Best Year Yet!

Metropolis broke its own lead number record in 2016, with an exceptional 7120 business leads published between 1st January 2016 and the 31st December 2016.

  • There were nearly 4,900 (69%) new stories on planned moves or projects by companies, not previously run in 2015 or before;
  • The new moves and projects reported in 2016 reached a staggering 135m sq ft, if all were added together;
  • This total includes 1,400 newly identified requirements (nearly 30 each week), as researchers uncovered previously unpublished searches for 22.7m sq ft of office space in 2016;
  • Metropolis identified a further newly researched 1500 companies, occupying 35m sq ft, which are approaching property decisions, potential movers, in 2017 and 2018;
  • A further 1,800 newly researched companies confirmed space had been found and a move date set ranging from 5 weeks to two years away;
  • In addition, a further 2,220 companies updated Metropolis that either a potential search had moved to an active one, or an active search had resulted in a property found and move was being planned.

Overall the regions with most reported office movers and projects were:

London – 3200 (45%)
South East – 831 (12%)
North West – 565 (8%)
Yorkshire – 444 (6%)
Scotland – 438 (6%)

Overall the sectors with the most reported office movers and projects were:

Financial – 712 (10%)
Professional (law, consultant, accountant) – 680 (10%)
Media 664 (9%)
Business Services – 569 (8%)
IT-related – 500 (7%)

In terms of timescale, move dates for relocations completed and future were:

2016 moves now completed – 2,500 (35%)
2017 moves planned – 3,287 (46%)
2018 or later moves planned -1,333 (19%)

NB – All statistics refer to business leads run in 2016 and there remains a considerable number of additional projected moves on the database from 2015 and before, where no significant update was possible in 2016.

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Central London Office Lettings – September 2016

Central London office lettings in September 2016 recorded nearly 720,000 ft of deals from 50 mid-large size transactions (5,000 sq ft+) during the month. The September figure represents a rise of 23% from the 580,000 sq ft total in August and a rise in the number of deals over the month. However the Q3 London take-up figure of just over 2.1m sq ft was disappointing.

September was characterised by 8 office deals over 20,000 sq ft, including WeWork at Aldwych House WC2; Havas at Alfred Place, WC1; Government Digital Service at the Whitechapel Building, E1 and DNV GL Group at Southbank Tower, SE1.

Professional services topped the table of lettings by sector, helped by the Havas deal, followed by media sector, boosted by deals to Time Inc and Audio Networks.  Business services also performed well. Office deals under offer in central London remain around 2.9m sq ft and include two large pending deals in Midtown. Enquiry levels are up slightly.

By area, the City accounted for only 26pc of the office floorspace let in September. The West End saw 240,000 sq ft of take-up. Midtown had a good month with 170,000 sq ft of transactions. Current London office demand is calculated to be around 4.3m sq ft in the City and 3.2m sq ft in the West End.

The volume of grade A (newly built or refurbished office space) let during the month reached 293,000 sq ft (41% of the total), as transactions for new space kept momentum.

New research currently being prepared by Metropolis and Cityoffices for a major report on London office construction, reveals there over 3m sq ft of speculative office space went under construction in Q2 and Q3 2016.

Central London office lettings in May 2016

Central London office lettings in May 2016 recorded just under 550,000 ft of deals from 38 transactions during the month. The May figure represents a fall back from the 650,000 sq ft in April and 1.4m sq ft recorded in March as Brexit fears subdued the market further.

May was characterised by 10 office deals over 20,000 sq ft, including Mishcon de Reya at Weston House, High Holborn, WC1; Tata Consultancy at Northcliffe House, Kensington High Street London, W8 and Dentsu Aegis at 10 Triton Street, London, NW1.

IT services topped the table of lettings by sector, helped by the Tata Consultancy deal. This was followed by professional boosted by Mishcon de Reya’s letting. Media and business services are also performing well. Office deals under offer have risen to over 3.2m sq ft and include two large pending deals in the City. Over 40 separate deals are under offer, but seem dependent on the Brexit vote.

By area, the City accounted for only 21pc of the floorspace let in May. The West End had a better month particularly Victoria which saw 5 deals and the West End fringe which saw a further 5 deals. The pace further picked up in Midtown with over 200,000 sq ft let in 10 deals. Current London office demand is calculated to be around 4.6m sq ft in the City and 3.8m sq ft in the West End.

The volume of grade A (newly built or refurbished office space) let during the month reached only 70,000 sq ft (13% of the total), as transactions for newly developed or refurbished space suffered from the slowdown.

Current forecasts suggest that in the event of a Brexit vote, London office lettings will be curtailed for some substantial period, due to market uncertainty.

Metropolis and Cityoffices are tracking a potential 20m sq ft of central London office space completions between 2016 and 2018 in 100 schemes of over 20,000 sq ft.

London Lettings – January 2016

Central London office lettings experienced a slow start to 2016 with only 787,000 sq ft of office space transacted in 32 deals in January 2016. The figure represented an almost halving of the strong December lettings total.

January was characterised by 7 deals over 20,000 sq ft, including WeWork at Eastbourne Terrace, W2; Rathbone Bros at Finsbury Circus, EC2 and Office Group at 91 Wimpole Street, W1.

Business services topped the table of lettings by sector, helped by WeWork’s 106,000 sq ft and Office Group, followed by financial services boosted by Rathbone Brothers. Healthcare and professional sectors are also performing well. Office deals under offer fell to just over 2.5m sq ft.

By area, the City accounted for only just over a 25pc of the floorspace let in January. In contrast the West End had a good month with over 50pc of space transacted. Current London office demand is calculated to be around 4.5m sq ft in the City and 4m sq ft in the West End.

The volume of grade A (newly built or refurbished office space) let during the month reached 250,000 sq ft (32% of the total), as transactions for newly developed or refurbished space took a slightly smaller part of the total this month. Further details of schemes and pre-lets on Cityoffices.net.

Metropolis is working on an upcoming report on office requirements in London and across the UK.

22m sq ft of office demand

Metropolis 2015 UK Research Review

The Metropolis research team produced a total of 6,439 relocation, construction and refurbishment leads in 2015.  1,195 new office requirements were identified in total,  accounting for 22m sq ft of demand from companies looking for new office space.

62% of Metropolis leads were projects located in the South of the UK, with 38% of lead projects located in Wales, the Midlands, North, North West, Yorkshire & Humberside, Scotland and Northern Ireland. Greater London projects represented 44% of the 2015 lead total.

 

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Greater London

In Greater London, Metropolis identified  just over 16m sq ft of requirements for offices, with over 827 companies looking for new space. About 12.6m sq ft of this demand was for central London space. The top 5 most sought after postcode areas by demand were:  EC2 (2.2m sq ft), W1 (2m sq ft),  SW1 (1.7m sq ft),  EC3 (1.3m sq ft) and E14 (1.2m sq ft).

 

South East

The number of leads in the South East (not including London) jumped by 22% when compared to 2014’s total. Over 150 office requirement leads were researched in the region in 2015,  representing just over 3.5m sq ft of office demand. The largest office requirements centered on RG1 and SL1 postcodes, including several 9,290 sq m (100,000 sq ft) + requirements from energy, media, pharmaceutical and technology companies.

 

North West

Office relocation and refurbishment activity continued to be strong in the North West, particularly between 186 sq m (2,000 sq ft) and 929 sq m (10,000 sq ft) projects.  Just over 2m sq ft of office demand was identified in the region, the largest requirements centered on the Greater Manchester area. About 60 Manchester companies were linked with searches for new space, around 1.5m sq ft of office demand.

 

Scotland

Leads numbers in Scotland were slightly up on 2014’s result (3.5% up). The region remains the UK’s 4th most active in terms of the number of  Metropolis lead projects researched, but 3rd in terms of total office demand.  Metropolis identified 2.1m sq ft of office demand in Scotland as a whole in 2015, 1m sq ft of which was demand for Edinburgh space and 0.8m sq ft of which was demand for space in Glasgow.

Some of the largest requirements came from the banking and finance sector, which were mainly centered on Glasgow. The largest requirements for Edinburgh space came from the accountancy, law and technology sectors.

 

Yorkshire & Humberside

In Yorkshire and Humberside, just over 1m sq ft of office requirements were identified, with 115 companies looking for new space. Demand for new space in Leeds accounted for 0.8m sq ft.

 

West Midlands

West Midlands lead numbers were up 21% on the 2014 total. Just over 1m sq ft of office demand was identified in the region, 0.7m sq ft in Birmingham. About 180,000 sq ft of office demand was identified in Coventry, boosted by a 100,000 sq ft requirement from an energy company.

 

South West

In the South West, just over 0.5m sq ft of new office demand was identified. Bristol was the preferred location in the South West for large insurance and law sector moves.

 

North

Lead numbers in the North increased significantly for the second year running, up 29% on 2014. About 0.6m sq ft of office demand was identified in the region, 0.2m sq ft in Newcastle.

 

East Midlands

Lead numbers in East Midlands were slightly up on the five year average. The largest requirements mainly came from the manufacturing and retail sectors looking for distribution space with offices.

 

East of England

East of England lead numbers were up 33% on 2015’s total. The top five office requirements by size came from technology, pharmaceutical, accountancy and law sector companies. Office demand tracked in Cambridge reached 0.4m sq ft.

 

Wales

The largest office requirements in Wales came from the Public sector, with a 130,000 sq ft requirement from a government department  looking in Cardiff. However there were also two 100,000 sq ft requirements from law and insurance firms also looking in Cardiff, where total office demand was just over 0.5m sq ft.

 

Northern Ireland

The largest office requirements unsurprisingly came from Belfast occupiers, with government, accountancy and technology sectors the most active.

 

 

UK Lead Projects By Size

50% of Metropolis leads in 2015 reported on projects over 10,000 sq ft. 44% of leads were made up of projects between 5,000 sq ft and 30,000 sq ft. 68% of leads covered projects over 5,000 sq ft.

 

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The increase in lead projects between 2,000 and 5,000 sq ft was  significantly influenced by added investment into regional research by Metropolis, particularly in the South East, West Midlands and South West.

A significant number of new office mover leads, typically 20 to 50 staff relocations,  were identified in these areas in 2015.

The 40 and 50 redevelopment schemes in London that effected existing tenants in 2015 also contributed to an increase in the proportion of these lead projects.

These schemes, which include demolition and refurbishment of existing buildings,  forced hundreds of SME office occupiers to find new space, the significant proportion of which occupied between 1,000 and 5,000 sq ft.

 

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UK Lead Numbers by Sector

The Banking & Finance Sector just edged ahead of  Technology & Telecoms leads in 2015 and was the most active UK business sector in terms of relocation and refurbishment projects. Lead numbers fell by 8.5% when compared to 2014’s strong result,  but were still about equal to the five year average.

The largest requirements in this sector were focused on space in Docklands and London EC2. The largest office lettings were on space in London EC4 and EC2.

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Office demand from the technology and telecoms sector was just over 3m sq ft. Two of the top five largest requirements for new space from the T&T sector came from social media companies, both seeking in excess of 100,000 sq ft of space in the West End of London.

The majority of requirements for new space over 50,000 sq ft centered on London, but there were notable exceptions, including a 150,000 sq ft requirement for space in Cambridge from a US Software firm and a 100,000 sq ft requirement for offices in Warrington from a US computer manufacturer.

Office demand from media sector companies, often grouped with Technology and Telecoms under the banner “TMT”, reached 2.5m sq ft.

Central London, particularly SW1, W1 and WC2, was the overwhelmingly preferred location for this sector. The largest media requirement outside of London came from a media broadcaster looking for 150,000 sq ft in the Thames Valley.

Demand for new space in the law sector focused on London EC2, with three 200,000 sq ft + requirements for new space in this postcode.  Outside of London, the largest office requirements centered on Manchester and Birmingham.

 

Copyright Metropolis Property Research Ltd 2016

Central London Office Lettings – October 2015

Central London office lettings registered a subdued 550,000 sq ft of transactions in October 2015, spread across 36 deals during the month.

October was characterised by 9 deals over 20,000 sq ft, including One Avenue Group at Dawson House, 5 Jewry Street, EC3; Ince & Co at Aldgate Tower, E1; Alexander McQueen at 1 Aylesbury Street, EC1 and N1 and Coller Capital at Park House, W1.

Business services topped the table of lettings by sector, helped by the One Avenue deal, followed by professional boosted by Ince & Co and another law firm. Office deals under offer (including Thomson Reuters) fell slightly to 3.7m sq ft.

By area, the City accounted for a little under half the total space at 35pc of the floorspace let in the month. Current London office demand is calculated to be around 5.8m sq ft in the City and 3.8m sq ft in the West End. Availability rose to 10.9m sq ft, helped by completion of a number of schemes in Q4.

The volume of grade A (newly built or refurbished office space) let during the month reached 317,000 sq ft (58% of the total), as transactions for newly developed or refurbished space took a large part of the total.

Metropolis is about to publish a new report on upcoming London office schemes for autumn 2015.

Metropolis Office Requirements – H1

Over 450 companies vie for London space

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Metropolis research identified over 17m sq ft of UK office demand in the first half of 2015. Just over 9.2m sq ft of this demand was for office space in Greater London, with over 450 companies searching for London space. In the rest of the UK Metropolis uncovered 400 requirements for new space representing 8.1m sq ft of office demand.

Central London office demand reached 8m sq ft, 3.8m sq ft (47.5%) of which was focused on the City of London. EC2 was the most popular postcode for companies planning a move,  with 1.4m sq ft of demand emerging in H1.

A significant proportion of total City of London demand (11%) came from two new law firm requirements, each firm looking for 200,000 sq ft. A new 150,000 sq ft requirement from an insurance group was also worthy of note. Demand from the banking and finance sector reached 1m sq ft, 26% of total City of London demand.

Demand for space in the West End, where rents can reach £125 psf, hit 1.8m sq ft. The largest West End requirement (150,000 sq ft) came from a social media group looking for offices in SW1. Just over 400,000 sq ft of office space (26% of total demand) was required by the banking & finance sector, 79% of which (315,000 sq ft) came from hedge funds and private investment firms.

Mid Town office demand reached 0.9m sq ft, pretty evenly split between WC1 and WC2. About 100,000 sq ft of Mid Town demand came from the technology sector and 90,000 sq ft from the media sector. Demand from law firms was just over 120,000 sq ft and demand from the banking and finance sector totalled 110,000 sq ft.

The largest office requirement in the South Bank (SE1) was a 140,000 sq ft search by an engineering and construction firm. Other requirements of note include a US insurance firm switching a 60,000 sq ft search from Maidenhead to London SE1, and a TV Broadcaster looking for 30,000 sq ft to house its news department.

Two big requirements dominated demand for office space in the Docklands: a German investment bank back office requirement for 350,000 sq ft and an information company requirement for 300,000 sq ft, with a sub-let mooted.

 

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The Top 5 Regional Cities

Manchester – The largest requirement, 400,000 sq ft, was a search by a government department considering space near Piccadilly Station in Manchester. Just over 250,000 sq ft of Manchester office demand came from the legal sector and 300,000 sq ft of demand was attributed to the insurance sector.

Edinburgh – Similar to the picture in Manchester, Edinburgh demand was dominated by a large government requirement for office space (300,000 sq ft), although this requirement could move to Glasgow. In terms of private sector demand, notable requirements included a 100,000 sq ft search by a US Bank and two significant searches from law firms seeking a move in central Edinburgh, one for 50,000 sq ft and the other 30,000 sq ft. There was also significant demand from the accountancy sector, with four firms searching for just over 130,000 sq ft.

Birmingham – A retail bank was linked with the largest office requirement in Birmingham: 170,000 sq ft,  a search now satisfied by space at Miller Developments Arena Central scheme.  Other significant requirements include a potential 100,000 sq ft search from a law firm and a 50,000 sq ft search from a business education group.

Reading – The largest requirement for Reading offices came from a network broadcaster looking for 150,000 sq ft, closely followed by a utility company searching for 140,000 sq ft. Both requirements also consider other Thames valley locations such as Bracknell, Farnborough and Slough.

Bristol – Bristol office demand was dominated by insurance company requirements, with the sector accounting for 56% of total demand (280,000 sq ft). Other notable requirements include an 80,000 sq ft search from a Bristol based law firm planning to combine two of its offices (which may now be a refurbishment and extension of the existing building) and an engineering group searching for 25,000 sq ft.

 

Top Ten Cities (Excluding London) by H1 Office Demand

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Copyright Metropolis Property Research Ltd 2015