Central London Office Market June 2019

Central London office lettings in June 2019 reached 1.05 million sq ft, from 64 mid-large size office transactions (5,000 sq ft+) during the month. The June 2019 deals volume figure is in line with the current monthly London average of 1m sq ft.

June was characterised by 15 office deals over 20,000 sq ft, which were led by Parliamentary Estate’s 97,000 sq ft deal at 64 Victoria Street, SW1; Smith & Williamson taking 87,000 sq ft at  40 Gresham Street, EC2; Squire Patton Boggs taking 61,000 sq ft at Devonshire Place, EC2 and WeWork taking 47,000 sq ft at Hounsditch, EC3.

Professional Services topped the table of lettings by sector, compiled by Metropolis, underpinned by the Smith & Williamson and Squire, Patton Boggs pre-lets. This was followed by financial services led by Liberty and Business Research. The Business Services sector was also prominent with deals to WeWork, Spaces and Knotel

Office deals ‘under offer’ in central London rose to 4m 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 40% of the office floorspace let in May 2019 at 406,000 sq ft. The West End saw 356,000 sq ft of take-up. Docklands 66,000 sq ft, Midtown contributed 134,000 sq ft of lettings and Southbank 93,000 sq ft. Current London office demand is calculated to be around 3.8m 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 349,000 sq ft sq ft (33% of the monthly total), as transactions for new space maintained the recent strong showing. Availability is dominated by secondhand space in all London markets.

Across Q2 2019, there were deals covering 3.3m sq ft of office space, slightly down on 2018, led by the EBRD pre-let at 5 Bank Street in Docklands, followed by Brewin Dolphin in the City and G-Research in the West End. Some 40% of space let in Q2 was in pre-lets. Financial and business services were the two most active sectors.

Metropolis research is currently monitoring 620 ‘live’ London office requirements, including a large volume of requirements from the banking and finance sectors, with pending deals for space of up to 1.5m sq ft due to sign in the next few months.

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Office Market Defies Gravity

Office market reviews for 2018 suggest that he UK office market continued to defy gravity as the third and fourth quarters recorded one of the highest levels of office letting activity in the last five years.

The Central London market is seeing quarterly take-up of up to 3.5 million sq ft, the highest since 2015. The increase was boosted by a number of large transactions in new or recently refurbished space, which is accounting for two-thirds of all deals. The number of pre-lets announced in the year has broken records. Space under offer in central London currently totals nearly 3 million sq ft, suggesting year-end take-up could exceed 12 million sq ft and be the highest seen in the capital since 2015.

Regional cities are also seeing high office mover activity with almost 2 million sq ft of space acquired per quarter, the second-highest on record. Letting activity in Glasgow reached a record level, and Newcastle recently reached a 14-year quarterly high. All but one of the eight regions witnessed a quarter-on-quarter increase in take-up.

Metropolis Research reported on over 5,000 individual office moves over the course of the year, with many more occupiers poised to make decisions in 2019

Manchester Offices and the Tech Sector

Knight Frank has recently published a report on Manchester’s  office market and the impact of the technology sector.

The consultant says that the city has evolved a significant tech market. Take-up within the Manchester market over the last five years (2013-17) shows that there were some 144 leasing transactions from occupiers within the IT & Telecoms sector. These deals accounted for more than 770,000 sq ft of office space – that is a volume of space greater than total 2017 take-up across all sectors in 6 of the 10 regional centres that Knight Frank monitor.

Notable transactions include: Amazon, Bet 365, Booking.com and Jaguar Land Rover, Recent research from Tech Nation, reveals that there are in excess of 30,000 digital jobs within the Manchester economy – which on generous space allocations of 1:8 is the equivalent to some 2.5 million sq ft of office space. These firms have a turnover of some £3.2bn – so they are significant contributors to the local and regional economy. The research also shows that Manchester has a vibrant digital eco-system which led to the birth of more than 450 new digital businesses in 2016. When those businesses are formed they have great growth prospects.

A third of Tech Nation’s Northern Tech 100 – that is the fastest growing tech companies in the North of England – are based in Manchester and have an average growth rate of 49% per annum. Four of the companies found on the list have recently let or acquired a total of 80,000 sq ft with a further 17,500 sq ft under offer at the time of writing.

Knight Frank are also aware of active requirements totalling around 100,000 sq ft from companies within the list. Microsoft, for example, have recently taken 100 desks within Bruntwood’s Neo Building
while both Amazon and Alphabet have a small presence in the city.

Over the same 5 year period there were 406 leasing transactions from companies across the 5 tech sub-sectors. They absorbed 1.4 million sq ft of office space over this time.

Knight Frank conclude that as Amazon and the like invest in the healthcare and insurance sectors, for example, the market will see space solutions that were not so long ago regarded as the exclusive domain of a few select, fast-growth tech companies becoming a reality for the many.

Metropolis Research is monitoring around 20 requirements in the Manchester market and 80 potential movers. Some 20% of companies are in the technology sector.

Metropolis Movers September 2018

Metropolis ran 535 business leads on ‘office movers’ in September 2018. If all reported moves were added together the total would exceed 13 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 270 business leads during month, but there were also strong showings from the South East (53),  North West (52) and Yorkshire (40). 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 535 September leads, included those on occupiers Apple, Santander, EBRD, PWC and UK Hydrographic .

The September 2018 leads included 175 ‘identified requirements’, including 105 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, 110 were newly posted office searches, not previously notified to clients.

The most recent research also included 153 ‘potential movers,’ which were mainly longer-term leads on occupiers, considering a 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.

If you would like some information on flexible Metropolis subscription packages, then please email Andy at andy@metroinfo.co.uk, mentioning ‘Metropolis Blog’

Cambridge Office Market

Savills has just published its September 2018 report on the Cambridge office market.

Savills say that the majority of take-up in Cambridge, whether for offices and/or laboratories, has occurred in the city centre (Zone 1) around the central station and Hills Road. This area has accounted for 38% of take-up by square footage up to summer 2018.

Available offices total 100,000 sq. ft. of existing stock in this area currently. At current levels of demand Cambridge has less than one years’ supply. The city centre market has around 156,000 sq. ft. under construction, of which 30,372 sq. ft. is pre-let. Developer confidence is growing outside of the city centre. St Johns College and Turnstone recently completed the 65,000 sq ft Maurice Wilkes Building at St John’s Innovation Park which was let to seven occupiers prior to practical completion. Biomed Realty is speculatively developing 108,000 sq. ft. of laboratory space at Babraham Research Park across two new buildings and Churchmanor Estates are speculatively developing 40,000 sq ft. In addition the Howard Group are to speculatively construct over 60,000 sq ft of office/R&D space at Pampisford. Savills expect record rents to be achieved in the city centre at 50 & 60 Station Road.

Astra Zeneca is soon to complete its new campus of 850,000 sq ft. Samsung has recently committed to opening a new AI research hub in Cambridge. Microsoft also have a research base covering AI at 21 Station Road.  Darktrace is moving to The Maurice Wilkes’ Building at St John’s Innovation Park. Amazon took 72,289 sq ft at One Station Square, CB1, while Astex Pharmaceuticals took 42,688 sq ft at Cambridge Science Park. Also at Cambridge Science Park, in Q1, Huawei acquired 11,500 sq ft at Building 101 for £29.50 psf. Savills is also aware of 100,000 sq. ft. of requirements from serviced office operators and envisage stronger demand from this sector in the future.

Metropolis is tracking around 40 Cambridge office moves and requirements.

Metropolis Leads in July 2018

Metropolis ran 592 business leads on ‘office movers’ in July 2018. If all reported moves were added together the total would exceed 16 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 270 business leads during month, but there were also strong showings from the South East (71),  Scotland (69) North West (38) and Yorkshire (36). Financial services 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 592 July leads, included those on occupiers Facebook, Linklaters, Barclays, EBRD and Diageo.

The July 2018 leads included 172 ‘identified requirements’, including 90 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 172 searches, 105 were newly posted office searches, not previously notified to clients.

The most recent research also included 142 ‘potential movers,’ which were mainly longer-term leads on occupiers, considering a 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.

If you would like some information on flexible Metropolis subscription packages, then please email Andy at andy@metroinfo.co.uk, mentioning ‘Metropolis Blog’

Metropolis Leads in May 2018

Metropolis ran 557 business leads on ‘office movers’ in May 2018. If all reported moves were added together the total would exceed 17 million sq ft of office searches and transactions, researched by Metropolis’ unique market led intelligence research team. London was the largest region with 245 business leads during month, but there were also strong showings from the South East (71),  North West (45), Yorkshire (39) and Scotland (37) . Business services and financials services were the largest business sectors planning relocations or agreeing moves during the month.

The relocation leads 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 557 May leads, included those on occupiers Chinese embassy, Barclays Bank, Telehouse, Societe Generale and Publicis.

The May 2018 leads included 154 ‘identified requirements’, including 83 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 154 searches, 110 were newly posted office searches, not previously notified to clients.

The most recent research also included 166 ‘potential movers’ which were mainly longer-term leads on occupiers, considering a 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 2020.

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

If you would like some information on flexible Metropolis subscription packages, then please email Andy at andy@metroinfo.co.uk