london offices Market analysisq12014

city core

docklands

contentsmidtown

city fringe

After the strong performance of 2013

optimism was high going into 2014

The market did not disappoint with 29m

sq ft let and a further 23m sq ft placed

under offer All of our six markets

enjoyed a strong quarter with Docklands

particularly resurgent

CLiCk on The AreA nAme To view iTs mArkeT breAkDown

CLiCk on The TAbs below for more in-DePTh AnAlysis

u overview The market is in rude health despite the first quarter ending down but which area was the star performer

u League tabLes Some smaller practices get among the multinationals this quarter as specialist firms flex their muscles in our submarkets

u submarkets Docklands was the star this quarter with take-up 10 times higher than last year but which other markets out-performed

south bank

west end

CLiCk for DeTAileD

bounDAry mAP

London Offices

London offices market anaLysis Q12014

fLight of fancy

produced by

docklands took flight in quarter one as a flurry of deals landed in canary Wharf but for how far into 2014 will the bounty continue asks Mark Simmons

docklands either gets it very wrong or very right This quarter it could not have been more right Occupiers swooped in and landed in Canary Wharf as three of the

top 10 deals ndash including the quarterrsquos largest ndash were signed in E14 Few market commentators expected the area to be the star performer of Q1 bagging 450000 sq ft of take-up closing in on its 2013 total in a single quarter

But its flight will probably be fleeting

With most of the space due for completion this year now gone and secondhand space also disappearing suggestions of a sustained renaissance in E14 may be wide of the mark

ldquoThe signs are that grey space [let but unoccupied offices available for short-term subleases primarily from financial institutions] will be pulled pretty quicklyrdquo says James Roberts head of commercial research at Knight Frank

Lettings echo a sweet first quarter for Londonrsquos occupational office market

EG BluffErrsquos GuidELondon in 6 secondsldquoTake-up just short of 3m sq ft signalled a strong start to 2014 An additional 2m sq ft under offer points to a lively Q2 A last-minute dash for buildings completing this year or next particularly by TMT and financial sector occupiers scooped nearly one-third of total take-up The City core is one to watch in Q2 it holds one-third of available space in the capital Overall availability was slightly down at 34m sq ftrdquo

Source coMMercial Space froM 8000 live inStructionS click here to find out More

city corE docklandsmidtown city frinGEsouth BankwEst EndanalysiscontEnts

click on the area name to go direct to market breakdown

a respectable pile of occupational deals stacked up in Q1 and equally importantly so did the promise of more to come

this bountiful haul was by no means guaranteed Shortly before the quarter-end total take-up was struggling to reach a respectable level a last-minute push partly driven by a desire to boost agency books for the past financial year saw the final amount settle at a little more than 29m sq ft on average this was one-fifth down on the impressive spurt seen at the end of 2013

the city core ndash which of Londonrsquos submarkets still netted the most space taken in Q1 (820000 sq ft) ndash was hardest hit seeing a 44 drop from the 15m sq ft recorded in Q4

Some of the 2014 signings were pleasant surprises like google and ingrsquos deals in midtown and the city core respectively (see 60 Seconds p69) others like the quarterrsquos largest move ndash eYrsquos pre-completion deal in docklands ndash had been well signposted

what was particularly encouraging about the end of Q1 was the 23m sq ft placed under offer a figure way above last yearrsquos quarterly average of 15m sq ft

opinions are divided on whether this will yield a bonus for Q2 but the consensus among London agents suggests more signings will be swiftly notched up dan bayley central London md at bnP Paribas real estate explains ldquowersquod expect many of these to complete within a three-month period in any case but now there is added negotiating pressure from landlords who can threaten to renegotiate a higher rent or even go with a competing tenantrdquo

overvieWlondon officeS Market analySiS

Q1 central london conStruction StartS

CiTy

380000wesT end

190000preleT

10000

for Q2 letting action but it will also be bittersweet for the agents a growing awareness of a potential supply gap in two yearsrsquo time will be one of the key grounds for optimism of a busy second quarter a casual glance at the figures (see Summary Statistics p76) can be misleading availability of existing or soon-to-complete space across the capital currently tops 10m sq ft compared with last yearrsquos take-up (excluding true prelets) of 115m sq ft there appears to be little cause for concern but a three-year view of ready-to-occupy space plus available space under construction brings up a total of just 23m sq ft if pre-

ldquotenants are taking property sooner than they would have expected perhaps taking buildings they wouldnrsquot have taken before simply because that kind of building isnrsquot available to themrdquo says deloitte real estate partner Stephen Peers ldquothere is a very different dynamic in the west end market now occupiers are taking whole buildings rather than floors and although that may mean taking more than they need the idea of subletting any surplus isnrsquot scary to themrdquo

the city core with nearly 5m sq ft of ready-to-occupy space plus a further 15m sq ft of offices due to complete later this year and still available will be an obvious location

MidTOwn

50000

city corE docklandsmidtown city frinGEsouth BankwEst EndanalysiscontEnts

click on the area name to go direct to market breakdown

Support valuationS With the lateSt coMparableS click here to find out More

Q1 central london conStruction StartS

dOCklAnds

0

construction starts are included ndash much lower than the 34m sq ft that will be required if annual take-up continues at last yearrsquos levels

the problem is a development pipeline that peters out in 2016 Just 24m sq ft of available space currently under construction is due to complete then the majority of it in docklands that may not turn out to be so much of an issue if new schemes start on site around now Unfortunately there was little sign of that happening in Q1 with no major new-build scheme getting the go-ahead

ldquoirsquove never seen anything like the shortage of space now in the pipelinerdquo admits cbre executive director chris Vydra ldquotwo occupiers with 2019 lease exits are already in the market in my experience looking for space five years ahead is rarerdquo

all eyes will therefore be on projects that are oven-ready in Q2 Schemes tipped to come out of the ground in the near future include great Portland estatesrsquo 212000 sq ft rathbone Place in w1 helical barrsquos 273000 sq ft mitre Square in ec3 and exemplar Propertiesrsquo 290000 sq ft Fruit amp wool exchange in e1

ldquoi donrsquot think wersquove seen the number of starts we might have expected in previous cyclesrdquo says deloitte real estate director Steve Johns ldquodevelopers can now see that staff numbers are growing again and that the city core in particular is attracting a wider tenant baserdquo

So as Londonrsquos property folk watch the skies for further deals landing they will be hoping for a delivery of some shiny new office buildings to the capital

DocklanDs revival ndash the party is overA run of deals in docklands saw a whopping (should that read wapping) 450000 sq ft sign this quarter That is more than was taken in the whole of 2012 and only 20 down on last yearrsquos total And it does not include the 250000 sq ft of second-hand offices Tfl is considering moving to at 10 Upper Bank street e14 A little more than half of Q1 take-up was in space completing this year ndash at 25 Churchill square However only 60000 sq ft of pre-completion space now remains available in docklands with no supply of new offices until 2016 this quarter may have been the submarketrsquos finest hour for some time

Q2 is hot to trot ndash space unDer offer shoots upMore than 23m sq ft was placed under offer at the end of Q1 half as much again as was in solicitorsrsquo hands at the end of 2013 and more than

075m sq ft up on the average quarter-end figure That bodes extremely well for Q2 expect more activity in the City core ndash more than 40 of the 14m sq ft of ready-to-occupy space is located there as well as a similar proportion of

the 41m sq ft of offices due to complete this year and still available

still waiting ndash no big construction startsThe optimistic tone of Q1 isnrsquot echoed in the development pipeline developers did not push the button on a single major new-build project in the first three months of 2014 And the total started dominated by refurbished projects was down by more than one-third on last quarter speculative starts were largely confined to the City core

and to a lesser extent the west end

cartographically challengeD londonrsquos biggest deal this quarter was not in central london so does not show in our figures The FCArsquos decision to prelet the first 430000 sq ft of offices at lend lease and london Continental railwaysrsquo international Quarter at stratford will

see it move east from its present docklands base in 2018 Time to redraw the london office map

when is an office Deal not an office Dealhellip when itrsquos at the shard se1 of course deals totalling 83500 sq ft were struck in Q1 to Hospital Corporation of America and warwick Business school Although the space will not technically be classified or indeed used as offices it was originally designated as such and for this reason is included in our figures

city corE docklandsmidtown city frinGEsouth BankwEst EndanalysiscontEnts

click on the area name to go direct to market breakdown

EG BluffErrsquos GuidELondon in 60 seconds

not

identify neW developMent opportunitieS click here to find out More

The first quarter of 2014 saw average rents in most London submarkets nudge upwards though there was no change in the City core and a fractional drop in Covent Garden The

biggest year-on-year growth was split between east and west with average rents rising strongly in both Aldgate (15) and Soho (10) Agents agree that the most generous incentives are currently on offer in Docklands (average 31 months rent-free) and the stingiest in Mayfair (15 months rent-free)

The consensus ends there Ask 10 London agents where rents are likely to go later this year and chances are you will get 10 different figures Leasing professionals are most bullish One suggests that the already steamy West End headline figure may reach pound150 per sq ft ndash admittedly on a small letting Another says that Soho (yes Soho) could break the pound100 per sq ft barrier by Christmas

Even the City core is likely to see prices rise not least because of the disappearance of overhanging space Dan Bayley central London MD at BNP Paribas Real Estate explains ldquoGood-quality surplus secondhand space sublet from financial institutions as well as never-occupied completed development space has mostly gone Now if you want a big chunk it wonrsquot be as cheap as it was last year as it will be mainly

Where to putrentsLondon offices market anaLysis

your moneyInvestors are eagerly eyeing rental growth but agentsrsquo views differ on how high the numbers will go this year says Mark Simmons

L

GROVE ROAD

soho

pound13mchange on q4 32

rent (pound per sq Ft) 762

paddington

pound96mchange on q4 27

rent (pound per sq Ft) 575

victoria

pound116mchange on q4 27

rent (pound per sq Ft) 695

euston road

pound92mchange on q4 34

rent (pound per sq Ft) 548

covent garden

pound115mchange on q4 0

rent (pound per sq Ft) 669

mayFairst james

pound19mchange on q4 22

rent (pound per sq Ft) 10875

city core docklandsmidtown city fringesouth bankwest endanalysiscontents

cLick on ThE AREA NAME TO GO DiRECT TO MARkET BREAkDOWN

receive a weekLy update on the London office marketcLick here to find out more

new or in a big refurbished buildingrdquoinvestment agents however are

generally more sceptical than their leasing counterparts about claims of rocketing rental growth though they admit that the rising occupational market is focusing investor interest on short-term gain ldquoThey want immediate performancerdquo reports an investment agent who prefers not to be named ldquoWith second-tier properties vacant buildings are worth considerably more because they can be knocked about quickly to get an immediate returnrdquo

investors arenrsquot chasing as hard for buildings where leases fall in 2017 and 2018 so some agents suggest there are opportunities for investors willing to take a punt on where rents will be in three to four yearsrsquo time Similarly those who can be flexible about covenant strength may find they have more choice ndash or at least less competition ndash in a market increasingly short of stock

Mike Edwards executive director at CBRE says ldquoinvestors are slightly more relaxed about income security than they were two years ago ndash provided the building has good fundamentals is in an improving location or has potential for conversion to residential for example But purchasers are not blaseacute ndash if the basis of a purchase is strength of income they will still be very careful about tenant covenantsrdquo

L

GROVE ROAD

investment barometer0 or below 3 or over

Panel Cushman amp Wakefield Deloitte Real Estate DTZ JLL CBRE Savills Farebrother (Midtown Covent Garden and South Bank only)

canary wharF

pound56mchange on q4 18

rent (pound per sq Ft) 375

aldgate

pound69mchange on q4 3

rent (pound per sq Ft) 422

more london

pound83mchange on q4 25

rent (pound per sq Ft) 507

chancery lane

pound97mchange on q4 21

rent (pound per sq Ft) 582

gresham st leadenhall st

broadgate

pound93mchange on q4 04

rent (pound per sq Ft) 578

rent return on a hypothetical 20000 sq ft letting with a 10-year lease

click for full data

city core docklandsmidtown city fringesouth bankwest endanalysiscontents

cLick on ThE AREA NAME TO GO DiRECT TO MARkET BREAkDOWN

understand current investment trends across the capitaL cLick here to find out more

occupiers

the need for speed

in depthLondon offices market anaLysis

The improving economy is intensifying the pressure on companies looking for space in the capital ndash and the hotspots are no longer obvious Nadia Elghamry reports

ten days ndash just 64 working hours Thatrsquos how long it took Hachette to make one of its biggest and boldest corporate real estate decisions in the UK The French publishing

giantrsquos decision to move its head office from Euston to Carmelite Riverside was one of the largest deals of last year but also possibly one of the speediest

Quarter one showed that pressure on occupiers had intensified With some going to best and final bids and even gazumping on the menu occupiers needed to get a move on

ldquoPeople sat on their hands for a bithellip therersquos now this uncomfortable situation

where prices are moving off and theyrsquore asking if we donrsquot get into the market now what an earth will we be paying in 18 monthsrdquo says Chris Lewis director at Deloitte Real Estate

Not long ago agents were scratching their heads and wondering if the West End would get back to pound115 per sq ft Now adds Lewis ldquoitrsquos there and then some so what does that mean for Portman Square or The Strand or Covent Gardenrdquo

As the economy improves that pressure is intensifying The Deloitte CFO survey released this month found industry leaders were on an expansion drive The survey which questioned 126 chief financial officers including 27 FTSE 100

and 45 FTSE 250 companies found that nearly 80 were expecting to hire up from virtually none in Q1 2013 A record 95 expected merger and acquisition activity to rise in the next year

Hachette might be forgiven for the speed of its move It had been jilted once having lost out at Kingrsquos Cross Rumour has it that it was looking closely at 3 Pancras Square ndash for which Havas is now in advanced talks ndash and Googlersquos 6 Pancras Square

That it lost out to two TMT firms will surprise few and probably elicit yawns from many The sector is the undisputed king of London It made up 18 of all lettings in Q1 and was the largest sector by both number of deals and sq ft signed for

support vaLuations with the Latest comparabLes cLick here to find out more

city core docklandsmidtown city fringesouth bankwest endanalysiscontents

cLick on The area name To go dIrecT To markeT breakdown

take-up by occupiers

ConstruCtion

Central amp loCal government

others

retail amp leisure

serviCes

industry amp manufaCturing

health amp eduCation

tmt

utilities

transport

property

insuranCeprofessional

finanCial

assoCiations

while just one out of the top 10 deals was to a TmT firm ndash google at York way ndash what the sector lacked in size it more than made up for in number penning 50 deals nearly a fifth of all signings in Q1

The next name on the occupier power list missing out on the top spot by 1 was financial companies

but it was professional services that did the heavy lifting The sector signed the largest deal of last year ndash eampY at churchill Place in docklands ndash and stacked up the highest average deal size of 25000 sq ft ndash two-and-

a-half times the overall average deal size what happens next chris Vydra

executive director in the city leasing team at cbre believes that TmTrsquos dominance is unlikely to wane but also that the amount and location of space TmT firms sign for ndash after googlersquos hQ deal in 2013 ndash might

ldquoThe majority of TmT subsectors are more footloose than ever before as they are realising that both the western city and city core often offer better value for money than the very hot districts of kingrsquos cross

Shoreditch and the South bankrdquo he says The banks are now feeling less politically

constrained he adds allowing them to make some sensible occupational decisions about relocations ldquoalthough mostly driven by lease events rather than expansion of office space occupiedrdquo

a wave of lease events is looming on the

horizon says Vydra cbre predicts the number of key lease events in the city and midtown over 50000 sq ft between 2017-2019 on will be up 50 on 2016rsquos levels ndash which will mark a low point

That says Vydra optimistically ldquogives great hope to sustained rental growth beyond the next 12 monthsrdquo

average deal (Sq ft)Largest ProfessionaL

overaLL

smaLLest construction

total dealS

276 largeSt Sector

tmt 50

24700

10600

5000

n TMT remains biggest sector at 18 of take-up but financial companies are a close second at 17

n Sector market shares remain static from Q4

n Financial TMT and professional services make up nearly half of all take-up this quarter

Location occupiers pick lsquonrsquo mixPaddington or Pimlico It used to be there was only one correct answer per occupier for a question like that but as knight Frank said recently ldquoTrying to second guess where a corporate is likely to relocate is more and more like picking a sweet out of a bag of pick lsquonrsquo mixrdquo

For example financials used to mean city and tech meant out in the fringes but with fin-tech gaining traction as a sector in its own right will the fin move to the tech or the tech to the fin

ldquogeneration Y want to work together and there is a grey area between work and home life and that means places like clerkenwell and Farringdonrdquo says Stephen clifton head of central London offices at knight Frank

ldquoover a long enough time itrsquos probably tidal thoughrdquo he adds pointing to whatrsquos happened in new York

ldquoas tech has grown its business requirements have too Tech firms need more power bigger floorplates and those are traditionally found in the core areas In

new York wersquove seen the financial district displaced by new media with amazon moving inrdquo

This echoes bloombergrsquos move into the city of London

on planet property most of the worry is about rents and development but deloitte director chris Lewis believes that whatrsquos creasing brows for occupiers is altogether different Their biggest challenge in the next decade will be talent he says

ldquocompanies are interacting with clients either virtually or at third-party locations so retaining employees through the environment is more importantrdquo he says

what that means says Lewis is that whether you are a media company a firm of accountants or a bank you are all going for the same graduates with everyone wanting the brightest and the best

For offices that will mean supersized break-outs instead of an office with anything you need to make it your office whether that is good wifi audio-visual equipment or good conferencing rooms and micro meeting pods

identify new deveLopment opportunities cLick here to find out more

city core docklandsmidtown city fringesouth bankwest endanalysiscontents

cLick on The area name To go dIrecT To markeT breakdown

leasingldquoI was a little bit surprised that the Q1

take-up figures are as good as they arerdquo chuckles Paul Smith co-founder of central London consultancy H2SO (see Overview p67) ldquobut not for the reason you

might be thinking I was surprisedrdquo Smith clearly knows how to intrigue But

he quickly explains that the first part of 2014 has seen a shift from tenants mainly considering a move due to lease events to them thinking about new premises to meet potential expansion within the business

The firm narrowly missed out on a placing in our league table this quarter but then outside the top three agents there was little market left to grab In quarter one CBRE JLL and Knight Frank combined market share was nearly 25m sq ft (see table)

The big boys were clearly landing the big fish as nearly two-thirds of deals were signed by the remaining 22 players in our table as agents grappled with tenants coming to the market earlier but taking longer to negotiate a lease

ldquoThere is another reason negotiations are taking longerrdquo adds Smith

ldquoGenuine prelets ndash which are a relatively new phenomenon in the West End ndash are now coming through and they take much longer than normal office lettings

ldquoA lot of occupiers are starting their searches earlier and then going slower when they find suitable premises as they want to minimise double overheads

ldquoDeals are consequently taking longer So I was surprised that the occupier feel-good factor has translated into take-up so quicklyrdquo

At the other end of the scale on smaller refurbishments that are due to complete later in the year landlords are now actively avoiding signing pre-completion lettings something inconceivable only six months ago Rhys Evans co-founder of niche office agency Monmouth Dean says ldquoItrsquos part of a deliberate strategy to get the best rental terms by holding off until the product is readyrdquo So a fair amount of space under construction and technically available at the end of Q1 may well not convert into take-up until the final part of the year

In the meantime Dan Bayley central London MD at BNP Paribas Real Estate points to a number of lettings between 40000 sq ft and 80000 sq ft that were under offer at the end of March

He says ldquoThat suggests we should have a strong second quarter although it may also mean that Q3 is relatively quietrdquo But both he and Monmouth Deanrsquos Evans are looking forward to a lively fourth quarter

League tabLesLondon offices market anaLysis

top London Leasing agents 2014

1 CBRE 982144 74

2 JLL 859792 49

3 Knight Frank 595019 37

4 DTZ 302511 22

5 GM Real Estate 272393 7

6 Cushman amp Wakefield 265805 22

7 BNP Paribas Real Estate 260501 12

8 Savills 257919 29

9 Strutt amp Parker 164442 33

10 Deloitte Real Estate 159244 12

11 Allsop 122921 11

12 Farebrother 103266 15

13 Hatton Real Estate 88604 22

14 GVA 88052 8

15 Edward Charles amp Partners 87730 19

16 Tuckerman 78218 14

17 Bluebook 71962 8

18 Richard Susskind amp Co 69490 19

19 Hanover Green 69012 15

20 BDG Sparkes Porter 57502 11

21 Ingleby Trice 57062 15

22 Crossland Otter Hunt 40751 11

23 Anton Page 39324 14

24 Matthews amp Goodman 35981 3

25 Monmouth Dean 34920 12

Rank Agent Disposals (sq ft)

No of deals

Rank Agent Disposals (sq ft)

No of deals

1 CBRE 325864 82 JLL 247751 53 GM Real Estate 245492 44 GVA 73984 25 Knight Frank 67604 2

Rank Agent Disposals (sq ft)

No of deals

1 CBRE 223150 742 BNP Paribas Real Estate 189998 503 Farebrother 64803 374 JLL 48260 225 DTZ 37700 7

Rank Agent Disposals (sq ft)

No of deals

1 Knight Frank 107343 42 JLL 107343 43 Cushman amp Wakefield 66865 54 Deloitte Real Estate 40412 15 Bluebook 40412 1

Rank Agent Disposals (sq ft)

No of deals

1 CBRE 130783 202 JLL 108249 153 Knight Frank 96598 124 Tuckerman 71557 125 Savills 63401 10

agents by submarket 2014

dockLands

midtown

southern fringe

west end

Rank Agent Disposals (sq ft)

No of deals

1 JLL 279637 162 Knight Frank 279048 143 CBRE 233741 164 DTZ 186681 95 Savills 143949 11

Rank Agent Disposals (sq ft)

No of deals

1 Hatton Real Estate 88604 222 Richard Susskind amp Co 62602 183 CBRE 43573 54 JLL 41700 35 Anton Page 36504 13

city core city fringe

Taking Their Time

CITy CORE DOCKLANDSMIDTOWN CITy FRINGESOuTH BANKWEST ENDANALySISCONTENTS

cLick on THE AREA NAME TO GO DIRECT TO MARKET BREAKDOWN

support vaLuations with the Latest comparabLes cLick here to find out more

Investment agents ruefully acknowledge that Q1 2014 was much quieter ndash in terms of completing transactions ndash than the same quarter a year before Is it a sign the much-warned-of stock crunch is beginning

to hit and capital is finding new homes The numbers bear this out total spend in

the first three months of 2014 was a little more than pound15bn ndash well down on the pound27bn recorded 12 months previously This tightening of the market can also be seen in the league table The leader of the pack in 2013 was CBRE which oversaw transactions totalling more than pound12bn This yearrsquos front runner JLL came in with less than half that pound505m The contrast with the picture just three months ago is similarly stark this quarterrsquos biggest deal ndash AXA REIMrsquos sale of 60 Holborn Viaduct EC1 ndash came in at pound250m down by 60 on the largest single transaction in Q4 2013 And unlike the previous quarter ndash which saw two whoppers of pound17bn each ndash there was no major portfolio deal The biggest was Clearbell Capital and Morgan Stanleyrsquos purchase of 34 and 5 Harbour Exchange in Docklands for pound37m

ldquoThere has been a real absence of

INVESTMENT

2014 investment league table

1 JLL 505 16

2 Savills 320 10

3 GM Real Estate 301 10

4 DTZ 280 9

5 CBRE 275 9

6 Knight Frank 207 7

7 Deloitte Real Estate 205 7

8 Cushman amp Wakefield 122 4

9 Allsop 78 3

10 Michael Elliott 72 2

Rank Agent Value (poundm)

Market share

bellwether deals this quarterrdquo confirms Ross Davies partner at Capital Real Estate Partners The firm dipped out of the top 10 this time round after an impressive showing in Q4 2013 when it advised on the pound17bn portfolio sale of More London

One similarity with the previous quarter stands out the majority of firms in the top 10 acted for vendors The exception was GM Real Estate which maintained an equal split between advising buyers and sellers and raced five places up the league table in Q1 to grab third place ldquoAt the core end of the market there are a significant number of investors looking to deploy capitalrdquo says GMrsquos co-founder Tony Gibbon

Whether they will find a willing seller is likely to be the defining question for the remainder of 2014 ldquoAre any of the groups who have bought in recent years going to profit-takerdquo asks Deloitte Real Estate director Jamie Olley ldquoMy gut instinct is that the City is a trading market so there are likely to be deals done by investors who understand the sophisticated market thererdquo As the City notched up more than half of Q1rsquos transactions by value (see graphic below) all eyes are likely to be focused there in Q2

TIME To rEflEcT

League table rankings take account of both sales and purchases and the agent is credited for advising either party Market share is calculated from a total pool that is significantly larger than the investment spend figureCity CoRe west end Midtown

southeRn fRinge doCklAnds City fRinge

location of sales by value 2014

54 18 17 8 3 lt1

The investment market in the first quarter of 2014 is not the frenzy of 12 months ago Is supply waning Mark Simmons reports

CiTy CoRE DoCKLAnDSMiDToWn CiTy FRinGESouTh BAnKWEST EnDAnALySiSConTEnTS

click on THE AREA nAME TO GO DIRECT TO MARkET BREAkDOWn

support valuations with the latest comparables click here to find out more

Q1 2014summary statisticsCity core City fringe Docklands Midtown South Bank West End Overall

2012 2013 2014 2012 2013 2014 2012 2013 2014 2012 2013 2014 2012 2013 2014 2012 2013 2014 2012 2013 2014Q1 Q1 Q1 Q1 Q1 Q1 Q1

Take-up (m sq ft) annual or quarter totalNewrefurb existing 088 119 011 011 024 003 000 021 000 024 021 004 002 017 014 032 064 017 156 266 048Premarketing 008 031 000 000 001 001 000 000 000 000 115 001 000 000 000 008 002 000 016 149 002Secondhand 197 233 032 071 090 026 044 036 022 085 096 026 021 051 011 156 178 039 573 684 155Under construction 022 066 039 004 014 000 000 000 023 000 027 018 000 071 004 043 021 002 070 199 086Total 315 450 082 086 128 030 044 057 045 109 260 048 023 139 028 239 265 057 815 1298 291Availability (m sq ft) annual quarterly average or quarter end

Q1 Q1 Q1 Q1 Q1 Q1 Q1Newrefurb existing 209 147 128 016 012 006 026 031 031 028 033 040 019 067 070 060 083 085 358 374 361Premarketing 412 283 244 162 131 168 360 359 351 098 330 349 041 109 110 118 117 097 1191 1329 1319Secondhand 449 387 343 133 124 127 135 155 146 196 174 144 060 076 066 282 244 215 1256 1160 1043Under construction 383 406 372 043 070 086 031 029 006 038 060 066 112 099 053 093 112 139 701 776 721Total 1453 1222 1088 355 337 387 553 575 534 360 597 600 232 352 299 554 556 536 3507 3639 3444Availability rate annual average or quarter

1141 940 839 684 579 562 864 995 949 740 661 602 716 849 795 539 528 486 781 759 706Under offer and withdrawn (m sq ft) quarter or quarterly average

Under offer 062 058 087 016 013 015 002 010 014 016 023 045 005 016 013 025 033 056 127 153 231Withdrawn 052 008 009 026 015 005 001 001 000 015 005 006 001 004 003 014 013 008 111 045 031Average asking prices (pound per sq ft) quarter or quarterly average

New leases only Q1 Q1 Q1 Q1 Q1 Q1 Q1 New build existing pound4719 pound4608 pound5250 pound1784 pound3149 pound4000 pound3521 pound3493 pound3500 pound4970 pound4264 pound5800 na na pound6000 pound7655 pound7460 pound6917 pound4530 pound4595 pound5244Secondhand grade A pound3725 pound4134 pound4136 pound2508 pound2852 pound2525 pound3345 pound3345 pound3121 pound3818 pound3911 pound4264 pound4292 pound4041 pound3370 pound5649 pound5732 pound6210 pound3890 pound4003 pound3938Investment sales (m sq ft) annual or quarter total

Total sq ft 684 753 103 184 144 007 071 234 020 201 283 020 011 298 017 253 384 017 1404 2096 185No of transactions 71 69 15 50 44 2 3 8 3 57 47 7 3 22 2 92 102 12 276 292 41Construction starts (m sq ft) annual or quarter total

Total started 288 139 038 054 070 004 054 000 000 098 123 005 070 035 000 107 148 019 671 515 066Prelet 126 022 000 009 008 000 049 000 000 062 025 000 051 001 000 023 014 001 320 070 001Speculative 162 117 038 045 062 004 005 000 000 036 098 005 019 034 000 084 134 018 351 445 065Completed space still available (m sq ft) (completion by full year or part of year)

Total completed 039 074 024 034 036 000 000 000 000 019 036 005 065 056 000 076 131 001 235 333 030Still available 016 030 018 002 004 000 000 000 000 006 024 005 043 013 000 031 037 001 099 108 024Future completions (m sq ft) for full year or part of year

Delivery date 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016Total to complete 335 186 000 077 021 000 054 000 199 137 026 000 062 032 000 126 051 044 791 315 244Amount still available 150 130 000 067 020 000 006 000 199 060 016 000 021 032 000 109 050 044 413 248 244 still available 45 70 0 87 97 0 10 0 100 44 61 0 33 100 100 87 99 100 52 79 100

round-upLondon offices market anaLysisCITy Core DoCklANDSmIDToWN CITy FrINgeSoUTh bANkWeST eNDANAlySISCoNTeNTS

cLick on the area name to go direct to market breakdown

CliCk hErE fOr intEraCtivE Map rsaquo

CliCk hErE fOr intEraCtivE Map rsaquo

CliCk hErE fOr intEraCtivE Map rsaquo

360deg VIEW OF PROPERTY

A unique all-round view of the commercial property market you simply canrsquot get anywhere else

Make informed business decisions with EGi visit wwwestatesgazettecomEGi360

NE

WS

BUILDING REPOR

TS

LEGAL

OCCUPIERS

AVAILABILITY

PLA

NN

ING D

EA

LS

360deg VIEW OF PROPERTY

A unique all-round view of the commercial property market you simply canrsquot get anywhere else

Make informed business decisions with EGi visit wwwestatesgazettecomEGi360

NE

WS

BUILDING REPOR

TS

LEGAL

OCCUPIERS

AVAILABILITY

PLA

NN

ING D

EA

LS

NEW

S

BUILDING REPORTS

LEGAL

OCCUPIERS

AVAILABILITY

PLAN

NIN

G DEALS

A unique all-round view of the commercial propertymarket you simply canrsquot get anywhere else

Make informed business decisions with EGivisit wwwestatesgazettecomEGi360

in depthLondon offices market anaLysis

At 819697 sq ft the City core recorded higher take-up than any of the other five markets for the fourth

consecutive quarter More importantly the Q1 take-up figure was 26 higher than for the same period last year with 2013 recording the highest take-up since 2010 The largest deal was INGrsquos preletting of Stanhope and Mitsui Fudosanrsquos 130340 sq ft Banking Hall development at 8-10 Moorgate EC2 This deal accounted for 16 of City core take-up and helped the financial sector reach 36 of take-up for this market and 18 for all our markets

It was noted last quarter that with the availability rate dropping below 8 rental growth should be anticipated with the data now pointing to this The constrained nature of the market with high levels of preletting (55 of City core stock due to complete this year

CITY COREq12014overview

n Take-up was 26 higher than Q1 2014

n Average deal size was 14010 sq ft compared to 12266 sq ft in Q4 2013

n The financial sector accounted for 36 of take-up in Q1 relative to 29 last quarter

n TMT accounted for 3 down from 11 last quarter

n The property sector dropped from 12 to 6

take-up

key deaLs

take-up by sector

avaiLabiLity

asking rent

Address Tenant Size (sq ft)

The Banking Hall 8-10 Moorgate EC2 ING 130340

Alphabeta 14 Finsbury Square EC2 SEI Investments 58971

The Walbrook Building Walbrook EC4 GSMA 50493

20 Fenchurch Street EC3 DWF 43450

20 Fenchurch Street EC3 Allied World Assurance 41139

0

1

2

3

4

5

6

201420132012201120102009

Sq ft (millions)

n new-build n secondhand

6

9

12

15

14 Q113 Q413 Q313 Q213 Q112 Q412 Q312 Q212 Q111 Q411 Q311 Q211 Q110 Q410 Q310 Q210 Q1

n new-build (existing) n secondhand

is prelet) has pushed the average asking rent up to pound5250 for new-build space which represents a pound5 per sq ft increase on last quarter Our consensus rents panel suggests even higher rents with an estimated pound5783 per sq ft The highest rent reported in Q1 was pound7250 sq ft paid by Australian company Servcorp for 11802 sq ft at 122 Leadenhall Street EC3 albeit with 24 months rent free

The availability rate has dropped back slightly from 793 to 839 however further rental growth should still be anticipated with levels of preletting in forthcoming developments high The most high-profile examples are 20 Fenchurch Street EC3 and 122 Leadenhall Street EC3 which are now 93 and 51 prelet respectively ahead of their completions There is however new-build stock available elsewhere for example AXA Real Estate and

30

40

50

60

20142013201220112010

pound psf

AssociAtions

construction

FinAnciAl

insurAnceother

services

heAlth amp educAtion

ProFessionAl

tMt

city core continued

agrave

ClICk HErE For INTErACTIvE MAp rsaquo ClICk HErE For INTErACTIvE MAp rsaquo

ClICk HErE For DATA rsaquo

ClICk HErE For DATA rsaquo

ClICk SCHEME For THE Full BuIlDING rEporT rsaquo

ProPerty

support vaLuations with the Latest comparabLes cLick here to find out more

380000 sq ft put under

construction in q1

819697 sq ft Let

1088m sq ft

avaiLabLe

pound5783 per sq ft

egi consensus rent

839 avaiLabiLity

rate

472m sq ft

avaiLabLe and ready to occupy

MGPArsquos 158895 sq ft 6 Bevis Marks EC3 which completed in Q1 with only the 13498 sq ft second floor let (Oxford Insurance Brokers in January) or the 221381 sq ft Moregate Exchange which is due to complete next quarter without any preletting

Momentum is likely to continue through the remainder of the year with strong appetite from the financial sector with requirements from banks such as Socieacuteteacute Geacuteneacuterale Rabobank and Mizuho with

n 240693 sq ft completed in Q1

n 184016 sq ft of that space is speculative development

n 380000 sq ft went under construction in Q1

n The majority of this space was Angel Court Tower EC2 which is 364867 sq ft

deveLopment future deveLopment

investment saLesdeveLopment under construction

Address price (poundm) Size (sq ft)

Sixty london Holborn viaduct EC1 pound250 217074

1 St Martinrsquos-le-Grand EC1 pound171 255041

33 Gracechurch Street EC3 pound64 84987

The rex Building 62 Queen Street EC4 pound58 72505

St Clare House 30-33 Minories EC3 pound41 163286

0

05

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35

201620152014

Sq ft (millions)

0

05

10

15

20

201420132012201120102009

Sq ft (millions)

n prelet n speculative n prelet n speculative

n Supply dropped 64778 sq ft quarter-on-quarter

n Pre-marketed space accounts for 22 of all City Core supply

n Quarter-on-quarter under construction supply dropped by 564670 sq ft all other classifications increased

suppLy

Address Completion date Size speculative (sq ft)

New ludgate 30 old Bailey EC4 2015 380000

Bloomberg place Bucklersbury EC4 2015 380000

Angel Court Tower EC2 2015 365000

leadenhall Building 122 leadenhall Street EC3 2014 290000

Moorgate Exchange 72 Fore Street EC2 2014 220000

0

05

10

15

20

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30

201420132012201120102009

Sq ft (millions)

n newrefurb existing n pre-marketing n secondhand n under construction

the latter placing Land Securitiesrsquo 193000 sq ft 2 New Ludgate EC4 under offer in Q1 A total of 867159 sq ft was placed under offer in Q1 up 39 on the last quarter and the highest level since Q2 2012

The biggest investment deal in Q1 was the purchase of Sixty London EC1 for pound250m by the pension fund for Berlin Doctors This deal alongside Ho Beersquos purchase of 1 St Martinrsquos-Le-Grand EC1 for pound171m were the only deals above the pound100m mark in Q1

headLine figures

city core docklandsmidtown city fringesouth bankwest endanalysiscontents

cLick on THE AREA NAME TO GO DIRECT TO MARkET BREAkDOwN

for any data queries pLease contact tompiLkingtonestatesgazettecom or caLL 020 7911 1775

in depthLondon offices market anaLysis

West End take-up slipped back a little on the 700000 sq ft plus figures recorded in the final two

quarters of 2013 Nonetheless the figure of 572368 sq ft recorded was up 1 on the same time last year The size of the increase is of little significance but there are reasons to be optimistic about this market At 564045 sq ft the amount of space placed under offer is the highest level the West End has seen since the pre-recession Q4 2006 It is perhaps little coincidence that Londonrsquos priciest markets should see such improvement as the economy is at its strongest since the recession

The occupier base of the West End is traditionally diverse and this quarter was no different but it was the financial sector that was the most dominant accounting for 23 of take-up The largest deal for the financial sector was TDR Capitalrsquos acquisition of 21843 sq ft at

west endq12014overview

n Take-up increased 1 year-on-year

n The average deal size was 6541 sq ft this quarter

n TMT dropped from 24 of the total to 17

n The financial sector accounted for 23 of take-up an increase from 21 last quarter

n Property increased from 6 in Q4 to 12 in Q1

take-up

key deaLs

take-up by sector

avaiLabiLity

asking rent

Address Tenant Size (sq ft)

Regentrsquos Place 20 Triton Street NW1 Aegis Group 31129

AirW1 20 Air Street W1 Twitter 24468

20 Bentinck Street W1 TDR Capital 21843

62 Buckingham Gate SW1 OMV 20495

Millbank Tower SW1 Citibase 20443

0

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20

25

30

35

201420132012201120102009

Sq ft (millions)

n new-build n secondhand

0

2

4

6

8

10

12

14 Q113 Q413 Q313 Q213 Q112 Q412 Q312 Q212 Q111 Q411 Q311 Q211 Q110 Q410 Q310 Q210 Q1

n new-build (existing) n secondhand

20 Bentinck Street W1 on a 10-year lease reportedly paying pound75 per sq ft The biggest deal of the quarter however was Aegisrsquos acquisition of 31129 sq ft at 20 Triton Street NW1 The media firmrsquos deal was one of a number that helped to boost TMTrsquos share of the West End market to 17 The highest rent of Q1 was achieved at 8 Hanover Street W1 where Nigerian Oil Mills is reportedly paying pound11250 for 3358 sq ft on a 10-year lease Mayfair remains the most expensive market at pound108 per sq ft according to our consensus rents panel representing a 2 increase quarter-on-quarter

While the take-up figure for the quarter was not especially high it was high enough to take another bite out of the availability rate which stands at a low 486 Of the 536m sq ft that is available only 3m sq ft is ready and available to occupy More encouraging is the development pipeline which should see a further 22m sq ft come

40

60

80

100

20142013201220112010

pound psf

ConstruCtion

FinanCial

others

ProPerty

retail amp leisure

serviCes

industry amp ManuFaCturing

health amp eduCation

Central amp loCal governMent

ProFessional

utilities

tMt

west end continued

agrave

CliCk heRe fOR iNTeRACTiVe MAP rsaquo CliCk heRe fOR iNTeRACTiVe MAP rsaquo

CliCk heRe fOR DATA rsaquo

CliCk heRe fOR DATA rsaquo

CliCk SCheMe fOR The full BuilDiNG RePORT rsaquo

understand current investment trends across the capitaL cLick here to find out more

pound7625per sq ft

egi consensus rent

572368 sq ft Let

536m sq ft

avaiLabLe

190000 sq ft put under

construction in q1

486 avaiLabiLity

rate

3m sq ft

avaiLabLe and ready to occupy

into the market before the end of 2016 and of all the markets this one has the lowest level of preletting with 75 of the space taken

Q4 2013 saw high levels of construction start in the West End with 743299 sq ft being placed under construction This quarter levels dropped back to 190000 sq ft however 180000 sq ft of that is speculative The level of completions was low with only 9730 sq ft completed and of that 6383 sq ft was prelet

n Only 9730 sq ft completed in Q1

n This figure is down from 442000 sq ft in Q4 2013

n 22m sq ft is due to complete before the end of 2016

n 925 of the space under construction is speculative

deveLopment future deveLopment

investment saLesdeveLopment under construction

Address Price (poundm) Size (sq ft)

Steel house 11 Tothill Street SW1 pound45 44000

1 Queen Annersquos Gate SW1 pound37 16103

14 Great Peter Street SW1 pound32 31324

Ashley house 2 Monck Street SW1 pound30 25848

18b Charles Street W1 pound24 13003

0

03

06

09

12

15

201620152014

Sq ft (millions)

0

02

04

06

08

10

201420132012201120102009

Sq ft (millions)

n prelet n speculative n prelet n speculative

n Supply dropped 126041 sq ft quarter-on-quarter

n Premarketed space accounts for 18 of all City Core supply

n There is 3000959 sq ft available and ready to occupy

suppLy

Address Completion date Size speculative (sq ft)

Nova Terminus Place SW1 2016 480000

fitzroy Place Mortimer Street W1 2014 225000

Zig Zag Building SW1 2015 190000

10-11 Babmaes Street SW1 2014 150000

Sceptre house 169-173 Regent Street W1 2014 150000

0

05

10

15

20

201420132012201120102009

Sq ft (millions)

n newrefurb existing n pre-marketing n secondhand n under construction

At a total of pound260m transacted over 14 deals investment volumes for office space in the West End were muted in the first quarter This should perhaps come as little surprise following on from a bumper Q4 in 2013 when almost pound19bn was transacted in 29 deals The largest deal of this quarter was the purchase of Steel House 11 Tothill Street SW1 by the Department of Education ndash the building will be let to a Free School

headLine figures

city core docklandsmidtown city fringesouth bankwest endanalysiscontents

cLick on THE AREA NAME TO gO DIRECT TO MARkET BREAkDOWN

for any data queries pLease contact tompiLkingtonestatesgazettecom or caLL 020 7911 1775

in depthLondon offices market anaLysis

Much like Q1 last year Midtown benefited from a large deal at Kingrsquos Cross Central to help take-up

figures and once again Google was the occupier What was shaping up to be a relatively quiet quarter was boosted in

the last day or two of the month as Google signed for 160004 sq ft at 6 Pancras Square N1 where construction is due to complete at the end of the year The letting pushed take-up to 479716 sq ft which is ahead of the five-year quarterly average of 398361 sq ft

The Google deal along with lettings including Rocket Fuel at 34 Bow Street WC2 Channel Advisor at 33 Kingsway WC2 and River Publishing at 3 Waterhouse Square EC1 saw the TMT sector account for 54 of Midtownrsquos take-up

Availability stayed constant at 6 The largest new instruction was 39084 sq ft at Carmelite Riverside EC4 where the first and second

midtownq12014overview

n Take-up this quarter was 479716 sq ft 51 down on the same period last year

n 37 of take-up was in space under construction

n The professional sector dropped from 17 last quarter to 7 in Q1

n The TMT sector was the most prevalent accounting for 54 of take-up up from 30 in Q4 2013

n The number of sectors represented dropped from 14 last quarter to 12 in Q1

take-up

key deaLs

take-up by sector

avaiLabiLity

asking rent

Address Tenant Size (sq ft)

Kingrsquos Cross Central 6 Pancras Square N1 Google 160004

Buchanan House 24-30 Holborn EC1 London School of Business amp Finance 24150

34 Bow Street WC2 Rocket Fuel 21202

1 Southampton Row WC1 Metro Bank 21097

33 Kingsway WC2 Channel Advisor 20054

0

05

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30

201420132012201120102009

Sq ft (millions)

n new-build n secondhand

2

4

6

8

10

12

14 Q113 Q413 Q313 Q213 Q112 Q412 Q312 Q212 Q111 Q411 Q311 Q211 Q110 Q410 Q310 Q210 Q1

n new-build (existing) n secondhand

floors are available on a sublease from Hachette but this space is already under offer Stock hitting the market and immediately going under offer is typical of this constrained market with 451419 sq ft placed under offer this quarter ndash the highest level since Q1 2011

Construction in Midtown was muted in Q1 but 137m sq ft is due to complete before the end of the year Of that space 602832 sq ft is still available

30

40

50

60

20142013201220112010

pound psf

AssociAtions

construction

FinAnciAl

others

ProPerty

retAil amp leisure

centrAl amp locAlgovernment

heAlth amp educAtion

ProFessionAl

tmt

city core docklandsmidtown city fringesouth bankwest endanalysiscontents

cLick on THE AREA NAME TO GO diRECT TO MARKET BREAKdOWN

pound5821per sq ft egi

consensus rent

184msq ft avaiLabLe and

ready to occupy

602 avaiLabiLity

rate

headLine figures

CLiCK HERE FoR iNTERACTivE MAP rsaquo CLiCK HERE FoR iNTERACTivE MAP rsaquo

CLiCK HERE FoR dATA rsaquo

CLiCK HERE FoR dATA rsaquo

CLiCK SCHEME FoR THE FuLL BuiLdiNG REPoRT rsaquo

industry amp mAnuFActuring

receive a weekLy update on the London office market cLick here to find out more

services

in depthLondon offices market anaLysis

These pages have regularly reported the cyclical nature of the Docklands market In Q1 we see a

peak after a subdued Q4 2013 when only 84891 sq ft was let This quarterrsquos total was 448271 sq ft representing a 913 increase on the same period last year In fact the average deal size for the 10 deals recorded this quarter (44827 sq ft) was greater than the take-up for all Docklandsrsquo Q1 take-up last year (44234 sq ft)

Take-up had a healthy balance of new-build and secondhand space EY (205039 sq ft) and European Medicines Evaluation Agency (27567 sq ft) prelet space at Canary Wharf Grouprsquos 25 Churchill Place E14 A further 222964 sq ft was let in secondhand space including large sub-lettings to High Speed 2 (54998 sq ft) and MDU (47016 sq ft) at 1 Canada Square E14 and to the General Pharmaceutical Council (38400 sq ft) at 25 Canada Square E14

docklandsq12014overview

n Take-up increased 913 on the Q1 2013 figure

n Q1 take-up has already exceeded the level achieved for all of 2012 (442686 sq ft)

n The professional sector accounted for 46 of take-up due which was up from 4 in Q4 2013

n All professional sector take-up is accounted for by one deal (EY at 25 Churchill Place E14)

n The financial sector dropped from 36 in Q4 2013 to 3 in Q1 2014

take-up

key deaLs

take-up by sector

avaiLabiLity

asking rent

Address Tenant Size (sq ft)

25 Churchill Place E14 EY 205039

1 Canada Square E14 HS2 54998

1 Canada Square E14 MDU 47016

25 Canada Square E14 The General Pharmaceutical Council 38400

25 Canada Square E14 Interroute 29204

0

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201420132012201120102009

Sq ft (millions)

n new-build n secondhand

6

8

10

12

14 Q113 Q413 Q313 Q213 Q112 Q412 Q312 Q212 Q111 Q411 Q311 Q211 Q110 Q410 Q310 Q210 Q1

n new-build (existing) n secondhand

These deals are timely as for all the column inches around these deals there were more around the Financial Conduct Authorityrsquos decision this quarter to move to Stratford

The impact of the level of take-up was to drive down the availability rate from 1012 to 949 With good-quality space at site such as 10 Upper Bank Street E14 and 1 amp 25 Canada Square the dip in availability rate is unlikely to push rents up too much

20

30

40

50

20142013201220112010

pound psf

Financial

insurance

association

tmt

ProFessional

transPort

city core docklandsmidtown city fringesouth bankwest endanalysiscontents

cLick on THE ArEA nAME To Go DIrECT To MArkET BrEAkDoWn

140000 sq ft pLaced under offer

pound3750per sq ft

egi consensus rent

534m sq ft avaiLabLe

headLine figures

ClICk HErE for InTErACTIvE MAP rsaquo ClICk HErE for InTErACTIvE MAP rsaquo

ClICk HErE for DATA rsaquo

ClICk HErE for DATA rsaquo

ClICk SCHEME for THE fUll bUIlDInG rEPorT rsaquo

for any data queries pLease contact tompiLkingtonestatesgazettecom or caLL 020 7911 1775

utilities

others

in depthLondon offices market anaLysis

At 302734 sq ft take-up in the City fringe was in line with the marketrsquos five-year quarterly average

of 294749 sq ft This was 8 higher than was recorded at this point last year The largest deal of the quarter was the letting to Improbable Worlds at 20 Farringdon Road EC1 The deal helped the TMT sector account for 34 of take-up which was significantly more than any other business sector

Some 86 of lettings were in secondhand space and there is now only 64928 sq ft of new and ready-to-occupy space available in this constrained market Furthermore there was only 969 sq ft of office space completed this quarter and at 970000 sq ft the City fringe has less space due to complete before the end of 2016 than any other London submarket With this in mind it is a little surprising that only 41559 sq ft was put under construction in Q1

city fringeq12014overview

n 302734 sq ft was let this quarter making it the highest Q1 for three years

n The average deal size in the City fringe was 6143 sq ft

n TMT accounted for 34 up from 24 in the previous quarter

n Construction recorded a fourfold increase to 12

n Retail and leisure dropped from 18 last quarter to just 4 this quarter

take-up

key deaLs

take-up by sector

avaiLabiLity

asking rent

Address Tenant Size (sq ft)

Farringdon Place 20 Farringdon Road EC1 Improbable Worlds 26528

68-80 Hanbury Street E1 Second Home 18953

Pegasus House 116-120 Golden Lane N1 Shelter 12280

90-92 Pentonville Road N1 Pareq 11100

Lloydrsquos Chambers 1 Portsoken Street E1 Global Witness 10468

0

03

06

09

12

15

201420132012201120102009

Sq ft (millions)

n new-build n secondhand

3

6

9

12

15

14 Q113 Q413 Q313 Q213 Q112 Q412 Q312 Q212 Q111 Q411 Q311 Q211 Q110 Q410 Q310 Q210 Q1

n new-build (existing) n secondhand

This is a concern for a market where the availability rate is down to 562 ndash a figure which appears to be pushing rents upwards as average new-build asking prices jumped from pound3375 per sq ft last quarter to pound40 per sq ft in Q1

Of the 387m sq ft available 151609 sq ft was placed under offer last quarter When calculated as a percentage of available space this market is second lowest at 39 behind Docklands at 27

10

20

30

40

50

20142013201220112010

pound psf

city core docklandsmidtown city fringesouth bankwest endanalysiscontents

cLick on ThE AREA nAME TO gO DIRECT TO MARkET bREAkDOWn

134m sq ft avaiLabLe and

ready to occupy

39m sq ft

avaiLabLe

0 under construction

space Let

headLine figures

ConstruCtion

othersretail amp leisure

serviCes

industry amp ManufaCturing

health amp eduCation

tMt

ProPerty

insuranCe

Professional

CLICk HERE FoR INTERACTIvE MAP rsaquo CLICk HERE FoR INTERACTIvE MAP rsaquo

CLICk HERE FoR dATA rsaquo

CLICk HERE FoR dATA rsaquo

CLICk SCHEME FoR THE FuLL buILdING REPoRT rsaquo

finanCial

assoCiations

identify new deveLopment opportunities cLick here to find out more

in depthLondon offices market anaLysis

The Shard SE1 accounted for 43 of the 283521 sq ft let in the southern fringe this quarter as Sellar

Grouprsquos vision for a vertical city comes together Whether the diversity of use types in the building is to fulfil that vision or down to office lettings being hard to achieve is unknown but as the space was marketed as offices it is included in EGirsquos take-up figures

Take-up has been impressive since the beginning of 2013 with a quarterly average of 334000 sq ft compared with only 56022 sq ft in 2012 This change represents the shift in perception of the area as a vibrant office market where young employees want to be The change has resulted in average asking rents for new-build space hitting pound60 per sq ft (although this figure is based on quoting rents for sublets in the two neighbouring Sellar developments)

Some 130214 sq ft or 44 of available stock was placed under

South bankq12014overview

n Health and education accounted for 37 of take-up

n The TMT sector dropped from 39 of take-up last quarter to 4 in Q1

n The property sector increased from 6 last quarter to 30 in Q1

take-up

key deaLs

take-up by sector

avaiLabiLity

asking rent

Address Tenant Size (sq ft)

The Shard SE1 HCA Healthcare 69602

Sea Containers House 20 Upper Ground SE1 WeWork 40412

Cottons Centre Hays Lane SE1 Charles Tyrwhitt 24337

1 London Bridge SE1 HCA Healthcare 15807

The Shard SE1 South Hook Gas 14770

0

03

06

09

12

15

201420132012201120102009

Sq ft (millions)

n new-build n secondhand

4

6

8

10

12

14 Q113 Q413 Q313 Q213 Q112 Q412 Q312 Q212 Q111 Q411 Q311 Q211 Q110 Q410 Q310 Q210 Q1

n new-build (existing) n secondhand

offer in Q1 Of this 72120 sq ft was at Great Ropemaker Partnershiprsquos 240 Blackfriars Road SE1 where lettings to DNV GL and Ramboll are thought to be close

Owing to the sale of More London SE1 for pound17bn the last quarter of 2013 saw investment levels that were unlikely to be surpassed but this quarter did not disappoint with MampG purchasing Riverside House SE1 for a reported pound122m reflecting a yield of 54

10

20

30

40

50

60

70

80

20142013201220112010

pound psf

city core docklandsmidtown city fringesouth bankwest endanalysiscontents

cLick on THE aREa NaME TO GO DiREcT TO MaRkET BREakDOWN

795 avaiLabiLity rate

136m sq ft avaiLabLe and

ready to occupy

pound5071 per sq ft egi

consensus rent

headLine figures

financial

services

industry amp manufacturing

retail amp leisure

CLiCk HErE for inTErACTivE MAp rsaquo CLiCk HErE for inTErACTivE MAp rsaquo

CLiCk HErE for dATA rsaquo

CLiCk HErE for dATA rsaquo

CLiCk SCHEME for THE fULL BUiLdinG rEporT rsaquo

property

for any data queries pLease contact tompiLkingtonestatesgazettecom or caLL 020 7911 1775

tmt

others

health amp education

n At 283521 sq ft it is the highest level of Q1 take-up since EGi records began

n The average deal size in Q1 was 12887 sq ft