Regional Office Boost

CBRE’s recent report ‘United Kingdom Office – The Property Perspective H1 2018’ concludes that office mover activity in the regions outside London continued to be ‘lively’ during the first half of 2018

CBRE say that regional office occupier markets in the first half of 2018 with few signs of Brexit-related uncertainty. The ten regional cities monitored by CBRE, saw take-up reach nearly 3.9m sq ft, which was 24% above the five-year average and 37% higher than the 2.8m sq ft newly occupied in the same period of 2017.

CBRE saw large numbers of requirement in regional cities and say that relocation activity could have been even higher if there had not been a shortage of new office space in some cities. CBRE particularly point to shortages in Bristol, Edinburgh and Glasgow where the development pipeline has not kept pace with demand. These shortages will drive further pre-let and refurbishment activity.

Metropolis echoes the CBRE findings, with nearly 400 regional office requirement leads flagged to subscribers in the first half of 2018, together with a similar number of companies finding space for moves between January and June.

CBRE say that The UK’s flexible office space operators continued to expand, with Bristol, Birmingham, Glasgow, and the wider South East the stand out expansion locations in H1. Bristol witnessed a
notable increase in demand with a key deal to Runway East (30,000 sq ft). In Birmingham, deals were concluded with BE Group, Instant, iHub, Regus and Orega, whilst in Glasgow there were prominent deals to
Orega and Regus. In the wider South East region, flexible office space providers took nearly 200,000 sq ft with Slough and Reading the most popular locations. Runway East and other operators also have live requirements in all the regional cities, with CBRE predicting more activity from this sector in H2.

Regional cities saw a record year of take-up in 2017, with the public sector playing a large role in regional office space demand in H1 2018 (just over 0.9m sq ft). HM Revenue & Customs accounted for the three largest transactions ranging between 157,000 – 270,000 sq ft in Manchester, Glasgow and Liverpool.

CBRE forecast the West Midlands as a region to watch. They say the West Midlands is experiencing some of the fastest growth in the country – Birmingham itself seeing prices rise by 6.9% in the year to May Birmingham is attracting public sector bodies, looking for more affordable solutions away from London. The latest requirement is from the General Dental Council, relocating 200 staff London.

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Central London Office Lettings in June 2018

Central London office lettings in June 2018 reached just over 1m sq ft from 58 mid-large size office transactions (5,000 sq ft+) during the month. The June 2018 figure is in line the current monthly London average of 1m sq ft.

June was characterised by 16 office deals over 20,000 sq ft, which were led by the Sony Picture’s 77,000 sq ft deal to take Brunel Building in Paddington; Trade Desk’s 54,000 sq ft pre-letting at Barts Square, EC1 and WeWork’s 49,000 sq ft at 70 Wilson Street, EC2.

Business Services topped the table of lettings by sector, underpinned by WeWork, Office Group and Foraspace deals. This was followed by professional services led by a number of lettings by sdeals to Herbert Smith and Kaplan. Financial services, technology and media were also well represented. Office deals ‘under offer’ in central London increased to 3.6m sq ft, and pending deal volumes are healthy in nearly all sub-markets, with a large number of deals pending.

By area, the City accounted for 40pc of the office floorspace let in June 2018 at 400,,000 sq ft. The West End saw 349,000 sq ft of take-up. Midtown contributed 126,000 sq ft of lettings, plus 50,000 sq ft of Docklands deals. Current London office demand is calculated to be around 3.3m sq ft in the City and 2.7m sq ft in the West End.

The volume of grade A (newly built or refurbished office space) let during the month reached 366,000 sq ft sq ft (37% of the monthly total), as transactions for new space resumed their recent strong showing. Availability is dominated by secondhand space in all London markets.

Metropolis research is currently monitoring 645 ‘live’ London requirements, with deals for space of up to 1.9m sq ft due to sign in the next few months.

Cityoffices is working on its current ‘Skyline Survey’ in London. Further details of office scheme planning applications and consents, with scheme by scheme detail are listed on the Cityoffices.net website. Details on Metropolis and the Cityoffices database from Andy King at andy@metroinfo.co.uk

Edinburgh’s Strong 2nd Quarter

Recent research by CBRE Scotland has pointed to a strong second quarter for Edinburgh’s office market, after a slow start to the year. Figures show a Q2 take-up of 351,916 sq ft of take-up – a 150% increase in take-up from Q1 2018, bringing office take-up in the first half of 2018 in Edinburgh to just under half a million sq ft (491,885 sq ft).

The recently announced pre-let to asset management firm Baillie Gifford taking over 60,000 sq ft at the newly developed Mint Building in St Andrew Square was possibly the stand out deal of the quarter, followed by other large lettings including 43,801 sq ft at 11-12 Lochside Place to Diageo and 14,832 sq ft at Atria One to EDP Renewables. The largest deal of the quarter was Edinburgh Palette (a workspace facility) occupying 109,153 sq ft of space at 525 Ferry Road, albeit on a short-term lease.

Metropolis is tracking around 40 occupiers searching for office space in Edinburgh. In general, tenant demand is considered to be buoyant, with a number of existing occupiers approaching lease expiries and seeking to relocate.

Meanwhile in the mid size range: The Scottish Public Services Ombudsman (SPSO) took 16,568 sq ft of out of town space at Bridgeside House, a Smart development at MacDonald Road, while Instant Offices, the serviced office provider, took 2,230 sq m (24,000 sq ft) of offices at the Cornerstone Building in South Gyle.

Total Edinburgh office supply remains at a low level at 923,540 sq ft, with 225,231 sq ft for city centre Grade A space. This represents a 30% decrease on the available space from the same period in 2017. The next scheme to complete is 2 Semple Street in Edinburgh city centre, which is due to be ready for occupation at the end of July 2018,  providing 38,648 sq ft of Grade A office accommodation across six floors.

CBRE say that there continues to be a number of larger, unsatisfied requirements for Edinburgh city centre.

London Office Lettings in April 2018

Central London office lettings in April 2018 reached almost 800,000 sq ft from 35 mid-large size transactions (5,000 sq ft+) during the month. The April 2018 figure is broadly in line with the current monthly average of 1m sq ft.

April was characterised by 13 office deals over 20,000 sq ft, which included Berwin Leighton Paisner’s 125,000 sq ft letting at Governor’s House, 5 Laurence Pountney Hill; St James’s Place’s 57,000 sq ft pre-letting at 30 Lombard Street, EC3 and KKR’s pre-let of 57,000 sq ft at 18 Hanover Square, W1.

Professional Services topped the table of lettings by sector, underpinned by BLP and KKR deals. This was followed by business services underpinned by a number of lettings by serviced office operators. Financial services, technology and media were also well represented. Office deals ‘under offer’ in central London increased to 3.6m sq ft, and pending deal volumes are healthy in nearly all sub-markets, with over 25 deals pending.

By area, the City accounted for 54pc of the office floorspace let in April 2018 at 433,000 sq ft. The West End saw 140,000 sq ft of take-up. Midtown contributed 80,000 sq ft of lettings, plus 45,000 sq ft of Docklands deals. Current London office demand is calculated to be around 3.3m sq ft in the City and 2.7m sq ft in the West End.

The volume of grade A (newly built or refurbished office space) let during the month reached 375,000 sq ft (47% of the monthly total), as transactions for new space resumed their recent strong showing. Availability is dominated by secondhand space in all London markets.

Metropolis research is currently monitoring 635 ‘live’ London requirements, with deals for space of up to 1.8m sq ft due to sign in the next few months.

Cityoffices is working on its current ‘Skyline Survey’ in London. Further details of office scheme planning applications and consents, with scheme by scheme detail are listed on the Cityoffices.net website. Details on the report and the Cityoffices database from Andy King at andy@metroinfo.co.uk

Leeds Office Market Q1 2018

Take up of Leeds city centre office space has grown by 83 per cent in the opening months of 2018, according to the Leeds Office Agents’ Forum (LOAF).

Office leasing figures released by LOAF have revealed that 191,861 sq ft of office space was taken up by occupiers in the city centre in first quarter of 2018 as part of 28 office deals. This represents an 83 per cent increase on the same period last year and the strongest first quarter recorded for five years.

Of the 28 city centre transactions to complete, the largest was the 76,000 sq ft acquisition at 33 Wellington Street by Walker Morris and the letting to the Dart Group (Jets2) of the remaining 48,272 sq ft at The Mint was the only other city centre transaction above 10,000 sq ft. Both deals came after long searches. Out of town the largest deals were Balfour Beatty and Call Credit.

Leeds remains an attractive city for ‘northshoring’ attracting a number of companies looking to set up back office operations, whilst serviced office providers are becoming increasingly interested in opening new centres in Leeds.

There remain a healthy number of live requirements within the market. Metropolis is tracking up to 40 companies searching and a further 100 occupiers approaching decisions on upcoming lease expiries over the next two years

 

Metropolis Office Movers in March 2018

Metropolis ran 621 business leads on ‘office movers’ in March 2018. If all reported moves were added together the total would exceed 20 million sq ft of office searches and transactions, researched by Metropolis’ unique market led intelligence research team. London was the largest region with 275 business leads during month, but there were also strong showings from the South East (72),  North West (44), Yorkshire (43) and Scotland (26) .  Financials services were the 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, 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 621 March leads, included those on occupiers Bank of America, Cleveland Clinic, BT, Morgan Stanley and PWC.

The March 2018 leads included 160 ‘identified requirements’, including 81 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 156 searches, 102 were new office searches, not previously notified to clients.

The most recent research also included 198 ‘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 2020.

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

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

Thames Valley Office Market Update

JLL’s just published Western Corridor office market report concludes that the Thames Valley enjoyed a solid start to 2018. Take-up across the region totalled approximately 516,000 sq ft, representing an increase of 31% on the corresponding quarter of 2017.

The first quarter of 2018 was characterised by smaller deals, according to JLL. The the majority of activity (80%) taking place in the 10,000 sq ft to 50,000 sq ft size band. Deal numbers increased by 50% from 24 deals in Q1 2017 to 36 deals in Q1 2018.

Metropolis reported on over 30 planned relocations in the M4 corridor in Q1 2018, such as FM Global taking 57,000 sq ft at Voyager Place in Maidenhead; Black+Decker taking 49,000 sq ft at 270 Bath Road, Slough; Panasonic taking 41,000 sq ft at Maxis office scheme in Bracknell; Fora Space taking 28,000 sq ft at Thames Tower, Reading; JDA Software taking 23,000 sq ft and Riverbed Technology 16,000 sq ft at Maxis office scheme in Bracknell; GiffGaff taking 23,000 sq ft in Uxbridge; Quest Software taking 13,000 sq ft at Arlington Square, Bracknell and MBNL at Thames Tower, Reading.

JLL say that supply of office space is flattening, falling below 10m sq ft and this is expected to moderate further over 2018.  JLL also think that availability will decline in 2019 and 2020 as the number of active speculative development schemes reduce.

James Finnis, head of south east office agency at JLL, said: “The Q1 take-up figures represent a solid start to 2018. The 50% increase in the number of deals in Q1 illustrates growing occupier confidence. Occupiers are focused on the best space and there is widespread evidence of tenants trading up but taking less overall sq ft. Flexibility remains important with occupiers wanting to build in options to either grow or downsize. The addition of serviced or co-working space into multi let buildings is a natural extension of this, providing on site swing space.

Metropolis is currently tracking around 50 office searches of various sizes along the Thames Valley and talking to over 100 occupiers with approaching lease expiries in the area.