Central London Lettings and Pre-lets – October 2017

Central London office lettings in October 2017 reached a healthy 1.3m sq ft of deals from 60 mid-large size transactions (5,000 sq ft+) during the month. The October figure exceeds the current monthly average of just under 1m sq ft .

October was characterised by 14 office deals over 20,000 sq ft, which included Dentsu Aegis’ 310,000 sq ft pre-let at 1 Triton Square, NW1, Sidley & Austin’s 120,000 sq ft pre-let at 70 St Mary Axe, EC3; WeWork took 107,000 sq ft at One Poultry, EC3, and Red Bull took 37,000 sq ft at Seven Dials, WC2.

Media topped the table of lettings by sector, underpinned by the Dentsu Aegis deal. This was followed by professional services with the large deals involving Sidley Austin and Grant Thornton.  Business services also performed well, helped by the lettings to WeWork and Orega. Office deals ‘under offer’ in central London fell slightly to 3.5m sq ft and pending deal volumes are healthy in nearly all sub-markets.

By area, the City accounted for 32pc of the office floorspace let in October at 414,000 sq ft. The West End saw 553,000 sq ft of take-up, underpinned by Dentsu Aegis. Midtown contributed 147,000 sq ft of lettings. Current London office demand is calculated to be around 3.2m 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 718,000 sq ft (55% of the monthly total), as transactions for new space resumed their recent strong showing.

Metropolis research is currently monitoring 630 ‘live’ London requirements, with deals for space of up to 1.8m sq ft due to sign in the next few months.

Cityoffices and Metropolis  has produced its latest London Skyline report for Q4 2017. The report contains details of new office schemes under construction, demolitions underway and projections for future construction. Further details of planning applications and consents, with scheme by scheme detail are listed on the Cityoffices.net website. Details on the report and Cityoffices from Andy King at andy@metroinfo.co.uk

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Manchester Office Market Summer 2016

Lambert Smith Hampton has just published its Q2 summary of the Manchester office market.

Manchester city centre office take-up for Q2 2016 reached 218,400 sq ft bringing the total for the first half of the year to 416,110 sq ft. LSH say that a number of large scale transactions are expected to complete in the second half of the year, which could lead to a year end total of 1m sq ft, close to the 5 year average.

Recent transactions included 11,000 sq ft to Mazars at One St Peter’s Square, 33,000 sq ft to the Co-op Bank at Martins House and 16,000 sq ft to Ericsson at MediaCity.

Recent Manchester pre-lets have included:

1 Spinningfields: PWC – 49,400 sq ft
Two St Peters Square: EY – 41,630 sq ft
XYZ: Global Radio – 16,670 sq ft
XYZ: Shoosmiths – 32,000 sq ft
XYZ: NCC Group – 60,000 sq ft

Swinton Insurance is under offer on 160,000 sq ft at 101 Embankment, Freshfields are due to complete imminently on 80,000 sq ft at New Bailey, DWP have a 80,000 sq ft Manchester requirement and PwC are being linked to taking further space at 1 Spinningfields.  There has growth in demand for companies looking to move operations (called northshoring) from London, for example law firm Freshfields, as well as Lonza and Escada opening new city centre operations.

Metropolis is also monitoring over 60 named Manchester office requirements from a wide variety of companies such as the likes of AJ Bell and Weinberger, as well as over 100 approaching lease expiries in late 2016 and 2017.

There is just over 1m sq ft of new office space under construction in Manchester, including schemes such as English Cities Fund’s 190,000 sq ft Two New Bailey and Ask Real Estate’s 164,000 sq ft 100 The Embankment.

 

London 2015 take-up tops 12m sq ft..Again

The results are in on central London office take-up in 2015.

Total transactions over 5,000 sq ft in the year amounted to 12.2m sq ft researched by Metropolis, a similar figure to 2014. The lettings breakdown included nearly 6m sq ft in the City; 1.2m sq ft in Docklands; Midtown 2.2m sq ft; West End 2.7m sq ft; Southbank 0.3m sq ft.

By office grade, a substantial 5.9m sq ft of the 12.2m sq ft was grade A, ie newly built or recently refurbished space. Some of the larger examples of grade A lettings included a flurry of deals at the Straford Quarter, Aldgate Tower, Leadenhall Tower, Alphabeta Building, Park House in Oxford Street and 58 Victoria Embankment. The highest rent recorded was nearly £100psf in a recently completed Mayfair scheme. Although the year saw more than 20 substantial pre-lets, the majority of grade A lettings came after the building completion. Developers seem to be benefitting from the ‘build it and they will come’ philosophy.

The most active sectors in 2015 are set out below. All figues in million sq ft.

Financial 3.2
TMT 2.5
Business Services 1.8
Professional 1.6
Insurance 0.4

Although financial services heads the list with 3.2m sq ft of deals, boosted by large pre-lettings to Deutsche Bank and Royal Bank of Canada, it was closely followed by TMT (technology, media and telecom). Large deals included Google, Facebook, Universal Music and Hewlett Packard. Also showing strongly are business services (WeWork took over 500,000 sq ft) in the year and professional services was boosted by big pre-lets to ashurst Morris Crisp and Deloitte.

Looking ahead to 2016, a similar year is in prospect. Some 7m sq ft of un-let speculative office space is under construction in central London, with a further 8m sq ft at demolition stage, according to Cityoffices.net. There are office requirements totaling around 10m sq ft for the City, Midtown, West End, Docklands and Southbank, plus a further large tranche of companies making decisions on future lease expiries. Based on current trends upto 6m sq ft of demand could go to under construction or newly refurbished space with a similar volume of secondhand space lettings. So another 12m sq ft of deals in 2016 is likely.

Metropolis London Skyline Survey

Metropolis has walked the streets of central London to compile its twice yearly skyline survey into the state of office development in the capital in 2015. The full report is available to clients, but the main conclusions were:

  • Office construction is on an upward path with 74 office schemes under construction in central London (72 a year ago) totaling an increased 9.5m sq ft (8m sq ft in October 2014).
  • In the last six months there have been 32 new office scheme starts in central London, totaling 4.1m sq ft
  • The proportion of refurbishments in the office construction market in central London has slipped to a 25:75 split by floorspace ratio of refurbishments:new-build.
  • The City dominates construction with 4m sq ft of new office space in schemes underway.
  • Work has started on 14 new West End schemes in the last six months, as part of a modest rise in construction activity in the West End to 34 schemes under construction.
  • Some 3m sq ft of the 9.5m sq ft office space under construction has already been pre-let.
  • More than 30 future schemes are currently at site preparation stage with nearly 5m sq ft of additional office space due to go under construction in the next 6 months.
  • Just over 3m sq ft of offices was completed in central London over the last six months, however a large proportion of the space was let either prior to completion or just after.
  • In total, less than 1m sq ft of offices are still available in the 27 London schemes and 3m sq ft of offices completed in Q4 2014 and Q1 2015. Some 32 different tenants have already signed up for space.
  • There are currently 1.6m sq ft of offices due for completion in Q2 and Q3 2015, of which only 400,000 sq ft has so far been pre-let.
  • Total office development underway in central London should break through the 10m sq ft ceiling in summer 2015.
  • Drops in availability are forecast to trigger a new wave of fast-track refurbishments.

Central London Office Lettings 2014

Sharddong

Best Year For Deals Since 2007

Metropolis has recently published its latest client newsletter, this month a special report on central London office lettings in 2014. Highlights include:

– Central London deals hit 12.8m sq ft, up 5% on 2013 take-up
– 14 deals were over 100,000 sq ft
– Metropolis is tracking over 700 central London office requirements
– Just over 2m sq ft currently under offer

The newsletter was provided exclusively to Metropolis clients. If you are interested in finding out how Metropolis could help your company win new business please visit us at http://www.metroinfo.co.uk.

Pre-lets growing

Last year we noted the pick-up in the number of companies pre-letting new or refurbished office space prior to completion. In the last 12 months the trend has picked up pace, with some 23 pre-lets announced in 2013 and a further 7 announced in the first three months of 2014. Recent examples include ING Bank at 8-10 Moorgate, EC2; Google at 6 Pancras Square, N1 and Estee Lauder at Fitzroy Place, W1.

Agents are reporting, backed by Metropolis monitoring of current requirements, is that space under offer in central London, suggests that a large number of pre-let deals will be completed in Q2 2014.

There is a trend for office occupiers to move relatively long distances across central London to pre-let the best quality space. High profile examples include Capita moving from the West End to 104,000 sq ft at 10 Aldermanbury in EC2; Hachette moving to 135,000 sq ft in EC4 from Euston; Ramboll moving to 30,000 sq ft at 240 Blackfriars Road in SE1; EY and Shell moving from Southbank to Docklands.

These figures taken from the Metropolis database illustrate the pre-let rise:

Prelet

Signs for the remainder of 2014 look encouraging, with some 4m sq ft under offer to companies such as Havas and Mizuho on various schemes currently under construction in central London. In addition, there are more than 500 lease expiries approaching on over 6m sq ft of offices in central London this year. The only question is will there be enough space to move into?

Kings Cross pre-let

PRS for Music, the music licensing organisation, has signed to pre-let 4,831 sq m (52,000 sq ft) of offices on the top four floors, at the under construction Two Pancras Square, King’s Cross Central, London, N1.

The building will be completed in summer 2014. PRS, which is taking a 15 year lease to 2029.