Edinburgh’s Strong 2nd Quarter

Recent research by CBRE Scotland has pointed to a strong second quarter for Edinburgh’s office market, after a slow start to the year. Figures show a Q2 take-up of 351,916 sq ft of take-up – a 150% increase in take-up from Q1 2018, bringing office take-up in the first half of 2018 in Edinburgh to just under half a million sq ft (491,885 sq ft).

The recently announced pre-let to asset management firm Baillie Gifford taking over 60,000 sq ft at the newly developed Mint Building in St Andrew Square was possibly the stand out deal of the quarter, followed by other large lettings including 43,801 sq ft at 11-12 Lochside Place to Diageo and 14,832 sq ft at Atria One to EDP Renewables. The largest deal of the quarter was Edinburgh Palette (a workspace facility) occupying 109,153 sq ft of space at 525 Ferry Road, albeit on a short-term lease.

Metropolis is tracking around 40 occupiers searching for office space in Edinburgh. In general, tenant demand is considered to be buoyant, with a number of existing occupiers approaching lease expiries and seeking to relocate.

Meanwhile in the mid size range: The Scottish Public Services Ombudsman (SPSO) took 16,568 sq ft of out of town space at Bridgeside House, a Smart development at MacDonald Road, while Instant Offices, the serviced office provider, took 2,230 sq m (24,000 sq ft) of offices at the Cornerstone Building in South Gyle.

Total Edinburgh office supply remains at a low level at 923,540 sq ft, with 225,231 sq ft for city centre Grade A space. This represents a 30% decrease on the available space from the same period in 2017. The next scheme to complete is 2 Semple Street in Edinburgh city centre, which is due to be ready for occupation at the end of July 2018,  providing 38,648 sq ft of Grade A office accommodation across six floors.

CBRE say that there continues to be a number of larger, unsatisfied requirements for Edinburgh city centre.

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Pre-lets on the rise

JLL’s recent London office report reveals that London office take-up reached 2.4 million sq ft in Q1 (Metropolis registered 3m sq ft), lower than the quarterly average but ahead of both the equivalent period in 2017 and the 10 year average for the first quarter.

JLL say that The West End was the strongest performing market, with take-up reaching 932,000 sq ft, the strongest Q1 for three years. City leasing volumes were robust at 1.3 million sq ft, marginally ahead of the equivalent period in 2017.

Pre-letting was a major feature of the market, accounting for nearly a third of quarterly take-up. JLL say that this will remain a feature of the market throughout the year with 45% of the 3.5 million sq ft currently under offer.

Metropolis saw around 40% of office space let being accounted for by pre-lets in the first months of 2018.

Across central London development completions have continued to be quickly absorbed, with 70% of quarterly completions pre-leased or let shortly after completion.

In The City, banking and finance sectors were most active with a 28% share of take-up, buoyed by the largest transaction of the quarter, Sumitomo Mitsui Banking Corporation Europe’s pre-let of 161,000 sq ft at 100 Liverpool Street, EC2. The service industries and professional services sectors were also prominent, accounting for 27% and 25% of quarterly take-up respectively, including major transactions to Sidley Austin LLP, Charles Taylor and Prudential.

In the West End, The TMT and services sectors had the largest share of quarterly take-up with 33% and 25% respectively. Within the services sector, the majority of take-up (63%) involved flexible office providers indicating that this sector is continuing to expand.

To conclude, JLL say that business sentiment remains robust and employment continues to rise strongly

Central London office lettings in December and 2017 Summary

Central London office lettings in December 2017 reached a healthy 1.1m sq ft of deals from 40 mid-large size transactions (5,000 sq ft+) during the month. The December figure slightly outperforms the current monthly average of 1m sq ft . Annual London take-up reached 12.2m sq ft, just above the 2016 figure.

December was characterised by 13 office deals over 20,000 sq ft, which included Turner Broadcasting’s 100,000 sq ft letting at 160 Old Street, EC1; Penguin’s 83,000 sq ft letting at Embassy Gardens, SW8; Vitol took 48,000 sq ft at Nova, SW1 and Enstar took 32,000 sq ft at Creechurch Place, EC3.

Media topped the table of lettings by sector, underpinned by Turner and Penguin deals. This was followed by IT services with the large deals involving Google and Dell.  Insurance and business services also performed well, helped by the lettings to Enstar and XBridge. Office deals ‘under offer’ in central London fell slightly to 3m sq ft but pending deal volumes are healthy in nearly all sub-markets.

By area, the City accounted for 39pc of the office floorspace let in December at 419,000 sq ft. The West End saw 184,000 sq ft of take-up, underpinned by Vitol. Midtown contributed 236,000 sq ft of lettings, plus 90,000 sq ft of Docklands deals. Current London office demand is calculated to be around 3m sq ft in the City and 2.7m sq ft in the West End.

The volume of grade A (newly built or refurbished office space) let during the month reached 558,000 sq ft (52% of the monthly total), as transactions for new space resumed their recent strong showing.

Metropolis research is currently monitoring 640 ‘live’ London requirements, with deals for space of up to 1.8m sq ft due to sign in the next few months.

Cityoffices is shortly to publish its annual review of the planning pipeline in London. Further details of planning applications and consents, with scheme by scheme detail are listed on the Cityoffices.net website. Details on the report and the Cityoffices database from Andy King at andy@metroinfo.co.uk

2017 Review

The 12.2m sq ft of central London take-up recorded in 2017 (deals 5,000 sq ft and above) was slightly above the 11.9m sq ft recorded in 2016.

The largest deals were lettings to Deutsche Bank, Dentsu Aegis, then 3 lettings to WeWork

The serviced office sector took nearly 2m sq ft of offices in 2017. WeWork let over 1.24m sq ft (10%) of the total 2017 take-up

As well as Business services, Financial services took 1.9m sq ft, IT sector took 1.5m sq ft, Media took 1.2m sq ft and Professional 1.1m sq ft

The City accounted for 5.1m sq ft, Midtown 2.4m sq ft, West End was 3.1m sq ft

200 Movers in Manchester

A recent report from the Manchester Office Agents Forum (MOAF) revealed a total of 1.208m sq ft of office lettings across 271 transactions in 2017, well above the 10-year average.

Metropolis ran over 330 business leads on Manchester office moves in 2017, which if all added together would total over 10m sq ft.

MOAF said strong demand for prime offices has left the market with a record low supply of Grade A office space.

The main schemes with available space are 101 Embankment, No 1 Spinningfields, 3 Hardman Square, 40 Spring Gardens and 2 St Peter’s Square, which is likely to trigger some short-term refurbishment projects

There are a number of Grade A schemes under construction to include Landmark (180,000 sq ft), 125 Deansgate (126,000 sq ft), Hanover, NOMA (90,000 sq ft), Circle Square (230,000 sq ft) and 11 York Street (80,000 sq ft), the majority of which will be delivered in mid-late 2019.

Key office lettings in 2017 included: 55,802 sq ft to We Work at No1 Spinningfields and 44,000 sq ft at One St Peters Square, 77,449 sq ft to DWP at 2 St Peters Square and Clyde & Co taking 69,000 sq ft at Manchester Royal Exchange.

Metropolis research also relayed early warning news of large Manchester moves by companies including Barclays Bank, Distelrec, Bupa, Callcare, Virgin Media and The Hut.

Forthcoming Manchester moves tipped by Metropolis for 2018 or beyond total just over 200.

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

London Skyline Report 2017

Metropolis and Cityoffices have published their Winter 2017 survey of the London office market for clients and those due to take subscriptions in December 2017 and January 2018.

The new report covers:

  • Commentary on the 92 London office schemes under construction at the beginning of Q4 2017;
  • The report examines the 32 new London scheme starts between Q1 and Q3 2017, as well as schemes completed over the course of 2017;
  • The analysis looks at the next wave of schemes due to start construction over the next few months, with examples;
  • A section on occupier demand looks at space pre-let in under construction and recently completed schemes;
  • Further sections examine London office lease ends in 2016 and trace the destinations of those occupiers in 2017;
  • The report concludes looking ahead of 2018, in terms both of those 6m sq ft of schemes currently at demolition stage and those tipped to see construction starts over the next 12 months.

The closing sections of the report also cover forecasts of likely office completion levels in 2018-2020 and current levels of office demand amongst London occupiers, set against trends in the letting of grade A office space in central London.

All figures are based on Metropolis and Cityoffices’ huge weekly business leads bulletins and website which delivers 130+ weekly interviews with office occupiers considering relocations, fit-out news and office scheme developers.

If you would like to find out more about a trial subscription in December or January 2018 to Metropolis and claim a free Skyline report, then email Simon at simon@metroinfo.co.uk

 

Thames Valley Autumn 2017

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.

Central London Lettings – September 2017

Central London office lettings in September 2017 reached a healthy 965,000 sq ft of deals from 61 mid-large size transactions (5,000 sq ft+) during the month. The September figure conforms to the current monthly average of just under 1m sq ft .

September was characterised by 14 office deals over 20,000 sq ft, which included Boston Consulting’s 123,000 sq ft pre-let at 80 Charlotte Street, W1, Metro Bank’s pre-let at 20 Old Bailey, EC4; Costain took 30,000 sq ft at Victoria House, WC1, and Mitie took 30,000 sq ft at The Shard, SE1.

Professional services topped the table of lettings by sector, underpinned by the Boston Consulting deal. This was followed by financial services with the large deals involving Metro Bank. Property and Business services also performed well, helped by the lettings to Costain and Mitie. Office deals ‘under offer’ in central London increased slightly at 3.6m sq ft and pending deal volumes are healthy in nearly all sub-markets.

By area, the City accounted for 33pc of the office floorspace let in September at 314,000 sq ft. The West End saw 263,000 sq ft of take-up. Midtown contributed 242,000 sq ft of lettings. Current London office demand is calculated to be around 3.1m sq ft in the City and 2.8m sq ft in the West End.

The volume of grade A (newly built or refurbished office space) let during the month reached 448,000 sq ft (46% of the monthly total), as transactions for new space resumed their recent strong showing.

Some 8.9m sq ft of offices were let in the first 3 quarters of 2017 to end of September 2017.

Metropolis research is currently monitoring 620 ‘live’ London requirements, with deals for space of up to 2m sq ft due to sign in the next few months.

Cityoffices and Metropolis are working on an analysis of lease expiries which were due to expire in 2017 and the latest London Skyline report. The update will contain details of dozens of new office schemes under construction, planning applications and consents, with scheme by scheme detail on the Cityoffices.net website. Details on Cityoffices from Andy King at andy@metroinfo.co.uk