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

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London Office Lettings in April 2018

Central London office lettings in April 2018 reached almost 800,000 sq ft from 35 mid-large size transactions (5,000 sq ft+) during the month. The April 2018 figure is broadly in line with the current monthly average of 1m sq ft.

April was characterised by 13 office deals over 20,000 sq ft, which included Berwin Leighton Paisner’s 125,000 sq ft letting at Governor’s House, 5 Laurence Pountney Hill; St James’s Place’s 57,000 sq ft pre-letting at 30 Lombard Street, EC3 and KKR’s pre-let of 57,000 sq ft at 18 Hanover Square, W1.

Professional Services topped the table of lettings by sector, underpinned by BLP and KKR deals. This was followed by business services underpinned by a number of lettings by serviced office operators. Financial services, technology and media were also well represented. Office deals ‘under offer’ in central London increased to 3.6m sq ft, and pending deal volumes are healthy in nearly all sub-markets, with over 25 deals pending.

By area, the City accounted for 54pc of the office floorspace let in April 2018 at 433,000 sq ft. The West End saw 140,000 sq ft of take-up. Midtown contributed 80,000 sq ft of lettings, plus 45,000 sq ft of Docklands deals. Current London office demand is calculated to be around 3.3m 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 375,000 sq ft (47% of the monthly total), as transactions for new space resumed their recent strong showing. Availability is dominated by secondhand space in all London markets.

Metropolis research is currently monitoring 635 ‘live’ London requirements, with deals for space of up to 1.8m sq ft due to sign in the next few months.

Cityoffices is working on its current ‘Skyline Survey’ in London. Further details of office scheme 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

Southbank attracts relocations

Hubble, the office and co-working provider, reports that tech startups and other growing SMEs in London are leaving the capital’s best known tech hotspots, including Shoreditch and Soho, while favouring the Southbank. Hubble’s search data suggests that London Bridge (29 percent of all searches) is now the most popular location in London for companies searching for flexible office space in 2018 (a sharp rise from 3.7 percent of searches in 2017), beating Shoreditch with 27 percent of all searches.

Additionally, analysis by Metropolis shows nearly 50 medium or large occupiers launching or renewing searches for offices in London, SE1 since January 2018, compared to 40 in Soho, 30 in Clerkenwell and 25 in the Shoreditch area.

Hubble say that more than 37 percent of searches were for office space in south London, counting London Bridge and the Southbank (8.5 percent). Startups and SMEs are branching out to different creative “hub-spots” within London, but most prominently is an unprecedented shift to south of the river. Searches for London Bridge specifically make up 29 percent of all searches and the Southbank, as a whole, making up 37.5 percent of all search queries.

Meanwhile Soho’s market share dropped from 45.2 percent in 2017 to 23.5 percent in 2018 while Clerkenwell dropped from 26.7 percent to 2 percent.

Hubble’s data is backed up by a recent Knight Frank report which named the Southbank as London’s newest commercial hotspot and claims: “South Bank has followed the trend in brownfield regeneration. Former industrial buildings have been put to new uses”. High quality offices have been developed in recent years, and new transport infrastructure built, which has opened up the market to businesses seeking new headquarters buildings.” Knight Frank say London has seen a 41% increase in small and medium enterprises (SMEs) since 2010, much of which has been driven by a marked increase in funding from venture capital. The growth of the gig economy has led to an increase in freelancing and contract based working. 70% of all transactions to TMT firms in the past five years (by number) have involved units smaller than 5,000 sq ft.

Looking ahead, Metropolis is tracking 140 occupiers of all sizes, which have lease expiries approaching in the next two years in the Southbank area, with a further 800 in neighbouring City and Midtown postcodes.

February 2018 Central London Lettings

Central London office lettings in February 2018 reached just over 1m sq ft of deals from 50 mid-large size transactions (5,000 sq ft+) during the month. The February 2018 figure is in line with the current monthly average of 1m sq ft.

February was characterised by 11 office deals over 20,000 sq ft, which included Sumitomo’s 161,000 sq ft re-letting at 100 Liverpool Street, EC3; Sidley Austin’s 135,000 sq ft pre-letting at 70 St Mary Axe, EC3 and Prudential took 59,000 sq ft at Angel Court Tower, EC2.

Financial Services topped the table of lettings by sector, underpinned by Sumitomo and Prudential deals. This was followed by professional services mainly underpinned by the signing of the Sidley Austin pre-let. Office deals ‘under offer’ in central London stayed at 3.5m sq ft, but pending deal volumes are healthy in nearly all sub-markets, with over 30 deals pending.

By area, the City accounted for 50pc of the office floorspace let in February 2018 at 501,000 sq ft. The West End saw 266,000 sq ft of take-up. Midtown contributed 66,000 sq ft of lettings, plus 143,000 sq ft of Docklands deals. Current London office demand is calculated to be around 3m sq ft in the City and 2.9m sq ft in the West End.

The volume of grade A (newly built or refurbished office space) let during the month reached 557,000 sq ft (55% of the monthly total), as transactions for new space resumed their recent strong showing. Availability is dominated by secondhand space in all London markets.

Metropolis research is currently monitoring 655 ‘live’ London requirements, with deals for space of up to 1.9m sq ft due to sign in the next few months.

Cityoffices is working on its current ‘Skyline Survey’ in London. Further details of office scheme 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

Metropolis Office Movers October 2017

Metropolis ran 548 business leads on ‘office movers’ in the month of October 2017. If all reported moves were added together the total would exceed 8 million sq ft of office searches and transactions, researched by Metropolis’ unique market led intelligence research team. London was the largest region with 251 leads during month, but there were also strong showings from the South East (60), North West (40) and Scotland (36). IT services, professional and financial were the largest business sectors planning relocations or agreeing moves during the month.

The business leads covered the whole UK and provided details of the size of the office occupier, its 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 548 October leads, included those on Dentsu Aegis, Sumitomo Mitsui Bank, WeWork, Royal London Insurance and Dyson.

The October 2017 leads included 165 ‘identified requirements’. Which means that the company confirmed to researchers that it has current or future plans to search for alternative office space. Of these 165 searches, 100 were new office searches, not previously notified to clients.

The most recent research also included 150 ‘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 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 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 Simon at simon@metroinfo.co.uk

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Cityoffices.net, the sister property leads service to Metropolis, is about to publish its ‘Autumn 2017’ survey on the office construction market in central London, with details of new schemes starting, the dozens of schemes at preparation stage and 200 office schemes in the pipeline for construction starts in 2017-2020.

For more information on Cityoffices, email Andy at andy@metroinfo.co.uk

Top June picks on Metropolis

Metropolis ran 650 ‘movers‘ in the month of June 2017. 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 295 leads during month, but there were also strong showings from the Yorkshire (77), South East (57) and North West (44). IT services and financial were the two largest business sectors planning relocations or agreeing moves during the month.

The business leads covered the whole UK and provided details of the size of the office occupier, its 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 650 leads included leads were those on Google, Global Switch, Dentsu Aegis and WeWork.

The June 2017 leads included 196 ‘identified requirements’. Which means that the company confirmed to researchers that it has current or future plans to search for alternative office space. Of these 196 searches, 100 were new office searches, not previously notified.

The most recent research also included 200 ‘potential movers’ which were mainly longer-term leads on occupiers which are considering a relocation, but have yet to make a final decision on whether to search.

Most of the remaining stories covered companies that have 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 mid 2020.

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

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Cityoffices.net, the sister property leads service to Metropolis, saw a further 32 stories posted in June, covering new development opportunities planning applications, consents, construction starts and development teams in London and major cities. The database now covers over 200 office schemes in the pipeline for construction starts in 2017-2020.

For more information on Cityoffices, email Andy at andy@metroinfo.co.uk

Thames Valley gives mixed signals

A new report from Lambert Smith Hampton (LSH) on the Thames Valley office market reveals a mixture of trends.  LSH report 126 enquiries (over 5,000 sq ft) in Q1 2017, an increase of 31% compared with the 96 received in the previous quarter, however these are mainly made up of smaller enquiries and LSH say that requirements for units of over 30,000 sq ft are running well below the long term average.

Take-up in Q1 2017 was 425,352 sq ft, a fall of 3 % from the 439,331 sq ft transacted in the previous quarter and 18.6% below Q1 2016’s total of 522,770 sq ft. The total is below the five-year average take-up of 482,169 sq ft and given the drop in large enquiries, take-up may suffer in upcoming quarters. Large deals included: MediaWorks, White City – 70,000 sq ft acquired by Net-a-Porter and Tor, Maidenhead – 40,000 sq ft letting to Rank Group.  Moves underway include Body Shop, Maersk, Macquarie Bank and EDF Energy.

The active sectors in Q1 2017 were professional (31%), technology, media and communications (25%) and pharmaceuticals (14%).  LSH say that 74% of all office take up in Q1 2017 was centred on just five of the 14 centres – Blackwater Valley, Bracknell, Maidenhead, Oxford and Reading. Reading continues to attract some big names and it’s key Business Parks are home to some of the world’s largest high-tech firms including Microsoft, Oracle, Cisco, Symantec, Logica CMG, Huawei, Veritas and more recently, major corporates such as Bayer and Thales.
Metropolis has published 260 stories about the relocation plans of 260 Thames Valley and South East companies in the last three months; including 75 companies searching for office space. In addition, it has reported on the plans of a further 60 companies that are approaching lease decisions.
The outlook for the Thames Valley seems to be for a slightly muted summer 2017, but with the recent rating revaluation and the nearing of the completion of the Elizabeth line, the near-term will see more occupiers relocating further out of Central London along the Thames Valley from early 2018.