Metropolis Leads in July 2018

Metropolis ran 592 business leads on ‘office movers’ in July 2018. If all reported moves were added together the total would exceed 16 million sq ft of office searches and transactions, researched by Metropolis’ unique market-led intelligence research team, last month.

London was the largest region with 270 business leads during month, but there were also strong showings from the South East (71),  Scotland (69) North West (38) and Yorkshire (36). Financial services and business services were the largest business sectors planning relocations or agreeing moves during the month.

The relocation leads geographically covered the whole UK and provided details of the size of the office occupier, company likely move dates, a description of the reasons for the move, its business sector and full contact details including an address for written inquiries, at least one telephone number and in most cases an email address. Some of the largest planned moves and top picks amongst the 592 July leads, included those on occupiers Facebook, Linklaters, Barclays, EBRD and Diageo.

The July 2018 leads included 172 ‘identified requirements’, including 90 in London. Which means that the company confirmed to researchers that it has current or future plans to search for alternative office space. Of these 172 searches, 105 were newly posted office searches, not previously notified to clients.

The most recent research also included 142 ‘potential movers,’ which were mainly longer-term leads on occupiers, considering a relocation, but the occupier has yet to make a final decision on whether to search.

Most of the remaining stories covered companies that have just signed for new office space and have set a move date, including some large pre-lets and companies inviting tenders for fit-out contracts. The shortest planned move date is just over a month away, whilst the longest was late 2021.

Recent research by Metropolis concluded that a conservative estimate of ‘live’ business tender opportunities on the database in recent months, exceeded £1bn of business.

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Requirements on the Rise?

Over the first two months Metropolis Property Research has noticed a small rise in the numbers of office occupiers launching new searches for office accommodation.

Some examples researched and published over the past week include:

  • An IT support firm, has told Metropolis that it is currently searching for around 200 sq m (2,200 sq ft) of office space within the South Bank area of London. The firm is planning to move from its current base in the Autumn of 2018;
  • A City of London-based energy consultancy, has told Metropolis that it has appointed an un-named property agent to advise on relocation or lease options in central London, ahead of a late 2018 lease break option. The company currently occupies 465 sq m (5,010 sq ft) of offices with about 35 staff;
  • A computer consultancy firm, has told Metropolis that it is currently searching for around 475 sq m (5,100 sq ft) of office space in the Maidenhead area. Staff advise that a move date has not been set, but that it will likely take place around Autumn 2018.;
  • An energy exploration company, has strongly hinted that it is considering launching a search for alternative London West End offices in 2018;
  • An IT consultancy firm, has told Metropolis that it is currently searching for around 220 sq m (2,400 sq ft) of office space in Bristol. A senior contact has stated that an ideal move date would be around October or November 2018;
  • A Leeds headquartered print management company, is planning to open an office in London by 2020;

Metropolis researches around 140 new office requirements each month in the UK, plus hundred of other companies pondering move decisions and agreeing lettings.

Scottish Offices 2018

Lambert Smith Hampton, the property adviser, has just published its review of the Scottish office market in 2017 and makes its predictions for 2018.

LSH say that for half of office movers in Glasgow, Edinburgh and Aberdeen (57% of occupiers), relocation was more likely to be prompted by a lease expiry or break option, a pattern that underlines the importance of market churn over inward moves from companies based outside Scotland.

Notable transactions triggered by lease events included State Street Bank and Trust Company (65,628 sq ft at Lauriston Place, Edinburgh), the Scottish Prison Service (51,009 sq ft at
Redheughs Rigg, Edinburgh) and Balfour Beatty (43,568 sq ft at Maxim 7, Glasgow).

Expansion was the trigger for 26% of relocations, indicating ongoing confidence among occupiers. Expansion also played a part in a number of deals in Aberdeen despite the dip in oil prices, albeit none of these involved occupiers in the energy sector. Key deals spurred by expansion included the University of West Scotland (225,000 sq ft), Computershare (41,395 sq ft) and the Student Loans Company (40,853 sq ft). Common among these occupiers was a desire for better quality office space or a more effective working environment.

In Edinburgh, location was behind the vast majority of relocation choices. In Glasgow, location accounted for less than half of deals. In some instances, occupiers were able to expand at the current base. For
example, Wescot Credit Services acquired an additional 10,567 sq ft at 38 Cadogan Street, Glasgow while Actavo acquired a further 10,685 sq ft at Alexandra Parade, Citypark, Glasgow.

Better quality office space was cited as the key driver of choice in 14% of deals, a notable example being Mott MacDonald’s acquisition of 34,515 sq ft of grade A space at St Vincent Plaza in Glasgow. Improved efficiency was the key driver of choice for 12% of deals, the largest being ST Microelectronics acquisition of 21,530 sq ft of grade A space at Tanfield, Edinburgh.

Looking ahead, to the end of 2020, Scotland’s five largest town’s and cities possess almost 450 known lease events in excess of 5,000 sq ft. 2018 will see 145 lease expiries and breaks above 5,000 sq ft across the
key markets, amounting to just over 2.1m sq ft of potential demand.

Metropolis is currently monitoring over 50 Scottish companies with plans to move in 2018 and over 100 occupiers coming up to decisions on leases in Aberdeen, Glasgow and Edinburgh.

Scotland enjoys growth

CBRE’s H1 2015 report on Scottish office market trends concludes that take-up is above average in Edinburgh, Glasgow and Aberdeen.

In Glasgow, CBRE point to active requirements in excess of 800,000 sq ft, with local agents calculating that demand remains at an all-time high, despite a slightly subdued first half of 2015, with just under 225,000 sq ft of office deals, about 75% of the long term half year average.

The latest large transaction was the 27,522 sq ft let to Teleperformance at Cuprum, along with 10,000 sq ft let to Arup at 1 West Regent Street.

Interest in new schemes at 1 West Regent Street (where Metropolis has reported on the activities of Real Radio) and 110 Queen Street (where there is activity by Deloitte, amongst other) is growing, while St. Vincent Plaza, following its completion, is expected to follow suit with a number of interested potential occupiers. Metropolis is monitoring demand from companies such as Kier, AXA and Jacobs.

In Edinburgh, nearly 404,000 sq ft was transacted in the first half of 2015, which CBRE point out is just above the recent five year H1 average. Capita took the entire building (26,900 sq ft) at 145 Morrison Street and the Law Society of Scotland signed for 19,100 sq ft at Atria One.

Demand remains strong in Edinburgh, with requirements from companies such as KPMG, Amazon, Edinburgh University and Brodies. Metropolis is speaking to over 50 Edinburgh companies about current move plans.

Moorfield is speculatively developing Quartermile 4 and has secured a pre-let to FanDuel. FanDuel concluded the deal six weeks after agreeing terms.

The next large office scheme completion in Edinburgh is The Haymarket due for late 2017.

In Aberdeen, three large pre-let deals were struck during the first half of 2015: Anderson Anderson & Brown and LR Senergy committed to 45,000 sq ft and 100,000 sq ft respectively at Prime Four Business Park while KCA Deutag acquired 70,000 sq ft at City South. Take up in the first half of 2015 was 290,000 sq ft, which was a fall from the 800,000 in the second half of 2014.

Agents report that he majority of letting activity and requirements are in the sub 10,000 sq ft size bracket. Metropolis is tracking demand from companies such as Raggnar Power and Burnett & Reid.