Metropolis Movers October 2018

Metropolis ran 616 business leads on ‘office movers’ in October 2018. If all reported moves were added together the total would exceed 14 million sq ft of office searches and transactions, researched by Metropolis’ unique market-led intelligence research team, last month.

London was the largest region with 300 business leads during month, but there were also strong showings from the North West (61), South East (52) and Yorkshire (52). Financial services, IT and business services were the largest business sectors planning relocations or agreeing moves during the month.

The relocation leads geographically covered the whole UK and provided details of the size of the office occupier, company likely move dates, a description of the reasons for the move, its business sector and full contact details including an address for written inquiries, at least one telephone number and in most cases an email address. Some of the largest planned moves and top picks amongst the 616 October leads, included those on occupiers Shell UK, IBM, WPP,Jane Street Capital and McCann Worldgroup .

The October 2018 leads included 161 ‘identified requirements’, including 100 in London. Which means that the company confirmed to researchers that it has current or future plans to search for alternative office space. Of these 175 searches, 109 were newly posted office searches, not previously notified to clients.

The most recent research also included 176 ‘potential movers,’ which were mainly longer-term leads on occupiers, considering a future relocation, but the occupier has yet to make a final decision on whether to search.

Most of the remaining stories covered companies that have just signed for new office space and have set a move date, including some large pre-lets and companies inviting tenders for fit-out contracts. The shortest planned move date is just over a month away, whilst the longest was late 2021.

Recent research by Metropolis concluded that a conservative estimate of ‘live’ business tender opportunities on the database in recent months, exceeded £1bn of business.

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London Office Market Analysis

Estates Gazette has just published in analysis of the London office market in 2017. The main conclusions include:

 

  • Total central London office take up was 12.6m sq ft (all deals) which was up around 2m sq ft on the 2016 total in a relatively strong year and just above the five year average;

 

  • The City core saw just under 3.6m sq ft of deals in 2017, together with 1.8m sq ft in the City fringe. Both figures are down on previous years;

 

  • Lettings in the Midtown, West End and Southbank areas were strongly up by over 40% last year;

 

  • Lettings of Grade A space were up strongly at 52% of all lettings in 2017, compared to 42% in 2016;

 

  • Overall, TMT was the most active sector in 2017 as a whole, accounting for more than 27% of all lettings. The five biggest deals in the quarter were from the TMT, Central and Local Government, Property, and Financial sectors. A proportion of small and medium sized occupiers are being absorbed by serviced office space;

 

  • Some 3.7m sq ft of new office space was started in 2017, but this compares with an average of over 5m sq ft of starts in 2015 and 2016. This means there are lots of speculative completions coming through, which in turn in driving higher take-up;

 

  • Around 8.3m sq ft of new London office completions are planned for 2018 (a ten year high), with over 6.3m sq ft of completions already planned for 2019;

 

  • Overall London office availability has risen from 4.3% in 2015 to 7.4% in late 2017, driven by a rise in secondhand space that now stands at 12.4m sq ft;

 

  • As a result rents overall are edging down, which could encourage more occupiers to relocate;

 

  • 2018 take-up in central London is likely to be driven by new build deals;

 

Metropolis forecasts that the rising volume and proportion of new build letting transactions will sustain the fit-out and office equipment supply markets in 2018-19.

Cityoffices.net forecasts a strong pipeline of new schemes (there are over 200 in the pipeline of 20,000 sq ft or more) seeing construction starts in 2018.

London Skyline Report Autumn 2014

Recent research by Cityoffices and Metropolis found that the central London office development market has stepped up another gear over summer 2014, with a further 32 office schemes starting (or poised ready to start in Q4 2014) since March 2014. Contrary to reports of a moribund construction sector, a healthy total of nearly 3.5m sq ft office space went under construction over the last 6 months. Notable recent scheme starts included: London Wall Place, EC2 (500,000 sq ft); Angel Tower, EC2 (360,000 sq ft) , River Plate House, EC2 (160,000 sq ft); 25 Chancery Lane (100,000 sq ft); St James’s Market, SW1 (212,000 sq ft) and 48 Leicester Square, WC2 (92,000 sq ft).

We expect nearly 15 further schemes to go under construction in the last quarter of the year. There is ‘only’ 8.7m sq ft of offices currently under construction (or about to start) following completion of  over 4m sq ft in the previous two quarters, including nearly 2m sq ft in three buildings 20 Fenchurch Street, Leadenhall Building and 25 Churchill Place. This is below the 10m sq ft long term average of London space under construction, but does not take account of a further 5m sq ft currently at demolition stage. Some 25 schemes such as 100 Bishopsgate, 52 Lime Street and Principal Place are on the verge of starting and even The Pinnacle may join them. Looking ahead to 2015, there are currently only 31 schemes due for completion, delivering 2.8m sq ft, although this figure will rise slightly as a number of refurbishments will join the list. However in relative terms, there is a shortage of large speculative office schemes scheduled to open next year, to add to the 7m sq ft of completions in 2014. In 2016 a further 7-8 million is forecast for completion, with half of that already underway.londond

Around 36% of office space under construction is already pre-let including recently-signed agreements with companies such as Amazon, KPMG and Estee Lauder. There is also a further raft of deals likely to be agreed in the near future which may include Societe Generale, Telefonica and Howden. Many schemes tend to find pre-lets closer to completion with over 50% of space completed during summer 2014 now pre-let. In contrast to some previous surveys, new-builds now make up the majority of new starts with 55% of the total compared to 45% refurbishments.

However, with nearly 3m sq ft of deals under offer and many of the larger central London occupiers beginning to appoint agents to advise on pre-let opportunities the expectation is that a new wave of refurbishments is just around the corner. In conclusion, although a large amount of central London office space was completed over summer 2014 and although some recent press reports have chosen to spotlight the drop in space actually under construction, writers have failed to note that it is about to be  replaced by almost as many schemes, if not the same volume of sq ft. In addition a large number of schemes are primed to start in 2015. The letting market continues to power on apace, exemplified by the recent pre-letting of the 400,000 sq ft Principal Place by Amazon and the rapid pre-letting of London Wall Place, EC2. Although 2015 looks likely to be a quiet year for completions, it will be balanced by up to 8m sq ft of completions in 2016.