London Office Market Q3 2019

This is the final Metropolis Office Market Blog. After five years of the blog and nearly twenty years specialising in relocation market intelligence in the London office market, the emphasis has shifted and new challenges await in other channels.

The London Office market saw an increased level of letting activity in Q3 2019. Overall quarterly take-up rose by 13% from the 2nd quarter to a 12-month high. Appetite for pre-letting is growing as occupier concern over supply shortages, encourages deals to conclude at an increased rate, with 1.3m sq ft of London office pre-lets concluded in Q3.

Absorption levels are more subdued as a high proportion of secondhand space is bypassed in favour of new builds. However, the good new for the fit-out industry is that confirmed major pre-lets for schemes completing in 2020-2022, include G-Research, Cooley, Bridgepoint, Splunk and Millbank increasing the size of their floorspace in their pre-lettings.

Central London office market vacancy levels have has edged below 5% for the first time since early 2017, with availability of completed recently new/refurbished space just above the all-time record low for London.

Recently emerging separate requirements for over 100,000 sq ft, across the entire London market, prioritising product availability over include occupiers such as IBM, BNY Mellon, Mastercard, The Telegraph
and Kingfisher.

The City office market has seen an increased level of demand. In the last three months deals to BT, Monzo, ICG Longbow, Urban Outfitters, ION and Reinsurance Group of America have boosted Grade A letting activity surpassing 1 million sq ft for the first time in nearly 20 years. Rival flexible offices providers are also active with Knotel pre-letting 82,000 sqft at City Place House, Uncommon forward purchasing Templar House WC2 (140,000 sq ft)and Convene taking over 100,000 sq ft at 22 Bishopsgate, EC2. The pipeline in the City of London is set to see 2.5 million sq ft of speculative space delivered up to the end of 2021. Future large-scale schemes not under construction will not impact the market until 2022 at the earliest.

The West End also saw take-up improve in Q3, to 1.0 million sq ft, with pre-letting activity accounting for 30% of lettings including Diageo, Bridgepoint and Nationwide Digital. Vacancy rates rose very marginally, but the future pipeline includes 3.5m sq ft to be delivered up to end of 2020, albeit that 80% of that is pre-let, There are only three speculative schemes over 50,000 sq ft set to be delivered up to the end of 2020.

Thanks, best wishes and Merry Christmas to all Metropolis office blog readers!

Paul Ives, Apollo Business Research, can be reached via Linkedin

London Office Schemes – The Next Wave

The following 10 examples are part of a major ongoing research project on the next 200 London office schemes to be built in central London, forecast to be built 2021-2024:

Skipton House, 80 London Road, London, SE1 – Major 42,000 sq m mixed use scheme planned by London & Regional Properties and designed by Piercy & Company

Panther House, 38 Mount Pleasant, London, EC1 – Panther Securities planning a 6,600 sq m office scheme designed by Cano Lasso Architects

One Fairchild, 201 Shoreditch High Street, London, E1 – Folgate Estates planning a 9,900 sq m scheme designed by Gensler

90 Long Acre, London, WC2 – Northacre have worked up a 9,900 sq m office scheme designed by PLP Architecture

Euston Tower, 286 Euston Road, London, NW1 – London & Sydney is fine-tuning plans for upto 28,000 sq m of offices in a project designed by KPF

Commercial Union House, 1 Long Acre, London, EC1 – GMS Estates planning a 10-storey office building of 11,000 sq m designed by Emrys Architects

56-64 Leonard Street, London, EC2 – Melville Holdings looking to build 8,000 sq m offices in scheme designed by AHMM

Haymarket House, 28-29 Haymarket, London, SW1 – Hermes Investments on the path to a 10,000 sq m office scheme designed by TP Bennett

Suffolk House, 127-129 Great Suffolk Street, London, SE1 – TLS/GSS planning a major refurbishment and extension of the 7,000 sq m building, designed by TDO

Woolworth House, 246 Marylebone Road, London, NW1 – Henderson Park pursuing a 18,500 sq m scheme designed by AHMM

Schemes totalling over 280,000 sq m (30 million sq ft) are in the pipeline for 2020-2024, with more expected to emerge.

 

Paul Ives, Metropolis and Apollo Business Research – November 2019

Central London Office Market in February 2019

Central London office lettings in February 2019 reached just over 950,000 sq ft from 50 mid-large size office transactions (5,000 sq ft+) during the month. The February 2019 figure is in line with the current monthly London average of 1m sq ft.

February was characterised by 11 office deals over 20,000 sq ft, which were led by Bank of Canada’s 250,000 sq ft pre-let at 100 Bishopsgate, EC2, along with large deals to House of Commons at Dartmouth House, SW1; Rothesay Life’s expansion at the Post Building, WC1; plus Challenge Partners at Elizabeth House, York Road in SE1 and TechHub at Fitzroy House, London, EC2.

Finance services topped the table of lettings by sector, compiled by Metropolis, underpinned by the Bank of Canada deal. This was followed by business services led by serviced office lettings. Insurance, professional and media were also well represented.

Office deals ‘under offer’ in central London rose to 3.4m 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 60% of the office floorspace let in February 2019 at 566,000 sq ft. The West End saw 171,000 sq ft of take-up. Midtown contributed 125,000 sq ft of lettings and Docklands 19,000 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 a healthy 569,000 sq ft sq ft (59% of the monthly total), as transactions for new space maintained the recent strong showing. Availability is dominated by secondhand space in all London markets.

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.

Paul Ives Metropolis paul@metroinfo.co.uk