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

Advertisements

Metropolis Office Movers in January 2018

Metropolis ran 620 business leads on ‘office movers’ in the month of January 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. London was the largest region with 282 leads during month, but there were also strong showings from the South East (62), Yorkshire (59) North West (41) and Scotland (39). Financial services, IT and business services 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, 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 620 January leads, included those on occupiers Credit Suisse, Barclays Bank, Sumitomo, Wells Fargo and Anglo American.

The January 2018 leads included 213 ‘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 213 searches, 126 were new office searches, not previously notified to clients.

The most recent research also included 148 ‘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 Simon at simon@metroinfo.co.uk

—————————————————————————————————————————————————————————-

Cityoffices.net, the sister property leads service to Metropolis, is working on its ‘Spring 2018’ 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

£1bn up for grabs on Metropolis

With over 6,000 office movers reported on Metropolis each year, we looked at an estimate of the total expenditure on relocation costs by these companies. Metropolis  estimate the total size of the office movers market in the UK each year.

Firstly, we looked at the average size of move. Metropolis tends to concentrate on the middle and larger end of the office relocation market, the total size of all listed office moves in the last year planned and implemented was over 80 million sq ft. Making some adjustments for updates, where company plans are updated more than once in the year, we arrived at 50m sq ft of unique office moves, both completed (space found), still deciding (potential mover) and searching (identified requirement).

We calculated an average office move size during the year of just over 8,000 sq ft. We then applied this average to a number of industry cost estimates.

Office fit-out costs can range between £15-£60 psf. If we take the most conservative estimate of £15 psf over 50m sq ft, these moves could generate £750m of expenditure on fit-out. Much more per office mover in central London.

Office agent fees, conservatively estimated at 2% of annual rent. If all 25m sq ft of office moves currently planned, but yet to take place, were considered around an average of £20 psf then office agency fees offer a potential £50m.

Furniture can also be a lucrative area for suppliers. Assuming 300,000 staff will move or be moving in the future, as part of these 6,000 office moves, if half of the companies spent a modest £500 on each employee for desk and chair this would total £75m. Of course this would be supplemented by additional furniture and some much higher expenditure at blue chip companies.

Removals can cost upwards of £10,000 for a small office and 40-50 staff. So conservatively, assuming some companies do not move, some expand into adjacent space and some move themselves, say £70m of business a year.

Cabling and IT upgrades can also provide opportunities for suppliers. Leaving aside the booming fintech sector, every company needs ever more sophisticated IT systems. With over 50m sq ft of unique moves this market can easily exceed £100m.

Other professional fees for dilapidations, consultancy and disposal costs can also provide opportunities, but these can be difficult to generalise.

In conclusion, on the most conservative estimates the potential business being signposted on metropolis is well over £1bn per year. Probably in reality over £2bn if less conservative assumptions are made.

Sources: Cushman & Wakefield Occupier Fit Out Cost Guide; http://www.getamover.co.uk; Morgan Lovell Office Relocation Checklist; Savills; Metropolis;