Patchy Leeds Demand

Demand for office space in Leeds for the first half of 2017 remains similar to the 12 months that preceded it, but trailed the five year average by 18 per cent, according to new research.

The CBRE Leeds office marketview report found that office take-up in the city was 237,165 sq ft in the first six months of 2017.

There were three lettings over 20,000 sq ft; a 46,058 sq ft letting to Burberry at 6 Queen Street, 25,968 sq ft to Willis Towers Watson at 5 Wellington Place and 22,441 sq ft to BW Legal at 1 Apex View.

The majority of take-up in the city was in the sub 5,000 sq ft size band.

Despite the lower level of enquiries in all size ranges, annual take-up is still likely to be a record for Leeds city centre if the pre-let of 350,000 – 380,000 sq ft at Wellington Place to the Government Property Unit goes ahead.

Looking to the second half of the year, demand is expected to be patchy for at least another quarter.

Metropolis has run nearly 40 new requirements for Leeds office space this year, however most searches are small.

3 Wellington Place (109,000 sq ft) is the only new development completing within the next 12 months. Refurbishments available this year, include ‘Platform’ (120,000 sq ft) and 7 Park Row (40,000 sq ft),
which will help the dwindling Grade A market.

Office Moves Planned in July

Metropolis ran 580 business leads on ‘office movers’ in the month of July 2017. 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. London was the largest region with 247 leads during month, but there were also strong showings from the South East (63) and North West (62), Scotland (44). IT services and financial were the two largest business sectors planning relocations or agreeing moves during the month.

The business leads covered the whole UK and provided details of the size of the office occupier, its 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 580 July leads. included those on Citi (Citigroup), HMRC, Credit Agricole and WeWork.

The July 2017 leads included 200 ‘identified requirements’. Which means that the company confirmed to researchers that it has current or future plans to search for alternative office space. Of these 200 searches, 134 were new office searches, not previously notified to clients.

The most recent research also included 130 ‘potential movers’ which were mainly longer-term leads on occupiers, considering a relocation, but have yet to make a final decision on whether to search.

Most of the remaining stories covered companies that have 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 2020.

If you would like some information on flexible Metropolis subscription packages, then please email Simon at simon@metroinfo.co.uk

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Cityoffices.net, the sister property leads service to Metropolis, saw a further 33 stories posted in July, covering new development opportunities planning applications, consents, construction starts and development teams in London and major cities. The database now covers over 200 office schemes in the pipeline for construction starts in 2017-2020.

For more information on Cityoffices, email Andy at andy@metroinfo.co.uk

Manchester’s Top Future Relocations

Lambert Smith Hampton has just released its Manchester office market report for Q2 2017. City centre office take-up for reached 284,497 sq ft across 68 transactions, a 23.3% increase on the same quarter in 2016. The cumulative 492,730 sq ft for the first half of 2017 is an increase of 14.6% on 2016.

The latest big relocations, movers and inward investments included: co-working giant We Work taking 55,802 sq ft offices at No.1 Spinningfields. Weightmans took 17,949 sq ft at the same building. EY is taking 40,000 sq ft at 2 St Peters Square; Car Finance 247 is relocating to 40,000 sq ft at Universal Building, Devonshire Street North; Distrelec is taking 17,000 sq ft at 2 St Peter’s Square, while Vodafone signed for 33,000 sq ft at Atlantic House.  Lookers acquired the 21,000 sq ft Aspect House in Altrincham,  21,200 sq ft was let at Regent Place, Salford to Convergys and Kaplan Financial also agreed a 10,000 sq ft move. Deals under 3,000 sq ft still accounted for 40% of take up

LSH secured the largest office deal this year outside of the city centre by acquiring 47,149 sq ft at 106 Dalton Avenue at Patrizia UK’s Birchwood Park, Warrington for Cavendish Nuclear. Business Services, consumer services and leisure and banking and finance have been the strongest sectors for take-up in the first half of the year. These three sectors accounted for 34%, 20% and 18% of take-up respectively

Metropolis is monitoring around 50 current office requirements in Manchester and around 60 ‘potential movers’, that is companies approaching lease expiries or with expansion plans, which have not decided whether to move yet.

Looking ahead, Manchester is expected to see faster office based employment growth over the next five years than Greater London and all of the major UK regional cities. Office based employment is
expected to grow by 6% over the next five years, significantly above the UK average of 3.5%.

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.

Central London Lettings – May 2017

Central London office lettings in May 2017 recorded just over 600,000 sq ft of deals from 40 mid-large size transactions (5,000 sq ft+) during the month.

The May figure represents a fall on the 800,000 sq ft sq ft of lettings in April, but the number of deals remains close to recent the monthly average.

May was characterised by six office deals over 20,000 sq ft, which included Hearst Publishing’s 71,000 sq ft deal at the LSQ Building in Leicester Square, WC2: WeWork took 70,000 sq ft at 1 Mark Square in London, EC2; Man Group taking 41,000 sq ft at 90 Upper Thames Street, London, EC4 and Petrochina taking 35,000 sq ft at the Adelphi Building in WC2.

Media topped the table of lettings by sector, underpinned by the Hearst Group deal, this was followed by business services bouyed by the serviced office sector and financial services with large deals involving Man Group and Hambro. Retail also performed well, helped by the lettings to Crabtree and Deliveroo. Office deals ‘under offer’ in central London rose to 3.6m sq ft and volumes are rising in nearly all sub-markets.

By area, the City accounted for 50pc of the office floorspace let in May at 300,000 sq ft – similar to the April level. The West End saw 90,000 sq ft of take-up. Midtown contributed 167,000 sq ft of lettings. Current London office demand is calculated to be around 3.2m 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 150,000 sq ft (25% of the monthly total), as transactions for new space paused from the recent strong showing.

Cityoffices and Metropolis are shortly to release its twice yearly Skyline report on the London office construction market. The summer report features details of the 100 schemes under construction and the trends for the next wave of schemes. Details on Cityoffices from Andy King at andy@metroinfo.co.uk

Metropolis Movers May Round Up

Metropolis ran 641 ‘movers’ in the month of May 2017. If all moves were added together the total would exceed 20 million sq ft of office searches and transactions, researched by Metropolis’ unique market led intelligence team. London was the largest region with 296 leads during month, but there were also strong showings from the South East (69), North West (57) and Yorkshire(54). Financial services and media were the two largest business sectors planning relocations or agreeing moves.

The business leads covered the whole UK and provided details of the size of the office occupier, its 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 amongst the 600 leads included leads on Barclays, British Airways, AMEX and HMRC.

The May 2017 leads included 212 ‘identified requirements‘. Which means that the company confirmed to researchers that it has current or future plans to search for alternative office space. Of these 212 searches, 112 were new office searches, not previously notified.

The most recent research also included 173 ‘potential movers’ which were mainly longer-term leads on occupiers which are considering a relocation, but have yet to make a final decision on whether to search.

Most of the remaining stories covered companies that have 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 mid 2020.

If you would like some information on flexible Metropolis subscription packages, then please email Simon at simon@metroinfo.co.uk

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Cityoffices.net, the sister property leads service to Metropolis, saw a further 30 stories posted in May, covering new development opportunities planning applications, consents, construction starts and development teams in London and major cities. The database now covers over 200 office schemes in the pipeline for construction starts in 2017-2020.

For more information on Cityoffices, email Andy at andy@metroinfo.co.uk

Birmingham Upswing

A recent report by specialist Birmingham consultant KWB, reveals that the Birmingham city centre office market recovered in the first quarter of 2017 back to normal Q1 levels.

Office space transactions in the first quarter of 2017 totalling 139,000 sq ft – more than 30,000 sq ft over total transactions in each of the third and final quarters of 2016.  The largest deal of the quarter was by Arcadis’ signing for 22,953 sq ft at Cornerblock which is currently being refurbished, followed by iHub’s 18,378 sq ft new base in Colmore Gate. Recruitment specialist SThree Group was also the first tenant to sign 10,035 sq ft at the newly refurbished 10 Temple Street, on the 4th and 5th floors on a 10-year lease.

KWB say that the first quarter of 2017 was very much on a par with that of 2015. Looking ahead, KWB say that the rest of 2017 looks set fair, with the highest level of office development underway in Birmingham city centre for 15 years (1.4 million sq ft), a good supply of top quality Grade ‘A’ space is coming on stream and should trigger some significant office lettings in the coming months. Schemes include 55 Colmore Row
(160,000 sq ft), Corner Block (112,000 sq ft) and the Lewis Building (110,000 sq ft). The much reported HMRC requirement, which has shortlisted Three Snowhill, Arena Central and Post & Mail building, will see a letting of 200,000-300,000 sq ft and KWB also expect the HS2 halo effect to strengthen the Birmingham city centre office market.

Metropolis is currently tracking over 30 medium and large office requirements in Birmingham. Looking ahead, HS2 will have a major pull in 2017. The city has already seen Laing O’Rourke take 11,000 sq ft at 1 Victoria Square in 2016 and engineering firms and consultants are likely  to be a big sector going for office moves this year. In addition, there are nearly 40 tenants which are approaching decisions on lease or office consolidation plans over the next eighteen months.