Central London Lettings – September 2017

Central London office lettings in September 2017 reached a healthy 965,000 sq ft of deals from 61 mid-large size transactions (5,000 sq ft+) during the month. The September figure conforms to the current monthly average of just under 1m sq ft .

September was characterised by 14 office deals over 20,000 sq ft, which included Boston Consulting’s 123,000 sq ft pre-let at 80 Charlotte Street, W1, Metro Bank’s pre-let at 20 Old Bailey, EC4; Costain took 30,000 sq ft at Victoria House, WC1, and Mitie took 30,000 sq ft at The Shard, SE1.

Professional services topped the table of lettings by sector, underpinned by the Boston Consulting deal. This was followed by financial services with the large deals involving Metro Bank. Property and Business services also performed well, helped by the lettings to Costain and Mitie. Office deals ‘under offer’ in central London increased slightly at 3.6m sq ft and pending deal volumes are healthy in nearly all sub-markets.

By area, the City accounted for 33pc of the office floorspace let in September at 314,000 sq ft. The West End saw 263,000 sq ft of take-up. Midtown contributed 242,000 sq ft of lettings. Current London office demand is calculated to be around 3.1m sq ft in the City and 2.8m sq ft in the West End.

The volume of grade A (newly built or refurbished office space) let during the month reached 448,000 sq ft (46% of the monthly total), as transactions for new space resumed their recent strong showing.

Some 8.9m sq ft of offices were let in the first 3 quarters of 2017 to end of September 2017.

Metropolis research is currently monitoring 620 ‘live’ London requirements, with deals for space of up to 2m sq ft due to sign in the next few months.

Cityoffices and Metropolis are working on an analysis of lease expiries which were due to expire in 2017 and the latest London Skyline report. The update will contain details of dozens of new office schemes under construction, planning applications and consents, with scheme by scheme detail on the Cityoffices.net website. Details on Cityoffices from Andy King at andy@metroinfo.co.uk

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Skyline Report Summer 2017

Metropolis and Cityoffices are about to publish their bi-annual survey of office construction in central London.

 

  • The survey brings readers all the statistics on the 101 office schemes in central London currently under construction and tenant activity connected to those schemes, right up to date to June 2017.

 

  • The survey, compiled after many hours of street surveys, telephone research and crosschecking, takes a snapshot of the central London office construction in Q2 2017, recent completions, recent pre-letting activity and looks ahead to future pipeline projects that will shape the next three years.

 

  • The report looks at the volume of construction underway, lists the major new scheme starts and looks at the proportion of refurbishment space compared to new builds. The report breaks down office construction by London district: City, West End, Midtown etc, as well as major recent building completions.

 

  • The survey also looks at occupier demand, with recent trends in pre-letting including examples of recent deals and a comparison with each of the last ten years.

 

  • The report then turns to the future pipeline including the 29 schemes currently at site preparation stage and 200 schemes with planning consent awaiting a start date.

 

  • Finally, it concludes with some forecasts for London office development based on current trends and makes predictions for London occupier demand over the rest of 2017 based on Metropolis’ detailed London office tenant research.

 

The report will be available free of charge to Metropolis and Cityoffices subscribers. If you are interested in a subscription contact Andy King at andy@metroinfo.co.uk

Refurbishment change

A recent report from Savills highlights the changing nature of office schemes in regional cities.

Rising construction costs and slim margins are pushing developers towards refurbishments and the new trend is for a higher quality of refurbishments according to Savills. Nearly 40% of the pipeline of office schemes in regional cities will be delivered in the form of refurbishments.

A sustained level of demand for space in many of the regional cities alongside a lack of new office schemes, is boosting demand for refurbished office space. Landlords are turning to refurbishments to capture lettings from professional occupiers including lawyers, accountants and engineering firms.

As an example, Helical’s ongoing refurbishment of Churchgate House in Manchester which has transformed the building from part-occupied and unattractive to now being fully let. Occupiers have been attracted by a new reception incorporating touch down space, collaborative working areas and a high quality cafe.

Aviva is refurbishing 11 Portland Street, Manchester, which will provide single floors of up to 20,000 sq ft. The major refurbishment incorporates an entirely new principal reception area which has been repositioned to the corner of Portland Street and Aytoun Street.

Savills expect Bristol to be the next city to see a step change in demand for refurbished office space, driven by both a shortage of new build office space.

Metropolis has published business leads on 160 planned office schemes in London and regional cities over the last six months including details of developers and architect contacts, as well as timescales and any pre-lets. In addition Cityoffices.net includes details of all pipeline schemes, with full contact names and numbers.

Newcastle Office Market

A recent 2017 report by Knight Frank, revealed that Newcastle city centre take-up fell by 15% during 2016 reaching 220,000 sq ft.

Business Services accounted for the largest proportion of city centre take-up in 2016 at 22%. There was also a continued increase in activity in the TMT (technology, media and telecom) sector.

Out of town, total take-up reached 492,000 sq ft, with the North East has attracted an increasing number of ‘footloose’ occupiers in recent years.

Key transactions included a 35,000 sq ft letting to Convergys at The Rocket in the Stephenson Quarter. The most significant deal in the TMT sector was Zerolight’s new lease of the entire LiveWorks development on Newcastle Quayside (15,000 sq ft) only months after the building completed.

Metropolis is monitoring around 20 companies with identified or possible office searches in Newcastle.

Figures from local agent Naylors show 177,041 sq ft of out of town office space in Newcastle was let in Q1 of 2017. In contrast, only 33,461 sq ft of city centre office space was let in the same period. In Q1 2017, Frank Recruitment let 19,000 sq ft at the St Nicholas Building, while Sir Robert McAlpine is taking 8,000 sq ft in the same building.

Out of town, Quorum Business Park secured the largest letting with Sitel taking 47,000 sq ft. Other significant deals included Leeds Building Society moving their regional HQ from Silverlink to Cobalt Business Park and Parseq acquiring 20,000 sq ft at Camberwell House, Doxford Business Park.

The office market in Newcastle remains relatively quiet, with the majority of companies approaching lease events in 2017, choosing to renew current arrangements rather than search for alternative space. Future market growth is likely to mainly come from companies outside the region inward investing and expansions.

Corporate Fit-Out Winners 2012-2016

 

 

 

 

 

 

 

 

London Top 10’s

The Corporate Fit Out Winners 2012-2016

Metropolis Property Research has just released its latest report for the period 2012-2016 on the central London office fit-out market.

The report provides Top 10 Rankings for those firms involved in ‘CAT B’ projects for corporate occupiers taking new space for interior design, project management, fit-out ‘build’, and agents advising tenants.

 

The No 1 TOP 10 firms are:

No 1 Interior Architect  – TP Bennett

TP Bennett has been ranked as London’s No 1 interior architect with 4.7m sq ft of interior design projects for corporate occupiers taking new space 2012-2016.  This is 29% market share amongst the named TOP 10 firms.

 

No 1 Fit Out Contractor – ISG

ISG has been ranked as London’s No 1 fit out contractor with 5.0m sq ft of fit-out projects for corporate occupiers taking new space in 2012-2016.  This is 33% market share amongst the named TOP 10 firms.

 

No 1 Interior Project Manager – CBRE

CBRE has been ranked as London’s No 1 project manager on interior fit out projects with 3.5m sq ft of projects for corporate occupiers taking new space 2012-2016.  This is 24% market share amongst the named TOP 10 firms.

 

No 1 Tenants Agent – CBRE

CBRE has been ranked as London’s No 1 tenant agent with 6.2m sq ft of occupier deals done on new office space 2012-2016.  This is 30% market share amongst the named TOP 10 firms.

 

 

Editorial Notes

In the five-years covered by the research (2012-2016) a total of 57.3m sq ft of new office space has been let in central London. The report has looked at deals of 2,322 sq m (25,000 sq ft) and over – which are the focus of the analysis – and amount to 30.3m sq ft of office space fitted out in 433 projects.

The report ‘London Top 10’s – The Corporate Fit Out Winners 2012-2016’ is available from Metropolis Property Research.   For details please contact simon@metroinfo.co.uk

 

About Metropolis Property Research Ltd

Metropolis Property Research is an independent research and information company established in 1998.   The company carries out research into the London and UK office markets and corporate relocation leads.

Metropolis Website and Blog – http://www.metropolisleads.uk

 

Copyright Metropolis Property Research Ltd 2017

November 2016 Central London Lettings

Central London office lettings in November 2016 recorded nearly 1,050,000 sq ft of deals from 45 mid-large size transactions (5,000 sq ft+) during the month.

The November figure represents a rise of 17% from the 900,000 sq ft total in October and a rise in the number of office deals over the month.

November was characterised by 10 office deals over 20,000 sq ft, which included Freshfield’s 300,000 sq ft pre-let at 100 Bishopsgate, EC2; Fidelity took 105,000 sq ft at 4 Cannon Street, EC4 and WeWork took 72,000 sq ft at The South Bank Tower, SE1.

Professional services topped the table of lettings by sector, underpinned by the Freshfields deal, along with big lettings to Olswang and Nabarro, followed by the financial sector, boosted by deals to Fidelity and EQT. Business services also performed well helped by more lettings to WeWork. Office deals under offer in central London fell slightlt to 2.5m sq ft after deals in the City and one in Southbank.

By area, the City accounted for only 78pc of the office floorspace let in November – a big increase on the 18pc in October. The West End saw 70,000 sq ft of take-up. Midtown contributed 20,000 sq ft of transactions, but Southbank again performed well with 70,000. Current London office demand is calculated to be around 4m sq ft in the City and 3m sq ft in the West End.

The volume of grade A (newly built or refurbished office space) let during the month reached a remarkable 800,000 sq ft (76% of the total), as transactions for new space kept momentum.

Take-up in central London for January to November 2016 has so far reached 9.4m sq ft with December to come. With two or three large lettings pencilled in the yearly total could touch 11m sq ft.

Cityoffices wishes all its readers a Merry Christmas and prosperous New Year.

South Coast steady

JLL has just published its Q3 2016 report on the ‘South Coast Metropole’, covering Portsmouth, Southampton and Bournemouth. The headlines are that prime building office rents reached £21.50 per sq ft; there has been a 6% increase in take up from this time last year and there is a shortage of new office schemes coming through the pipeline. The market has generally stabilised after the initial shock of the Brexit vote.

In Q1 – Q3 2016 there has been a 16% increase in take-up compared to the same period last year. Take-up has risen from from 337,366 sq ft in 2013 to 419,160 sq ft in 2014 and to over 500,000 sq ft in 2015. The largest letting over the last year was Utilita Energy which took circa 52,000 sq ft at Hutwood Court, Chandler’s Ford. More recently Just Develop IT  took 25,000 sq ft at Segensworth; Peach Telecom took 14,000 sq ft at Fareham and One Insurance took 12,500 sq ft at Chandlers Ford.

The south coast remains a popular location for businesses in the defence, technology and financial sectors. JLL point to a trend for larger occupiers moving to out-of-town locations due to lack of suitable new schemes in city centres.

Metropolis is tracking over a dozen companies looking for over 10,000 sq ft of offices in Portsmouth, Southampton and Bournemouth.

The occupational market in the region is being been driven by lease events with companies consolidating into single buildings or relocating to take advantage of newly refurbished, better quality accommodation, often from cellular offices into more modern open plan space.

Speculative office development has been quiet with the exception of one building at Southampton Science Park and in Bournemouth, One Vision is currently under construction as part of a mixed use scheme where offices will be provided up to 83,300 sq ft by 2018. Development sites at Royal Pier Waterfront in Southampton, Lakeside Northarbour in Portsmouth and Chilcomb Centre in Winchester may as a result, see new offices built, as supply continues its steady decline.