supply squeeze begins to frustrate take-up in midtown ... · supply squeeze begins to frustrate...
TRANSCRIPT
Supply squeeze begins to frustrate Take-up in Midtown. Investment turnover down.
The
London MidtownOffice Markets Q4 2015
Future Supply
“We are currently lacking office buildings of scale, but this should be readdressed in 2016 and Take-up levels should recover. Whilst the six new starts in the 4th Quarter will undoubtedly be good for the market, the supply pipeline is still relatively limited and developers who are starting schemes now will still find a landlord friendly market when their schemes reach completion.”
Jules Hind, Leasing & Development Partner
The Midtown development pipeline had a significant boost in the 4th Quarter with six new starts that will eventually contribute 499,000 sq ft of New & Refurbished stock, a boost that has not been seen in the Midtown market since the 3rd Quarter 2007.
Investment Turnover for the 4th Quarter was 45% down on the previous quarter at £567m in just ten transactions. Turnover for the whole of 2015, at £2.63bn, was considerably down on the total for 2014 which delivered £3.84bn.
AvailabilityTotal Availability in the 4th Quarter was up 17% on the previous quarter but the strength of Secondhand Take-up has further contributed to an unusual balance in the market whereby New & Refurbished Supply now accounts for a significant 41% of total Availability. “Normally”, this quality of accommodation is no more than 15-20% of total Supply; this illustrates the continued level of Take-up in Secondhand and lack of New /
Refurbished completions, not a drop off in demand for higher quality space.
Secondhand
New & Refurbished
59%
41%
1.24msq ft
TOTAL AVAILABILITY IN Q4 15
£1.5bn
£1.2bn
£0.9bn
£0.6bn
£0.3bn
Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15
£1.08bn
£1.35bn
£744m£634m £688m
£332m
£1.04bn
Investment
499,000SQ FTOF NEW & REFURBISHED1. 34,469 sq ft Victoria House, WC1 (Q2 16)2. 49,733 sq ft Elm House, WC1 (Q3 16)3. 23,600 sq ft Eagle House, WC1 (Q3 16)4. 56,000 sq ft 1 Puddle Dock, EC4 (Q1 17)5. 80,000 sq ft 20 Farringdon Street, EC4 (Q4 17)6. 255,158 sq ft 21-31 New Oxford Street, WC1 (Q1 18)
2
6
4
5
31
RentsThe supply-demand dynamics continue to apply upward pressure to rents, with Wadhani’s acquisition at WELPUT’s Orion House, WC2, at £90 per sq ft*, setting a new record office rentfor the market.
£90PER SQ FT*
Take-upAs predicted, the paucity of supply in Midtown has begun to adversely affect Take-up, with leasing activity in the 4th Quarter 2015 falling below the 10-year quarterly average of 693,672 sq ft at 464,400 sq ft.
The Professional Services sector Take-up has outstripped DAMIT (Design; Advertising, Marketing & PR; Media; Internet and Technology & Telecoms) Take-up in 2015, accounting for 25% and 18% of total
Midtown Take-up respectively.34%
ON 10-YEAR QUARTERLY AVERAGE
£ ££
£ ££“Central London Investment turnover figures for 2015 will be at approximately £20bn (as previous years) and so the prognosis for Central London remains good. Midtown’s reduced turnover figures are a reflection of the limited opportunities presented through the year as appetite remains.”
Alastair Hilton, Investment Partner
NEED MORE DETAIL?
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 the contact details on the back of this report to request your copy and to discuss your interest in more detail.
+44 (0) 20 7405 [email protected]
Farebrother
Leadership Team
NEED MORE DETAIL?
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.
WE WOULD BE HAPPY TO PROVIDE YOU WITH THE FULL MIDTOWN MARKET REPORT FOR THE 4TH QUARTER 2015.
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
Farebrother27 Bream’s BuildingsLondon 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. ©2015 Farebrother. All rights reserved.
This research is available in PDF format. Please email [email protected] to receive a copy.
Working in Partnership
Stephen HallHead of Business Rates+44 20 7855 [email protected]