for a move to 18 Grosvenor Street, W1 and Golden Tree Asset Management paying £115 psf for a move to 33 Davies Street, W1.  In addition, rents at 20 Fenchurch Street (Walkie Talkie Building) in the City are rumoured to be topping £70 psf.

Office Boom in Leeds

A recent office market report on Leeds by Lambert Smith Hampton highlighted a surge of letting activity towards the end of 2013. Office take-up for the year reached 250,000 sq ft for the quarter and the total of office deals for 2013 reached nearly 1.3m sq ft.

Despite a number of recent high profile transactions in 2013, most of which were tipped in advance by Metropolis, including Leeds City Council pre-letting 50,000 sq ft, Lowell Group taking 80,000 sq ft, HSBC (60,000 sq ft), Squire Sanders (50,000 sq ft), NHS Leadership Academy (22,000 sq ft) and KPMG taking 28,000 sq ft at Broad Gate, some 60% of deals were for lettings of less than 5,000 sq ft.

The Metropolis database reveals 40 outstanding office requirements in Leeds including Sky and PWC both looking for 60,000 sq ft each. In total, the forty firms are currently searching for over 500,000 sq ft of office space in the city, with another 30 firms due to make decisions ahead of lease expiries in 2014 and 2015.


The availability of grade A office space, newly constructed or refurbished, has fallen to a five year low at 6.6%. Total office availability in Leeds is 10%. agents are forecasting top office rents of £26 psf in 2014 with £30 psf in 2015.

Recent development news includes Town Centre Securities gaining consent for the next 375,000 sq ft phase of its Whitehall Riverside scheme; MEPC’s 35,000 sq ft 10 Wellington Place scheme was recently topped out and a number of medium/large refurbishments such as Minerva and 15 Park Row are planned or underway.