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LONDONMARKETS
International Property Consultants
Analysis of the London office market Winter 2017/18
Key schemes under constructionH2 2017 key deals
Q4 2017 Availability
Q4 2017 Take-up
11.1
3.2MILLION SQ FT
MILLION SQ FT
27%
£110
24.2%
£68.50
Grade A Availability
West End Prime Rent (p
er sq
ft)
Tenant Space
City Prime Rent (per sq ft
)
4.8%
£67.50
Availability Rate
Mid
town Prime Rent (per sq ft)
70 Farringdon Street825,000 sq ftGoldman Sachs/Tishman Speyer
52-54 Lime Street & 27 Leadenhall Street (The Scalpel)398,000 sq ft (262,000 sq ft available space)WRBC Development
10 Fenchurch Avenue398,000 sq ft (67,000 sq ft available space)Generali Real Estate/Greycoat/CORE
60-70 St Mary Axe326,000 sq ft (166,254 sq ft available space)TH Real Estate
Two Southbank Place282,440 sq ftBraeburn Estates ( JV Canary Wharf Group/Qatari Diar)/Almacantar
Deutsche Bank496,000 sq ftCity
WeWork135,500 sq ftShoreditch
Dentsu Aegis312,000 sq ftKing’s Cross & Euston
Lloyds125,400 sq ftCity
Boston Consulting Group Ltd123,500 sq ftFitzrovia
www.geraldeve.com
EXECUTIVE SUMMARY
Over 50% of development space has been let
There is currently 10.2 million sq ft of new office space under construction across central London, with the majority being built in the City. However this level of development is likely to decrease as developers pause to see the full impact of leaving the EU before committing to new schemes.
Of the space currently under construction, 51% has already been pre-let. With grade A availability falling by 25% in 2017, it is likely that pre-letting activity will continue throughout 2018, and could potentially lead to a real shortage of grade A availability for a number of submarkets.
King’s Cross & Euston in particular will feel the supply squeeze. The submarket already has the lowest availability rate in London at 1.5%, and currently all of the 180,000 sq ft under construction is fully let.
4.5
4.0
Million sq ft
2.5
2.0
1.5
1.0
0.5
3.5
3.0
0
Q4
2017
Q3
2017
Q2
2017
Q1
2017
Q4
2016
Q3
2016
Q2
2016
Q1
2016
Q2
2015
Q4
2015
Q3
2015
Q1
2015
7Million sq ft
4
6
5
3
2
1
0
2008
2020
2018
2015
2014
2017
2016
2011
2010
2013
2012
2009
2019
14
10
Million sq ft
6
12
8
0
2
4
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q2
2016
Q3
2016
Q1
2017
Q2
2017
Q3
2017
Q4
2016
Q4
2017
Quarterly take-up by regionSource: Gerald Eve
Central London development pipelineSource: Gerald Eve
Availability by gradeSource: Gerald Eve
East West Midtown Southbank Five year average
Completed Under Construction Let Under Construction Available
New Refurbished Unrefurbished
3
Media & Tech drives London occupier demand
While uncertainty reigns across the country, the London office market continues to be active with 12.8 million sq ft of space taken in 2017, a 12% increase on the previous year.
The changing nature of occupier employment across the capital was reflected by the fact that the media & tech sector was the most active throughout the year, accounting for 28% of total take-up. This included significant deals for Dentsu Aegis in King’s Cross & Euston (312,000 sq ft), NEX group in Shoreditch (112,000 sq ft), and Spotify in Covent Garden (104,000 sq ft).
Although finance & banking occupiers have started to prepare for life outside of the EU, which will include moving some positions from London to other EU member states, the sector remained active, acquiring 1.5 million sq ft in 2017, which represents 17% of annual take-up.
An increasing number of occupiers are sub-letting space
An increasing number of occupiers are sub-letting space back to the market as they reassess their real estate needs. Whether it’s to reduce overall costs, or simply due to a change in business strategy, the volume of tenant space in the market has increased from 19% to 24% of total availability. As a result, we’ve seen the volume of unrefurbished space increase over the last 12 months.
The finance & banking sector are the most active in releasing space, and currently account for 30% of all tenant space.
However despite this rise in tenant space, overall availability has actually fallen with an availability rate of 4.8% recorded in December 2017, compared to 5.4% 12 months earlier. This is a result of take-up erosion of existing supply, plus significant volumes of development space being let pre completion.
Although serviced offices have traditionally catered towards start-ups, a number of major occupiers have recently taken large amounts of serviced office space to reduce the risk of wasted space. The volume of tenant space has increased by 5% over the last 12 months, which indicates that occupiers are becoming increasingly aware of shedding their excess real estate space in order to save costs. However with serviced offices, excess space is significantly reduced as offices are taken on a desk-by-desk and shorter term basis.
As well as the potential cost saving, serviced offices can also assist in the war for talent. The attractiveness and popularity of the new co-working environment, including the amenities and staff benefits on offer, will directly appeal to the younger workforce, and in particular graduates.
So what impact are serviced offices having on the fundamentals of London offices? The vacancy rate for smaller buildings (less than 25,000 sq ft), fell below 3% at the end of 2014, its lowest level in more than 12 years. However, on 28 March 2014, WeWork began its aggressive expansion across the capital by signing its first major London lease at Sea Containers. Since then, despite vacancy rates across all Central London offices continuing to trend downwards for a further 18 months, the vacancy rate for smaller buildings increased.
From an investment point of view, this void created in the market will impact rental growth and could potentially provide a buying opportunity in the future. However in the near term we are likely to see landlords reduce lease lengths and increase incentives as it will become harder to lease certain units.
The current landscape of the London office market is likely to continue to change. In June 2017, British Land announced Storey, their own brand of flexible working, with more companies expected to follow suit in 2018.
With the uncertainty surrounding Brexit set to increase throughout the year, occupier’s desire for more flexibility in their lease will increase. There is also the heightened demand coming from the media & tech sector, known for its high number of start-ups, which will lead to a further increase in the number of serviced offices across the capital.
THE RISE OF SERVICED OFFICESTraditional leases are in decline. Since 2014, the number of leases signed across central London has fallen year on year and this trend looks set to continue in 2018. This is a direct result of occupier’s desire for short, flexible leases, which allows them to expand and shrink their operations easily. This increasing level of demand for serviced offices led the sector to its most acquisitive year in 2017, taking 1.3 million sq ft of space, which represents 10% of total take-up.
www.geraldeve.com
1400
800
1000
1200
200
600
400
0
130
110
120
70
80
90
100
2017
201
6
201
5
2012
2014
2013
2011
10
8
%
4
6
2
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
The number of traditional leases signed in central LondonSource: Gerald Eve
Central London vacancy rate by office sizeSource: CoStar Group
Number of leases (LHS) % change (index 100 = 2011)
Central London buildings under 25,000 sq ft Central London all office buildings
Positive employment growthCentral London demand is being supported by positive office-based employment, which is set to increase by 9% over the next 10 years. This is largely being driven by strong growth in the professional services and media & tech sectors. However this could be affected by the ability to attract and retain EU workers after Brexit.
Media and tech sector to drive demandCertain sectors will continue to downsize their real estate needs in order to maximise their office space efficiency, however this will be offset by the continued rise of the Media & Tech sector. Driven by the development of new technologies and the fourth industrial revolution, 11% employment growth is expected over the next 10 years.
Speculative developments to decreaseAmid Brexit uncertainty, rising construction costs and a weak exchange rate, developers will likely place certain schemes on hold until a clearer UK outlook is known. This will lead to a reduction in the number of speculative developments starts across central London.
Consumer spending squeezeNominal wage growth is currently around 2.5%, and with inflation at 3% and the potential for interest rates to rise further, consumer spending is being squeezed. However over the course of 2018, an easing in overall inflation is expected to emerge and with low unemployment rates, wage growth could begin to gain some added momentum. This should support a steady improvement in retail sales volumes
Serviced offices continue to riseOccupiers with smaller requirements are increasingly acquiring space from serviced offices as they seek greater flexibility. This has been reflected by the decrease in the number of traditional leases signed since 2014. Further expansion is anticipated throughout 2018 which will cause the void rate for smaller office units to increase across London.
High investment demand for London officesThe amount of money targeting prime London offices in 2017 far outweighed supply, which led to the record sales of the Walkie Talkie and Cheesegrater buildings. Asian investors will continue to dominate the London market throughout 2018 as they seek a strong income return at a national discount. New entrants from Hong Kong, Malaysia and Singapore will enter the market as well as German property funds.
OUTLOOK
5
NationalTheatre
London South Bank University
Tower Bridge
Tower of London
30 St Mary Axe
City Hall
Tate Modern
Whitechapel Gallery
London Stadium
Bank of England
Mansion House
Somerset House
St Paul’sCathedral
Barbican Centre
London Eye
Sadler’s Wells
Geffrye Museum
The Old Truman Brewery
Brick Lane MarketOld Spitalfields Market
Scala
The British Library
The WallaceCollection
BBC
Buckingham Palace
Selfridges
Kensington Palace
Science Museum
Royal Albert Hall
The National Gallery
Royal Opera House
V&A
Harrods
Southbank Centre
Imperial War Museum
The Oval
Westminster Abbey
Westminster Cathedral
Palace of Westminster
Regent’s Park
Lincoln’sInn Fields
SouthwarkPark
Tower HamletsCemetery Park
Hyde Park
Green Park
St James’s Park
Victoria Park
LONDON OFFICE RENTS
Knightsbridge
Rent Free 21 months
£67.50£90.00
Grade A
Grade B
Victoria
£55.00£75.00
Grade A
Grade B
www.geraldeve.com
Covent Garden
Rent Free 21 months
£65.00£77.50
Grade A
Grade B
Mayfair & St James’s
Rent Free 21 months
£87.50£110.00
Grade A
Grade B
Soho
Rent Free 21 months
£70.00£90.00
Grade A
Grade B
Paddington
Rent Free 21 months
£55.00£71.00
Grade A
Grade B
King’s Cross & Euston
Rent Free 18 months
£60.00£80.00
Grade A
Grade B
Marylebone
Rent Free 21 months
£65.00£82.50
Grade A
Grade B
Fitzrovia
Rent Free 24 months
£60.00£82.50
Grade A
Grade B
Rent Free 24 months
NationalTheatre
London South Bank University
Tower Bridge
Tower of London
30 St Mary Axe
City Hall
Tate Modern
Whitechapel Gallery
London Stadium
Bank of England
Mansion House
Somerset House
St Paul’sCathedral
Barbican Centre
London Eye
Sadler’s Wells
Geffrye Museum
The Old Truman Brewery
Brick Lane MarketOld Spitalfields Market
Scala
The British Library
The WallaceCollection
BBC
Buckingham Palace
Selfridges
Kensington Palace
Science Museum
Royal Albert Hall
The National Gallery
Royal Opera House
V&A
Harrods
Southbank Centre
Imperial War Museum
The Oval
Westminster Abbey
Westminster Cathedral
Palace of Westminster
Regent’s Park
Lincoln’sInn Fields
SouthwarkPark
Tower HamletsCemetery Park
Hyde Park
Green Park
St James’s Park
Victoria Park
See inside back cover for definitions
Ten year term
7
Southbank
Rent Free 18 months
£45.00£65.00
Grade A
Grade B
Shoreditch
Rent Free 24 months
£50.00£70.00
Grade A
Grade B
Fa
rringdon & Clerkenwell
Rent Free 21 months
£55.00£65.00
Grade A
Grade B
Midtown
Rent Free 24 months
£55.00£67.50
Grade A
Grade B
City
Rent Free 24 months
£60.00£68.50
Grade A
Grade B
Hyde Park
Edgware Road
Paddington
Lancaster Gate
140000s sq ft
120
0
80
60
100
20
40
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q4
2017
Q4
2016
Q1
2017
Q2
2017
Q3
2017
Q3
2016
Q2
2016
600000s sq ft
300
500
400
200
100
0
2008
2019
2009
2010
2011
2012
2013
2014
2015
2020
2018
2017
2016
500000s sq ft
200
300
400
100
0
Q1
2015
Q4
2017
Q3
2017
Q2
2017
Q1
2017
Q4
2016
Q3
2016
Q2
2016
Q1
2016
Q4
2015
Q3
2015
Q2
2015
DemandQuarterly take-up and five year average
Source: Gerald Eve
SupplyAvailability by grade
DevelopmentDevelopment pipeline
Leasing activity in the second half of the year totalled 96,000 sq ft, a 25% increase on H1 2017. The majority of deals came in Q3, and notably Mars’s decision to take 31,000 sq ft at 4 Kingdom Street for its confectionery business. Mars has agreed a ten year lease on the sixth and seventh floors.
Sasol also signed a ten year lease for 15,000 sq ft on the eighth floor of the same building. The two occupiers join Finastra, the computer software firm, which recently took 42,000 sq ft over three floors.
4 Kingdom Street, which launched in June 2017, is now 89% let or under offer at an average rent of £71 per sq ft, a new market high. The remainder of the space is being taken by Storey, British Land’s flexible workspace brand, which will take space across the fourth, ground and lower ground floors of the building. British Land has invested nearly £100m in the construction of 4 Kingdom Street and the redevelopment of the public realm at Paddington Central.
Although leasing activity picked up in the second half of the year, availability increased and resulted in an availability rate of 10.7%, a third of which is available as a sublease from an existing tenant. There will also be a further 160,000 sq ft coming to the market, when M&S vacate 2 Merchant Square later in the year.
A further 240,000 sq ft of new space is on the way, with Derwent London’s Brunel Building, currently the only building under construction. The development remains available and is due to be delivered at the beginning of 2019.
PADDINGTON
£71.00Prime Rents
10.7%Availability Rate
30.6%Tenant Space
3Underground Stations
0Michelin Star Restaurants
34Pubs
63%Corporate take-up
240,000 sq ftUnder Construction
84,500 sq ftUnder Offer
ContactPatrick RyanLondon OfficesMobile +44 (0)7792 078397
New Refurbished Unrefurbished
Take-up Five year average
Completed Under construction available Under construction let
www.geraldeve.com
Source: Gerald Eve
The Wallace Collection
Edgware Road
Baker Street
Marble Arch
200000s sq ft
160
140
180
0
100
80
120
40
60
20
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q4
2017
Q4
2016
Q1
2017
Q2
2017
Q3
2017
Q3
2016
Q2
2016
450
400
000s sq ft
100
350
300
50
250
200
150
0
2008
2009
2019
2010
2011
2012
2013
2014
2015
2020
2018
2017
2016
400
300
000s sq ft
100
200
0
Q1
2015
Q4
2017
Q3
2017
Q2
2017
Q1
2017
Q4
2016
Q3
2016
Q2
2016
Q1
2016
Q4
2015
Q3
2015
Q2
2015
DemandQuarterly take-up and five year average
SupplyAvailability by grade
DevelopmentDevelopment pipeline
The final quarter of the year saw leasing activity reach 181,000 sq ft, which far exceeded the five year average and was the largest quarterly volume since 2012.
Two significant deals were responsible for the increase in take-up, firstly WELPUT, the specialist central London real estate fund, signed WeWork for the entire 40,000 sq ft North West House, 119-127 Marylebone Road, on a 20 year lease.
The second deal saw a private financial occupier let the entire 21,000 sq ft of Howard de Walden’s new development, 47-53 Queen Anne Street.
The upturn in letting activity reflects the occupier demand in the submarket. This is also reinforced by the fact there is currently a further 225,000 sq ft under offer, which is the largest quarterly volume on record.
Despite the increase in take-up, availability has remained relatively flat throughout 2017 with the availability rate moving up slightly from 2.3% in January to 2.4% in December. This is the second lowest availability rate across central London after King’s Cross & Euston.
There are a number of developments in the pipeline however, and three which are under construction and should complete by the end of H1 2018; 1-9 Seymour Street (55,000 sq ft), 151 Marylebone Road (46,000 sq ft) and 3 Cavendish Square (20,000 sq ft). The majority of this space is still available.
MARYLEBONE
£82.50Prime Rents
2.4%Availability Rate
15.6%Tenant Space
5Underground Stations
4Michelin Star Restaurants
51Pubs
56%Serviced Offices take-up
215,800 sq ftUnder Construction
225,377 sq ftUnder Offer
New Refurbished Unrefurbished
Take-up Five year average
Completed Under construction available Under construction let
ContactSophie DawLondon OfficesMobile +44 (0)7880 454161
9
MAYFAIR & ST JAMES’S
Hyde Park
Green Park
St James’s Park
Bond StreetOxford Circus
Hyde Park Corner
Piccadilly Circus
400
350
000s sq ft
300
0
200
150
250
50
100
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q4
2017
Q4
2016
Q1
2017
Q2
2017
Q3
2017
Q3
2016
Q2
2016
600000s sq ft
300
500
400
200
100
0
2008
2009
2019
2010
2011
2012
2013
2014
2015
2020
2018
2017
2016
1200000s sq ft
800
1000
600
200
400
0
Q1
2015
Q4
2017
Q3
2017
Q2
2017
Q1
2017
Q4
2016
Q3
2016
Q2
2016
Q1
2016
Q4
2015
Q3
2015
Q2
2015
DemandQuarterly take-up and five year average
SupplyAvailability by grade
DevelopmentDevelopment pipeline
Following a positive first half of the year, take-up fell below the five year average in both Q3 and Q4 2017 with letting activity totalling 315,000 sq ft in H2 2017. However there is currently 400,000 sq ft under offer which suggests that the quiet end to 2017 might be a blip rather than a decline in occupier sentiment.
A lack of larger deals was mainly responsible for the subdued leasing activity, with only six deals above 10,000 sq ft recorded in H2 2017, the most significant being global alternative investment firm Summit Partners decision to take 13,000 sq ft at 11-12 Hanover Square, at £120 per sq ft.
Summit Partners’ move exemplifies the dominance of the Finance and Banking sector within the region, which continued in the second half of the year accounting for 57% of leasing deals, with the professional service sector the second most active with 12%.
Despite the subdued letting activity in H2, availability declined throughout 2017 with the availability rate falling from 5.2% at the beginning of the year, to 4.7% in December. Of this available space, 17% is available as a sublease from an existing tenant.
Mayfair & St James currently has a number of schemes under construction which will deliver 267,000 sq ft over the next two years. In 2018, 20 St James’s Street (50,000 sq ft) and 11-12 Dover Street (10,000 sq ft) will complete by Q3, whilst, Tishman Speyer are also set to deliver several floor in the former “Economist Plaza”, the only office tower in St James’s.
£110.00Prime Rents
4.7%Availability Rate
17.4%Tenant Space
6Underground Stations
24Michelin Star Restaurants
71Pubs
56%Finance & Banking take-up
267,000 sq ftUnder Construction
399,556 sq ftUnder Offer
ContactPatrick RyanLondon OfficesMobile +44 (0)7792 078397
www.geraldeve.com
Source: Gerald Eve
New Refurbished Unrefurbished
Take-up Five year average
Completed Under construction available Under construction let
KNIGHTSBRIDGE
Hyde Park Green Park
Victoria
Sloane Square
100000s sq ft
90
0
70
60
80
40
30
50
20
10
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q4
2017
Q3
2017
Q2
2017
Q4
2016
Q1
2017
Q3
2016
Q2
2016
90000s sq ft
30
80
70
20
10
60
50
40
0
2008
2009
2019
2010
2011
2012
2013
2014
2015
2020
2018
2017
2016
300
100
250
200
150
50
0
Q1
2015
Q4
2017
Q3
2017
Q2
2017
Q1
2017
Q4
2016
Q3
2016
Q2
2016
Q1
2016
Q4
2015
Q3
2015
Q2
2015
000s sq ft
DemandQuarterly take-up and five year average
SupplyAvailability by grade
DevelopmentDevelopment pipeline
Take-up volumes totalled 110,000 sq ft in 2017, which is the submarkets’ lowest annual volume since 2013. The slowdown in leasing has largely been a result of limited availability, particularly for new office space, although subdued demand from the finance and banking sector has also contributed in recent quarters.
With limited availability, there were only four deals in 2017 above 10,000 sq ft. the largest of which came in the second half of the year when INEOS Industries took 36,000 sq ft at 15-19 Britten Street.
Two lettings took place at 60 Sloane Avenue, Ralph & Russo Limited agreed to take 16,000 sq ft, and Babylon Partners took a further 11,000 sq ft in the final quarter of the year.
To help ease the supply strain, Motcomb Estates are refurbishing and leasing 40,000 sq ft of high quality offices at 27 Knightsbridge, advised by Gerald Eve.
£90.00Prime Rents
5.3%Availability Rate
7.7%Tenant Space
2Underground Stations
6Michelin Star Restaurants
31Pubs
76%Corporate take-up
0 sq ftUnder Construction
22,912 sq ftUnder Offer
11
ContactRhodri PhillipsLondon OfficesMobile +44 (0)7768 615296
Source: Gerald Eve
New Refurbished Unrefurbished
Take-up Five year average
Completed Under construction available Under construction let
Green ParkHyde Park
Palace of Westminster
Victoria
Pimlico
St James’s Park
Hyde Park
Westminster
Green Park
350000s sq ft
300
0
200
150
250
50
100
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q4
2017
Q4
2016
Q1
2017
Q3
2016
Q2
2016
Q3
2017
Q2
2017
700000s sq ft
400
600
500
300
200
100
0
2008
2009
2019
2010
2011
2012
2013
2014
2015
2020
2018
2017
2016
800000s sq ft
500
700
600
400
200
100
300
0
Q1
2015
Q4
2017
Q3
2017
Q2
2017
Q1
2017
Q4
2016
Q3
2016
Q2
2016
Q1
2016
Q4
2015
Q3
2015
Q2
2015
DemandQuarterly take-up and five year average
SupplyAvailability by grade
DevelopmentDevelopment pipeline
Recent improvements to the region’s building stock have helped to transform Victoria into one of London’s most dynamic submarkets. This was reflected during the second half of the year where both quarters exceeded the five year average take-up.
441,000 sq ft of office space was leased during this period, notably energy and commodities company Vitol, which took 50,000 sq ft at the recently completed Nova South. This was followed by service office provider LEO, which took 32,000 sq ft of additional space at Nova, and BlueCrest Capital, which took 31,000 sq ft at Nova North, advised by Gerald Eve.
With 193,000 sq ft currently under offer, demand from occupiers for new space remains fairly healthy in Victoria. Companies from a variety of industries, and from other parts of London, are being lured here, attracted by the new developments that have been delivered. A number of lettings above 20,000 sq ft have occurred in recent quarters, with firms such as Anadarko Petroleum, Child & Child, and Reply taking significant chunks of office space.
The recent letting activity has seen the availability rate fall to 5.3% in December 2017 from 6.3% 12 months previously. This is likely to continue to fall as significant chunks of development space currently under construction has already been let. Notably, The Office Group has pre-let the entire Eccleston Place. However there is currently 100,000 sq ft under refurbishment and available at 64 Victoria Street, likewise a further 55,000 sq ft at 2-3 Buckingham Green which completes this year.
VICTORIA
£75.00Prime Rents
5.3%Availability Rate
23.7%Tenant Space
5Underground Stations
2Michelin Star Restaurants
79Pubs
23%Finance & Banking take-up
224,400 sq ftUnder Construction
193,292 sq ftUnder Offer
ContactRhodri PhillipsLondon OfficesMobile +44 (0)7768 615296
www.geraldeve.com
Source: Gerald Eve
New Refurbished Unrefurbished
Take-up Five year average
Completed Under construction available Under construction let
SOHO
Soho Square Gardens
Golden Square
Oxford Circus
Tottenham Court Road
Piccadilly Circus Leicester Square
160000s sq ft
0
120
100
140
20
60
40
80
Q1
2015
Q2
2015
Q3
2015
Q2
2017
Q3
2017
Q4
2015
Q1
2016
Q4
2017
Q4
2016
Q1
2017
Q3
2016
Q2
2016
350000s sq ft
200
300
250
150
100
50
0
2008
2009
2019
2010
2011
2012
2013
2014
2015
2020
2018
2017
2016
350000s sq ft
250
300
200
100
50
150
0
Q1
2015
Q4
2017
Q3
2017
Q2
2017
Q1
2017
Q4
2016
Q3
2016
Q2
2016
Q1
2016
Q4
2015
Q3
2015
Q2
2015
DemandQuarterly take-up and five year average
SupplyAvailability by grade
DevelopmentDevelopment pipeline
Leasing activity was somewhat subdued in Soho throughout 2017, and the annual take-up volume only totalled 294,000 sq ft, 33% down on 2016.
The market was populated with smaller deals, with only four above 10,000 sq ft in the second half of the year. The most significant deals were signed at Great Portland Estates recent development, 30 Broadwick Street. Serviced office provider LEO, took 14,000 sq ft on a ten year lease, whilst the Boston Consulting Group took 15,000 sq ft, also on a ten year lease. These deals have meant that Soho’s largest delivery in 2016 is now fully let.
The office stock available in the region continued to attract the media & tech sector, which accounted for 37% of deals throughout 2017. Significant deals for Skyscanner (24,000 sq ft) and Snapchat (21,000 sq ft) at the beginning of the year exemplify this. The finance & banking sector were also active with 17%.
Although the number of lettings has been subdued, overall availability has fallen throughout the year and resulted in an availability rate of 3.9% in December 2017, down from 5.3% 12 months earlier. Of this available space, 25% is available as a sublease from an existing tenant.
However development activity is underway to bring more new available office space to the market. Currently there are four schemes under construction, notably Axtell House (13,200 sq ft), 21 Soho Square (26,000 sq ft) and 41 Great Pulteney Street (12,000 sq ft), which will complete this year, and 40 Beak Street (13,500 sq ft) to be delivered in 2019.
£90.00Prime Rents
3.8%Availability Rate
24.8%Tenant Space
4Underground Stations
3Michelin Star Restaurants
72Pubs
33%Media & Technology take-up
64,700 sq ftUnder Construction
36,179 sq ftUnder Offer
ContactSophie DickensLondon OfficesMobile +44 (0)7763 206550
13
Source: Gerald Eve
New Refurbished Unrefurbished
Take-up Five year average
Completed Under construction available Under construction let
RIBA
British Museum
University College London
Great OrmondStreet Hospital
Wigmore Hall
Russell Square
Goodge Street
Holborn
Tottenham Court RoadOxford Circus
450000s sq ft
350
400
300
250
0
200
150
100
50
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q4
2017
Q1
2017
Q2
2017
Q3
2017
Q4
2016
Q3
2016
Q2
2016
800000s sq ft
700
600
500
300
400
200
100
0
2008
2009
2019
2010
2011
2012
2013
2014
2015
2020
2018
2017
2016
500000s sq ft
400
300
100
200
0
Q1
2015
Q4
2017
Q3
2017
Q2
2017
Q1
2017
Q4
2016
Q3
2016
Q2
2016
Q1
2016
Q4
2015
Q3
2015
Q2
2015
DemandQuarterly take-up and five year average
SupplyAvailability by grade
DevelopmentDevelopment pipeline
Over 300,000 sq ft was taken in the second half of the year with a further 130,000 sq ft currently under offer, confirming that Fitzrovia remains an attractive market for occupiers. Whilst the amenities of Charlotte Street and Oxford Street have always been a draw for occupiers, the improvements made to building stock, as well as the increased infrastructure to Tottenham Court Road, brought on by the development of Crossrail, has led to an upward pressure on prime rents and to some major occupiers choosing to locate in Fitzrovia.
The largest deal of H2 2017 was signed by Boston Consulting Group, which took a pre-let at Derwent London’s development, 80 Charlotte Street. The firm has agreed to take 123,000 sq ft across 5th to 8th floors on a 15 year lease.
In addition, Arup Group committed to take a further 20,000 sq ft on the 4th floor in the same building, which meant Derwent London has pre-let 96% of the building prior to its 2019 completion, highlighting the demand for new space within the submarket.
Despite a number of developments due to complete over the next couple of years, only 20% of the office space remains available following a number of pre-lets. Notably, the developments at 161 Oxford Street and Mortimer House, which will complete in 2018, are already fully let. This means that only 76,000 sq ft of available new space will be delivered this year.
This high level of leasing activity for both existing, and development space, has led to a steady decline in availability since early 2016, resulting in an availability rate of 3.9%.
FITZROVIA
£82.50Prime Rents
3.9%Availability Rate
26.2%Tenant Space
5Underground Stations
5Michelin Star Restaurants
58Pubs
62%Professional Services take-up
451,000 sq ftUnder Construction
129,022 sq ftUnder Offer
ContactSophie DickensLondon OfficesMobile +44 (0)7763 206550
www.geraldeve.com
Source: Gerald Eve
New Refurbished Unrefurbished
Take-up Five year average
Completed Under construction available Under construction let
Mornington Crescent
King’s Cross
Euston
350000s sq ft
300
0
200
150
250
100
50
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q4
2017
Q4
2016
Q1
2017
Q2
2017
Q3
2017
Q3
2016
Q2
2016
400
350
000s sq ft
200
300
250
150
100
0
2008
2009
2019
2010
2011
2012
2013
2014
2015
2020
2018
2017
2016
300000s sq ft
150
250
200
100
50
0
Q1
2015
Q4
2017
Q3
2017
Q2
2017
Q1
2017
Q4
2016
Q3
2016
Q2
2016
Q1
2016
Q4
2015
Q3
2015
Q2
2015
DemandQuarterly take-up and five year average
SupplyAvailability by grade
DevelopmentDevelopment pipeline
Take-up exceeded 400,000 sq ft in the second half of 2017, which was largely driven by media & tech firm Dentsu Aegis’ 312,000 sq ft pre-let at Triton Square, Regent’s Place. The announcement of this deal meant that British Land confirmed the redevelopment of 1 Trition Square.
The £196m commitment to the redevelopment is in line with the company’s focus on campuses, and the pre-let means that 57% of their committed pipeline is now either pre-let or under offer.
Dentsu Aegis currently occupy 118,000 sq ft at 10 Triton Square, and their decision to remain in the area reflects the transformation of the region into one of the most desirable locations in the capital.
The demand to be in this location is evidenced by the fact that all of the major schemes to be delivered since 2014 are now fully let. The submarket has been able to attract a diverse range of tenants’ including Google, Hammerson, and Universal Music away from the West End due to its availability of high quality large spaces and ability to compete on rents.
However despite a significant number of developments, pre-letting activity has meant that availability has fallen throughout 2017, and with a lack of new space currently under construction, only 140,000 sq ft remains available. This has resulted in an availability rate of only 1.5%, the lowest across central London.
The lack of space available will now restrict larger deals being signed in the region until more developments begin construction. Notably throughout 2017, 70% of deals were below 5,000 sq ft.
KING’S CROSS & EUSTON
£80.00Prime Rents
1.5%Availability Rate
25.2%Tenant Space
6Underground Stations
0Michelin Star Restaurants
55Pubs
88%Media & Technology take-up
180,000 sq ftUnder Construction
16,988 sq ftUnder Offer
ContactCathal DiamondLondon OfficesMobile +44 (0)7766 977175
15
Source: Gerald Eve
New Refurbished Unrefurbished
Take-up Five year average
Completed Under construction available Under construction let
COVENT GARDEN
Lincoln’sInn Fields
River Thames
Leicester Square
Charing Cross
Covent Garden
Embankment
700000s sq ft
500
600
400
300
0
100
200
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q4
2017
Q1
2017
Q2
2017
Q3
2017
Q4
2016
Q3
2016
Q2
2016
500
450
000s sq ft
300
400
350
250
200
150
100
0
2008
2009
2019
2010
2011
2012
2013
2014
2015
2020
2018
2017
2016
600000s sq ft
200
400
500
300
100
0
Q1
2015
Q4
2017
Q3
2017
Q2
2017
Q1
2017
Q4
2016
Q3
2016
Q2
2016
Q1
2016
Q4
2015
Q3
2015
Q2
2015
DemandQuarterly take-up and five year average
SupplyAvailability by grade
DevelopmentDevelopment pipeline
After five consecutive quarters of above average take-up, leasing activity fell short in the final quarter of the year with only 97,000 sq ft recorded across 10 deals. However this was likely just a blip rather than a drop in occupier sentiment, as currently there is 250,000 sq ft under offer, which represents the highest volume on record.
Before Q4, Covent Garden’s leasing market had performed particularly well over recent quarters, with a number of firms committing to relocate to the region from other submarkets, as well as existing firms choosing to remain and expand.
Benefitting from its shops, restaurants, and theatres, Covent Garden’s office sector continues to attract a diverse mix of tenants, and in particular from the media & tech sector. A notable example came from music streaming company Spotify, which agreed to move its UK headquarters from Soho and took 104,000 sq ft at The Adelphi, 1-11 John Adam St, the markets largest deal in H2 2017.
Energy drinks firm Red Bull, have also agreed to relocate their London headquarters to Covent Garden by taking 37,000 sq ft at Seven Dials, a building which has in recent years held the headquarters of Facebook, Expedia and King.com.
The robust level of demand combined with a lack of development activity has seen availability gradually fall since the beginning of 2016, which has resulted in an availability rate of 2.5%. Brockton Capital’s delivery of the Post Building, which should complete in Q3 2018, will ease the supply squeeze with currently 137,000 sq ft still available, after global management consultants McKinsey & Company have already committed to taking 126,000 sq ft.
£77.50Prime Rents
2.5%Availability Rate
20.9%Tenant Space
6Underground Stations
1Michelin Star Restaurants
63Pubs
44%Media & Technology take-up
303,000 sq ftUnder Construction
249,694 sq ftUnder Offer
www.geraldeve.com
ContactSophie DawLondon OfficesMobile +44 (0)7880 454161
Source: Gerald Eve
New Refurbished Unrefurbished
Take-up Five year average
Completed Under construction available Under construction let
MIDTOWNMuseum of London
Leicester Square
King’s Cross
Farringdon
Blackfriars
Euston
Picadilly Circus
Chancery Lane
450
400
000s sq ft
100
350
300
50
250
200
150
0
2008
2009
2019
2010
2011
2012
2013
2014
2015
2020
2018
2017
2016
DemandQuarterly take-up and five year average
SupplyAvailability by grade
DevelopmentDevelopment pipeline
Whilst the market has seen a couple of key occupiers leave, notably Freshfields Bruckhaus Deringer, which recently signed a large pre-let at 100 Bishopsgate in the City, and Goldman Sachs which will consolidate into a new headquarters building at 70 Farringdon Street, occupier sentiment remains strong in the market which was reflected in three consecutive quarters of above average take-up.
The media & tech sector continues to be a key driver in the market, and this was shown in the largest deal of H2 2017 when Verizon agreed to take around 83,000 sq ft at MidCity Place. Verizon will occupy the fourth and fifth floors, space which was previously occupied by infrastructure services firm AECOM.
WeWork also continued their aggressive expansion across the capital and added a further 49,000 sq ft to their portfolio at The Cursitor Building, 35 Chancery Lane. The US serviced office firm will take the first to fifth floors, which completes the letting of the 66,000 sq ft development by Aberdeen Standard and Endurance Land.
The high volume of leasing activity throughout the year has led to a decrease in availability, with an availability rate of 5.6% at the end of Q4 2017. However there are three developments which are set to complete in the first half of 2018 which will add 153,000 sq ft to the market; Lazari Investments’ 262-267 High Holborn (34,000 sq ft), Evans Randall Investors’ 90 Fetter Lane (74,000 sq ft), and ESAS Holdings Summit House (45,000 sq ft). All of which are currently available.
£67.50Prime Rents
5.6%Availability Rate
28.3%Tenant Space
7Underground Stations
0Michelin Star Restaurants
76Pubs
36%Media & Technology take-up
153,000 sq ftUnder Construction
241,695 sq ftUnder Offer
ContactRhodri PhillipsLondon OfficesMobile +44 (0)7768 615296
Amy BryantLondon OfficesMobile +44 (0)7551 172931
450000s sq ft
400
0
300
250
350
200
100
50
150
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q4
2017
Q4
2016
Q1
2017
Q2
2017
Q3
2017
Q3
2016
Q2
2016
1600000s sq ft
1000
1400
1200
800
400
200
600
0
Q1
2015
Q4
2017
Q3
2017
Q2
2017
Q1
2017
Q4
2016
Q3
2016
Q2
2016
Q1
2016
Q4
2015
Q3
2015
Q2
2015
17
Source: Gerald Eve
New Refurbished Unrefurbished
Take-up Five year average
Completed Under construction available Under construction let
Farringdon
Chancery Lane
Barbican
Old Street
1,000000s sq ft
600
800
400
200
0
2008
2009
2019
2010
2011
2012
2013
2014
2015
2020
2018
2017
2016
DemandQuarterly take-up and five year average
SupplyAvailability by grade
DevelopmentDevelopment pipeline
Farringdon & Clerkenwell has enjoyed a renaissance in recent years, with the arrival of tech, creative, and media businesses attracted by its central location, trendy pubs, competitive rents, and refurbished buildings. It has also been boosted by the imminent arrival of Crossrail, and the associated infrastructure improvements made to Farringdon station.
This has been reflected in the healthy levels of leasing activity across the region, with take-up reaching 1.6 million sq ft in 2017. The most significant deal in H2 2017 was for media & tech firm Turner Broadcasting, which signed a 95,000 sq ft pre-let at Great Portland Estates’ 160 Old Street development.
Old Street itself is an area undergoing significant change, with many tenants and developers moving to, and investing in, what is quickly becoming London’s digital and tech hub.
The media & tech sector dominated the market in terms of lettings, with a number of large deals across the year, including Photobox Group, which took 43,000 sq ft at Herbel House, following deals for ITV (89,000 sq ft) and the Disney Corporation (48,000 sq ft) earlier in the year.
A number of large completions in 2017 led to a gradual increase in availability, resulting in an availability rate of 5.2%, up from 4.3% at the beginning of the year. This could potentially rise further in 2018 with 600,000 sq ft of new space to complete this year, with the majority still available to let, notably Helical’s One Bartholomew Close (213,000 sq ft).
FARRINGDON & CLERKENWELL
£65.00Prime Rents
5.2%Availability Rate
11.4%Tenant Space
5Underground Stations
2Michelin Star Restaurants
118Pubs
62%Media & Technology take-up
991,250 sq ftUnder Construction
110,292 sq ftUnder Offer
ContactFergus JaggerLondon OfficesMobile +44 (0)7787 558756
600000s sq ft
0
500
400
300
200
100
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q4
2017
Q4
2016
Q1
2017
Q3
2016
Q2
2016
Q3
2017
Q2
2017
1200
1000
80
000s sq ft
60
50
40
20
0
Q1
2015
Q4
2017
Q3
2017
Q2
2017
Q1
2017
Q4
2016
Q3
2016
Q2
2016
Q1
2016
Q4
2015
Q3
2015
Q2
2015
www.geraldeve.com
Source: Gerald Eve
New Refurbished Unrefurbished
Take-up Five year average
Completed Under construction available Under construction let
CITYLiverpool Street
Cannon Street
Farringdon
4.0
3.5
Million sq ft
2.0
3.0
2.5
1.5
1.0
0.5
0
2008
2009
2019
2010
2011
2012
2013
2014
2015
2020
2018
2017
2016
DemandQuarterly take-up and five year average
SupplyAvailability by grade
DevelopmentDevelopment pipeline
Following a below average start to the year in terms of leasing activity, the City picked up in H2 2017 with take-up volumes reaching 2.1 million sq ft, a 27% increase on H1.
Despite the uncertainty caused by Brexit, the finance & banking sector has been robust and we’ve seen several key deals, boosting confidence since the referendum, such as Wells Fargo (221,000 sq ft).
This was also evidenced in the second half of 2017, when Deutsche Bank signed a 496,000 sq ft pre-let to move their headquarters to Landsec’s 21 Moorfields.
This was also shown by Lloyds Bank, which acquired the former Nabarro offices at 125 London Wall, totalling 125,000 sq ft.
There is currently around 5.5 million sq ft of new space under construction in the City, however with a number of significant pre-lets signed over the last 12 months, 49% has already been taken. With this trend likely to continue throughout 2018, we don’t expect much change in the overall availability rate, which is currently at 6.2%.
Supply has peaked and demand has been robust, and as a result we believe that rents will remain steady during the year, helped by the low vacancy rate and reducing development pipeline.
£68.50Prime Rents
6.2%Availability Rate
26.7%Tenant Space
14Underground Stations
4Michelin Star Restaurants
180Pubs
57%Finance & Banking take-up
5,532,500 sq ftUnder Construction
1,480,963 sq ftUnder Offer
ContactSteve JohnsLondon OfficesMobile +44 (0)7833 401249
1.6Million sq ft
0
1.2
0.8
1.4
0.6
0.4
0.2
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q4
2017
Q4
2016
Q1
2017
Q2
2017
Q3
2017
Q3
2016
Q2
2016
6
4
2
Million sq ft
5
3
1
0
Q1
2015
Q4
2017
Q3
2017
Q2
2017
Q1
2017
Q4
2016
Q3
2016
Q2
2016
Q1
2016
Q4
2015
Q3
2015
Q2
2015
19
Source: Gerald Eve
New Refurbished Unrefurbished
Take-up Five year average
Completed Under construction available Under construction let
SHOREDITCH Brick Lane Market
Old Spitalfields Market
Shoreditch High Street
Liverpool Street
Whitechapel
500
450
000s sq ft
300
400
350
250
200
150
100
50
0
2008
2009
2019
2010
2011
2012
2013
2014
2015
2020
2018
2017
2016
DemandQuarterly take-up and five year average
SupplyAvailability by grade
DevelopmentDevelopment pipeline
Shoreditch has enjoyed a positive 2017 in terms of leasing activity, with only Q4 failing to beat the five year average. Overall take-up volumes reached 801,000 sq ft, a 33% increase on 2016. Service office firms continue to be the main driver in the market as they seek to tap into rising demand for flexible workspace in the area, especially from smaller tech firms.
WeWork in particular has been active, and accounted for the two largest deals in H2. The US company agreed to take a pre-let of 178,000 sq ft in total, at Cain International’s development, The Stage. The deal will see WeWork occupy five floors in The Hewett building and 13 floors in The Bard building. This transaction means that all of the commercial office space within the scheme, which won’t complete until 2020, is now fully let.
Although Shoreditch has an availability rate of 5.7%, the third highest in central London, there isn’t a lot of new development space coming to the market over the next three years.
The market has seen significant early leasing activity, and as a result, of the 650,000 sq ft currently under construction, 86% has already been leased, with only The Epworth (66,000 sq ft), and 20-30 Whitechapel Road (23,000 sq ft) available.
£70.00Prime Rents
5.7%Availability Rate
22.0%Tenant Space
4Underground Stations
3Michelin Star Restaurants
69Pubs
70%Serviced Offices take-up
647,750 sq ftUnder Construction
59,933 sq ftUnder Offer
450000s sq ft
400
0
300
250
350
200
150
100
50
Q3
2014
Q4
2014
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q2
2017
Q4
2016
Q1
2017
Q3
2016
Q2
2016
600
500
400
000s sq ft
200
300
100
0
Q1
2015
Q4
2017
Q3
2017
Q2
2017
Q1
2017
Q4
2016
Q3
2016
Q2
2016
Q1
2016
Q4
2015
Q3
2015
Q2
2015
www.geraldeve.com
Source: Gerald Eve
New Refurbished Unrefurbished
Take-up Five year average
Completed Under construction available Under construction let
ContactSteve JohnsLondon OfficesMobile +44 (0)7833 401249
Waterloo
London Bridge
Embankment
Elephant and Castle
Tate Modern
Oxo Tower
1,000000s sq ft
600
800
400
200
0
2008
2009
2019
2010
2011
2012
2013
2014
2015
2020
2018
2017
2016
DemandQuarterly take-up and five year average
SupplyAvailability by grade
DevelopmentDevelopment pipeline
Southbank has now firmly established itself as a popular central London office market appealing to a broad range of occupiers. Many firms have made the business decision to relocate to the region from more expensive locations north of the river, attracted by its growing dynamism.
In 2017, over 1 million sq ft of office space was taken, with WeWork’s 280,000 sq ft pre-let at Almacantar’s Two Southbank Place the most significant. This will be the US serviced office providers largest office in London, and will mean their offices are home to around 15,000 members.
The development will be shared with the headquarters of Shell Petroleum, which will occupy the entire One Southbank Place. This means that of the 615,000 sq ft of new space to be delivered in 2018, only 64,000 sq ft remains available at HB Reavis’ 61 Southwark Street. However, some upward movement in vacancy is still expected in 2018 when the Financial Times departs for the City and Elizabeth House is vacated ahead of its potential redevelopment the following year.
Southbank continues to lure media & tech and the finance & banking sector, which traditionally favoured locations north of the river. Notably, Digital solutions firm GPL UK took 16,000 sq ft at the recently refurbished 53 Great Suffolk Street in Q2 2017, a move that will see the firm leave the City. Also Kings College London became the latest in a long line of West End-based occupiers to commit to the area this year when it took more than 26,000 sq ft at 5-11 Lavington St, which will house the college’s IT department.
SOUTHBANK
£65.00Prime Rents
2.7%Availability Rate
30.9%Tenant Space
7Underground Stations
1Michelin Star Restaurants
133Pubs
53%Corporate take-up
957,240 sq ftUnder Construction
154,056 sq ftUnder Offer
600000s sq ft
0
500
400
300
200
100
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q4
2017
Q4
2016
Q1
2017
Q3
2016
Q2
2016
Q3
2017
Q2
2017
700
600
000s sq ft
400
500
300
100
200
0
Q1
2015
Q4
2017
Q3
2017
Q2
2017
Q1
2017
Q4
2016
Q3
2016
Q2
2016
Q1
2016
Q4
2015
Q3
2015
Q2
2015
21
Source: Gerald Eve
New Refurbished Unrefurbished
Take-up Five year average
Completed Under construction available Under construction let
ContactFergus JaggerLondon OfficesMobile +44 (0)7787 558756
In the City, £7.5 billion of office stock was traded in 2017, a 47% increase on 2016 and the highest volume recorded for three years. The standout transactions were CC Land’s £1.2 billion purchase of the Leadenhall Building and LKK’s £1.3 billion purchase of 20 Fenchurch Street. The latter transaction represents a record for a single UK asset, surpassing the £1.2 billion paid by the Qatar Investment Authority to acquire the HSBC Tower in Canary Wharf in December 2014.
In the West End, transaction volumes reached £3.8 billion in 2017, with 74% of the deals taking place in the first half of the year. The largest deal was by German investors Deka and WestInvest, which purchased Rathbone Square, the new headquarters of Facebook, for £435 million. This deal did however show some indication that the market is softening for larger transactions as the transaction reflected a 4.25% yield which was 25 basis points higher than the property was under offer for before the referendum in 2016.
Central London remains one of the most attractively-priced global cities, as well as one of the most liquid. Investors seeking protection against short-term fluctuations readily find solace in the long leases the UK market offers. With a degree of turbulence expected over
the next five years, we expect demand for these assets to remain high, particularly with the premium it still offers against Gilts and corporate debt. As a result, Asian investors, especially private buyers from Hong Kong, will continue to dominate the market in 2018.
They will not be alone, with Middle East and further new entrants from Malaysia and Singapore to enter the market, as well as German property funds, which are attracted by London’s pricing relative to other cities elsewhere in Western Europe.
Whilst office investors will continue to favour these well located, high quality assets despite the uncertainty of the future relationship between the UK and the EU, they will exercise greater caution when it comes to secondary stock, which has been much more subdued in terms of transaction activity in 2017. This reflects an aversion to risk in the light of economic fundamentals and concern over the impact of Brexit on both occupier demand and liquidity.
Because of this, overall capital value growth is forecast to decline by 1.6% in 2018, driven by a combination of weak rental growth, and some yield softening. As a result, the overall total return for 2018 is expected to be 1.8%, central London offices weakest return since 2009.
However, positive capital value growth is expected to return in 2019, driven by some yield compression, which will lead to increased total returns, and with an unsatisfied level of historic demand, high quality assets will be in strong demand in the short term.
CENTRAL LONDON INVESTMENT
2.5
2.0
Net investment (£ billion)
0
0.5
-0.5
1.5
1.0
-1.0
-1.5
-2.5
-2.0
Q1
2017
Q4
2017
Q2
2017
Q3
2017
Overseas investors UK institutions Quoted Prop Co
Private Prop Co Private investors Occupiers Others
8.0
7.0
6.0
%
2.0
3.0
1.0
5.0
4.0
0
-1.0
-3.0
-2.0
2017
2022
2018
2019
2020
2021
Capital growth Income return Total return
2017 central London net investmentSource: Property Data, Gerald Eve
Central London investment performance forecastSources: MSCI, Gerald Eve
ContactLloyd DaviesLondon OfficesMobile +44 (0)7767 311254
www.geraldeve.com
High demand for prime assets across central London pushed transaction volumes to £12.6 billion in 2017, a 21% increase on 2016. Foreign investors, lured by the fall in sterling, a slight softening in yields, and long-term faith in London, were overwhelmingly responsible for the increase, with investors from Asia leading the way.
GERALD EVE IN THE MARKET
23
DEFINITIONS
The Ragged School, Farringdon & Clerkenwell We have successfully advised the owners on the freehold sale of this unique development and refurbishment opportunity in the heart of Clerkenwell.
20 North Audley Street, MayfairWe have successfully advised Global Holdings on the leasing of 21,000 sq ft to Alfred Dunhill.
The Harley Building, 77 New Cavendish Street, FitzroviaWe have successfully advised a private investor client on the leasing of this 36,000 sq ft development to IWG Group for a new flagship location for its Spaces co-working concept.
Nova North, VictoriaWe recently acquired 31,300 sq ft in Landsec’s landmark development on behalf of BlueCrest Capital.
Floor quality
New: Floor in a newly-developed or newly-refurbished building, including sub-let space in new buildings which have not been previously occupied. Refurbished: A floor which has been comprehensively refurbished and is of good specification, floorplate efficiency and image, but is in a building which is not new or been comprehensively refurbished. Unrefurbished: Poorer quality space, usually offered for occupation ‘as is’.
Floorplate sizes
Small (S) 1,000 to 5,000 sq ft
Medium (M) 5,001 to 10,000 sq ft
Large (L) 10,001 to 20,000 sq ft
Extra Large (XL) 20,001 sq ft +
Current letting policies may dictate some floors are not available in isolation
Prime headline rents
The rent being paid which does not take account of concessions such as rent free periods. The references to both headline rents and incentives in this report are a reflection of the best office space in that submarket which is taken on an assumed ten year term.
Tenant space
Reference to ‘tenant space’ includes office space that is actively marketed and is available either as a sub-let or an assignment of an existing lease. ‘Grey space’ that is not actively marketed is not covered in this report.
Agency & Investment
Lloyd DaviesPartnerTel. +44 (0)20 7333 6242 Mobile +44 (0)7767 311254 [email protected]
Fergus JaggerPartnerTel. +44 (0)20 7653 6831Mobile +44 (0)7787 558756 [email protected]
Steve JohnsPartnerTel. +44 (0)20 7653 6858 Mobile +44 (0)7833 401249 [email protected]
Rhodri Phillips PartnerTel. +44 (0)20 3486 3451 Mobile +44 (0)7768 615296 [email protected]
Patrick RyanPartnerTel. +44 (0)20 7333 6368 Mobile +44 (0)7792 078397 [email protected]
Lease Consultancy
Tony GuthriePartnerTel. +44 (0)20 3486 3456 Mobile +44 (0)7585 960695 [email protected]
Graham FosterPartnerTel. +44 (0)20 7653 6832Mobile +44 (0)7774 [email protected]
Research
Alex DunnAssociateTel. +44(0)203 486 3495Mobile +44 (0)7917 [email protected]
Disclaimer & copyright
London Markets is a short summary and is not intended to be definitive advice. No responsibility can be accepted for loss or damage caused by reliance on it.
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