Embed Size (px)
Citation preview
“A mixture of DAMIT and Educational occupiers alongwith Serviced Office Operators drove activity this quarter.”
NOT ALL DOOM AND GLOOM IN THE POST REFERENDUM WORLD
BE A STEPAHEAD
Monitoring occupier activity has never been more important than during these uncertain times. We continue to monitor and track occupier demand in this market and would be pleased to talk you through our latest schedules. Get in touch using the contact details overleaf.
+44 (0) 20 7405 [email protected]
The
London MidtownOffice Markets Q3 2016
Take-up
“The Midtown office market is clearly in transition at present. Some businesses are looking to minimise their property liabilities – hence the recent increase in tenant space being released onto the market – but others are gearing up for the new economic and political future.
It is probably no coincidence that the biggest letting of the quarter involved WeWork at Aldwych House, WC2 - a serviced office operator which provides expansion and special projects space for businesses. The bulk of demand and consequential lettings is for units of up to 10,000 sq ft, whilst limited demand remains for larger requirements.
We’ll undoubtedly see a softening in rents for some secondhand accommodation, but the demand for new offices remains robust – especially as Midtown in terms of the percentage of total office stock has half the availability of the City postcodes immediately to its east.”Jules Hind, Partner, Leasing & Development
The market entered a phase of uncertainties in the leap up to the Referendum, from a strong base with robust economic growth and an 11-year low unemployment rate. Markets which were positively contingent on the remain side of the vote suddenly faced a state of shock and panic began to dominate the business climate in the weeks following the referendum. However, UK consumer confidence bounced back in August, while the general consensus was that the initial assumptions were too pessimistic.
A total of 444,926 sq ft was leased over the quarter, which was 7% down on the 2nd Quarter 2016 and quite significantly below the long-term average.
A mixture of DAMIT (32%) and Educational (17%) occupiers along with Serviced Office (16%) Operators drove activity this quarter.
Since the Referendum...
32%*DAMIT SECTORS
AvailabilitySupply has increased significantly by 19% over the quarter to 1.69m sq ft. As a result of development completions, New & Refurbished space reached 948,493 sq ft, representing 56% oftotal Availability.
“Looking ahead, the London market outlook is uncertain given the unpredictable economic and political conditions. Given the continued uncertainty over the true impact of the EU Referendum and the increased cost the 2017 Rating Revaluation will have on London businesses, we fully expect vacancy rates to rise.
The successful property investors will be those who respond to occupiers’ size, specification and financial needs going forward.”
Alistair Subba Row,Senior Partner
InvestmentTotal investment turnover was £349m, marginally below the 2nd Quarter 2016 when the market closed at £364m. It reflects the cautious investor sentiment in the immediate aftermath of the EU Referendum result, driven by the sudden political and economic uncertainty in the UK. By the end of the quarter, however, investor sentiment for commercial property had largely recovered with the realisation that the impact of leaving the EU on the real economy will take a few years to materialise.
UK Funds were the biggest vendor sector thisquarter, disposing of 83% of total volume.
83%
13%
UK
£349m (total sold in Q3 16)£304m UK vs. £45m Overseas
Future Supply Looking ahead, there is 1.93m sq ft under construction, which is on a par with the 2nd Quarter 2016. 56% of the total space under construction is scheduled for delivery in 2017.
2016 MARKETQ1 Q2 Q3 Q4
PLAY PAUSE PAUSE PLAY ?
4.0%upfrom3.4%
Availability RateQ316
Q216
This is the highest volume by sq ft of New and Refurbished space to be delivered to the market since the 4th Quarter 2010.
1.93MSQ FTUNDERCONSTRUCTION
TO BE DELIVERED IN 2017
56%
*Design; Advertising, Marketing & PR; Media, Internet; and Technology & Telecoms
Matthew CauserPartner, Leasing & Development+44 20 7855 [email protected]
Farebrother
Leadership Team
NEED MOREDETAIL?
Our full 16 page report incorporating the full set of transactional data and comprehensive commentary on the overall performance of the Midtown Leasing, Development, Investment and Retail markets is available via our Leadership Team. Please use one of the contact details above to request your copy and to discuss your interest in more detail.
Alistair Subba RowSenior Partner, Strategic Property Advice+44 20 7855 [email protected]
Jules HindPartner, Leasing & Development+44 20 7855 [email protected]
Malcolm BrackleyPartner, Lease Advisory+44 20 7855 [email protected]
Charlie ThompsonPartner, Leasing & Development+44 20 7855 [email protected]
Mark AnsteyPartner, Leasing & Development+44 20 7855 [email protected]
Alastair HiltonPartner, Investment+44 20 7855 [email protected]
Ciara O’BrienPartner, Lease Advisory+44 20 7855 [email protected]
Neil DaviesPartner, Retail & Leisure+44 20 7855 [email protected]
Andrew GloverPartner, Property Asset Management+44 20 7855 [email protected]
Contact
27 Bream’s Buildings, London, EC4A 1DZ
For further information please call +44 20 7405 4545
farebrother.com
This publication has been carefully prepared and it is intended for general guidance only. No responsibility is accepted by Farebrother for any errors or omissions. The information contained herein should not be relied upon to replace professional advice on specific matters and is not, in whole or in part, to be published, reproduced or referred to without prior approval. Information may be subject to revisions in subsequent editions. ©2016 Farebrother. All rights reserved.
This research is available in PDF format. Please email [email protected] to receive a copy.
Working in Partnership
Hugh TippettPartner, Business Rates+44 20 7855 [email protected]
Matt MartinPartner, Retail & Leisure+44 20 7855 [email protected]
