Bristol market on the Rise

A recent report on the Bristol office office market from property consultant Colliers International revealed that office take-up in Bristol in the first half of 2016 reached 380,000 sq ft, which is a substantial 43% up on the first six months of 2015. Bristol is on track to reach take up of 800,000 sq ft by the end of 2016, well above the five year average of 533,000 sq ft.

The strong figures include two recent deals: EDF Energy taking 81,000 sq ft at Bridgewater House, Direct Line purchasing 63,000 sq ft at The Core and 28,000 sq ft in let at Narrow Quay House to Frazer Nash Consultancy. Grade A (new and recently refurbished space) take-up was 123,570 sq ft.  Vacancy levels remain at an all-time low – 7.3% (Bristol) and 7.0% (Grade A) respectively.

Colliers say that Business Services represented 28% of total take-up for the first six months of 2016, while Energy and Utilities were the second most active business sector at 21%, although that 21% comprises
the EDF Energy deal only. The demand for space remains strong, with a good level of significant sized requirements actively seeking high specification centre city offices. HMRC has the single largest requirement of more than 170,000 sq ft.

Metropolis is currently tracking around 40 companies with searches underway in the Bristol area. In addition, around 50 medium/large companies are approaching lease expiries in 2017/18.

Tech and digital companies are also key drivers behind office demand in Bristol, with the BBC, IMBD (owned by Amazon), Hewlett Packard, Just Eat and Huawei all recently choosing to locate in the city

66 Queen Square was the last Grade A office scheme to be completed and only 3,500 sq ft is available. The 95,000 sq ft Aurora scheme, is the only office building under construction and will be delivered in Q4 2017. The 250,000 sq ft ‘Assembly’ office scheme is currently looking for revised planning consent, while the 184,000 sq ft ‘Aspire’ scheme is tipped for a late 2016 start.

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Metropolis Office Requirements – Q1 2015

9.6m sq ft of demand

The Metropolis team researched over 455 UK company office requirements in Q1 2015, representing 9.6m sq ft of office demand.

5.5m sq ft of this demand was for space in Greater London, 4.3m sq ft of which was demand for central London space. 4.1m sq ft of demand was identified by our team in the rest of the UK.

Demand for City of London space continued to be strong during Q1, with 2.1m sq ft required in over 91 planned office relocations. Four of the top five requirements by size were searches by banks with the other a significant requirement from a major accountancy firm. The top five requirements were moves planned in 2016, 2017 and 2018. EC2 demand made up 42% of the total central London space required.

0.8m sq ft of demand was identified in the West End of London, 0.5m sq ft in London SW1 and 0.3m sq ft in London W1. Two of the top five requirements by size were searches by banking and finance companies. All of the top five largest moves are planned for late 2015 and 2016.

Mid Town office demand was mainly focused on London WC2, with two of the largest requirements centered on this postcode. One of the most significant requirements identified was an 80,000 sq ft HQ search by a TMT company planning a move in 2017.

In London SE1, where 0.3m sq ft of demand was researched, the largest requirement came from a construction group. In E14, a 400,000 sq ft requirement from an investment bank made up 66% of the 0.6m sq ft of total demand for offices in the area.

Banking & Finance sector UK office demand reached 2m sq ft in Q1 2015. The largest searches centered on the City of London and Docklands, although there was a notable search for 175,000 sq ft of space in central Birmingham.

0.8m sq ft of demand was identified from the Technology & Telecoms sector, and similar to banking and finance was largely focused on the City of London. There were however also significant searches for space in Manchester and Newcastle-upon-Tyne.

The largest government requirements were for space outside of central London, the most significant a search for over 400,000 sq ft in Manchester. The largest media sector requirements centered on fringe central London locations and the top three law sector requirements were for space in Birmingham, Manchester and Bristol.

 
Metropolis is currently tracking over 700 unique searches for space in London and over 400 in the rest of the UK.

 

DemandbysectordemandinLondon

 

Central London Lettings Jan-Feb 2015

Central London office lettings dropped in the first two months of 2015 to just under 990,000 sq ft in 60 deals in January and February 2015.

The months were was characterised by a shortage of large deals, with only the 60,000 sq ft letting to Hewlett Packard at 1 Aldermanbury Square, EC2 and 167,000 sq ft to WeWork at More Place, EC2, the only ones over 50,000 sq ft. Other large lettings included deals to Investec, Aimia and the Royal College of Pathologists

Business Services and the computer and IT sectors topped the table of lettings by sector, helped by the WeWork and HP deals, followed by financial services and transport. The media and law sectors looks likely to provided some momentum in the months ahead.

By area, the City accounted for over half the deals and 62pc of the floorspace let in the months, while Midtown saw 10 deals totaling 120,000 sq ft including a major deal to Aimia.

The volume of grade A (newly built or refurbished office space) let during the month dipped to under 300,000 sq ft as transactions for newly developed or refurbished space slowed during the period. However there are a number of large lettings in the pipeline at ‘under offer’ stage.

Metropolis is preparing a report on current office deals under offer in London based on its extensive database.

Law firms intensify demand

A recent report by property consultant CBRE underlines recent Metropolis research on the law sector in London.

The report highlights law firms efforts to use their space more efficiently as well as using lease events to rebuild IT networks and change working methods. The report also estimates there are currently 24 medium/large office requirements by law firms in central London (Metropolis is currently tracking 28 searches over 10,000 sq ft in London), including DLA Piper, Withers and Ashurst.

Nearly 800,000 sq ft of central London office space was let to law firms in 2014 (a similar level to 2013) including: Mishcon De Reya taking 116,000 sq ft at Africa House, Kingsway; HowardKennedyFsi’s 54,600 sq ft letting at 1 London Bridge; Ropes & Gray’s 45,000 sq ft pre-let at One New Ludgate; DWF’s 43,000 sq ft deal at 20 Fenchurch Street. In addition, Boodle Hatfield took 23,000 sq ft at 240 Blackfriars, and Radcliffe’s le Brasseur agreed a deal to take 29,000 sq ft at 85 Fleet Street.

In addition, a wave of law mergers has led to a number of firms bringing two previously separate operations together under one roof. There are currently over a dozen mergers at various stages and some recent examples include Locke Lord and fellow US law firm Edwards Wildman; Morgan Lewis and Bingham McCutcheon, as well as Charles Russell and Speechly Bircham.

Looking ahead, a number of firms are saying they plan to re-gear leases at impending renewal including Simpson Thatcher & Bartlett, Dechert, Watson Farley & Williams, and Kirkland & Ellis. There has been a gradual trend to dispose of surplus space in recent years. However, there is nearly 5m sq ft of lease expiries and break options, amongst law firms, approaching in the next five years, so activity looks likely to be brisk and deliberations often start early. CBRE’s survey work indicates that discussions may begin four or five years ahead of any lease event, with the broadest possible consultation among the firm’s partners and lawyers.

Metropolis forecasts that with the combination of lease expiries, expansions, mergers and new market entrants; law sector office moves could reach an average of nearly 1m sq ft per annum in central London over the next few years.