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TABLE 1

Key July Stats

West End OfficeMarket Watch August 2018

Supply and demand snapshot

g Take-up in July reached a new monthly record of 1.13m sq ft, with pre-letting activity driving take-up 14% up on the previous monthly record of 1.03m sq ft in January 2013.

g This brought year-to-date take-up to 3.3m sq ft, already surpassing the long-term average for take-up at the end of the third quarter by 14%, with two months still left to go.

g Pre-lets have accounted for 42% of space let out over the year so far, and almost 80% of space transacted over the month. The most notable pre-let was Facebook's acquisition of 600,000 sq ft at King's Cross on confidential terms. This contributed substantially to increasing the Tech & Media sectors market share to almost half of take-up (47%), for the year so far.

g There were two other notable pre-lets to complete over the month. Publicis Media pre-let 2 Television Centre, W12, taking 212,000 sq ft across 7 floors, at a rent believed to be in excess of £50 per sq ft, and Nike took 63,000 sq ft at S1, Handyside Street, N1C, on a 10 year lease at a rent believed to be in the late £70's. g Whilst these three pre-lets dominated take-up in terms of overall sq ft, the number of transactions to complete over the month, at 50 was the largest volume in over three years, also making this the busiest July on record. Insurance and Financial sector occupiers accounted for the largest number, (30%) of transactions to complete over the month.

Facebook pre-let boost take-up to new monthly record

Source: Savills Research July 2018

Source: Savills Research

GRAPH 1

West End Monthly take-up

Source: Savills Research July 2018

Savills Research UK Commercial

July Stats

Take-up 1,135,774 sq ft

Take-up (YTD) 3,315,350 sq ft

Supply 4,741,176 sq ft

Vacancy Rate 3.9%

Top Rent (psf) £120.00/sq ft

Avg Grade A Rent (psf) £79.53/sq ft

g Despite the Insurance and Financial sector accounting for 14% of overall take-up, at 58 transactions they have accounted for the same number of transactions as there has been to Tech & Media occupiers (see Graph 2).

g Outside of the Tech & Media sector, which accounted for 72% share of take-up for the month, the Insurance & Financial sector accounted for the next largest share with 7% (80,395 sq ft).

g July was particularly active in the St James's and Mayfair sub-market, which saw 17 transactions completing. This was the largest volume for over three years, with Private Equity, Investment and Asset Management firms continuing to drive demand.

g Space under offer continued to remain at a high level and was above the long-term average for the 15th consecutive month, with 1.7m sq ft under offer at the end of July.

g Supply has remained broadly stable since December 2016, only mostly experiencing monthly variations of 10 pbs at the most. However at the end of July supply stood at 4.74 m sq ft, equating to a vacancy rate of 3.9%. This was up 20 bps on the previous month and was the first upward movement since the end of 2017 with an additional 600,000 sq ft of space coming onto the market.

g Current supply equates to 13 months’ worth of take-up at the average rate we have seen over the past 5 years.

GRAPH 2

Year-to-date take-up by sector

02

Market Watch | West End offices

TABLE 5

Demand & Under Offers

TABLE 6

Development pipeline

Analysis close upTABLE 2

Take-up

Sq ft % Grade A 12 month rolling take-up Total % Grade A % chg on

prev monthVacancy Rate (%)

Jul-17 497,778 77% 4,673,855 4,920,875 75% -1.0% 4.1%

Aug-17 257,994 76% 4,568,725 4,850,847 75% -1.4% 4.0%

Sep-17 878,868 79% 4,780,749 4,669,142 72% -3.7% 3.9%

Oct-17 390,622 76% 4,962,890 4,608,183 72% -1.3% 3.8%

Nov-17 302,092 73% 4,985,911 4,526,154 72% -1.8% 3.7%

Dec-17 518,447 68% 5,219,112 4,428,542 62% -2.2% 3.9%

Jan-18 354,070 90% 5,304,814 4,625,751 60% 4.5% 3.8%

Feb-18 286,749 82% 5,132,513 4,800,007 66% 3.8% 4.0%

Mar-18 429,829 80% 5,214,457 4,674,771 63% -2.6% 3.9%

Apr-18 284,967 83% 5,303,241 4,583,388 61% -2.0% 3.8%

May-18 285,173 82% 5,248,438 4,536,129 60% -1.0% 3.7%

Jun-18 538788 84% 5,025,377 4,492,323 61% -1.0% 3.7%

Jul-18 1,135,774 87% 5,663,373 4,741,176 57% 5.5% 3.9%

TABLE 3

Supply

TABLE 4

Rents

£ per sq ft Top Average

Grade A Grade B Prime* Rent free**

Jul-17 £110.00 £78.15 £68.15 - -

Aug-17 £109.00 £76.13 £55.25 - -

Sep-17 £135.00 £75.11 £45.00 £116.43 20

Oct-17 £175.00 £83.15 £64.73 - -

Nov-17 £105.00 £78.18 £52.17 - -

Dec-17 £150.00 £87.71 £52.45 £127.67 15

Jan-18 £102.50 £71.53 £54.25 - -

Feb-18 £120.00 £82.42 £71.33 - -

Mar-18 £98.62 £71.68 £63.25 £98.62 20

Apr-18 £86.00 £70.90 £62.50 - -

May-18 £185.00 £79.80 £64.69 - -

Jun-18 £104.00 £72.16 £51.17 £103.50 24

Jul-18 £120.00 £79.53 £60.40 - -

WE Potential demand (sq ft) 607,000

WE Active demand (sq ft) 3,595,000

WE Total demand (sq ft) 4,202,000

% change on 12 month ave -23%

Under offer (sq ft) incl. pipeline 1,698,712

Under offer this month (sq ft) 247,158

% change on ave 51%

Landlord controlled supply 73%

Tenant controlled supply 27%

*Average prime rents for preceeding 3 months ** Average rent free on leases of 10 years for preceeding 3 monthsCompletions due in the next 6 months are included in the supply figures

Sq ft Refurb Devs Total % Pre-let

2018 931,507 950,786 1,882,293 54%

2019 968,387 1,422,744 2,391,131 48%

2020 288,400 1,505,107 1,793,507 22%

2021 479,900 2,206,506 2,686,406 27%

Total 2,668,194 6,085,143 8,753,337 38%

Demand figures include Central London requirements

03

Market Watch | West End offices

Address Floor/s Sq ft Grade Achievedrent

Tenant Lessor

P2 and 11 and 21 Canal Reach, N1C Entire 600,000 A Confidential Facebook Argent

2 Television Centre, W12 Entire 212,000 A Confidential Publicis Media Stanhope, Mitsui, AIMCo

S1, Handyside Street, N1C Pt G, Pt 7-10 63,000 A Late £70s Nike Argent

11 Hanover Square, W1 2,3 12,622 A Confidential Pollen Street Capital Aviva Investors

101 New Cavendish Street, W1 Pt 3 12,300 A Confidential Confidential Welput

33 Foley Street, W1 G,LG 11,666 A £71.04 Work Life Kier

30 Broadwick Street, W1 5 10,572 A £107.50 Meyer Bergman Jagex

75 Davies Street, W1 Pt3 9,787 A £50.00 Lodha Crossrail

Address Floor/s Sq ft Grade Quoting rent Lessor U/O

5 Merchant Square, W2 G-7 159,110 A £60.00 Marks & Spencer

The Post Building, 21 New Oxford Street, WC1 1-3, Pt 4 136,586 A NQ

Brockton Capital, Oxford

Properties

1 Page Street, SW1 LG-9 126,045 A £57.50 Burberry

The Foundry, 77 Fulham PalaceRoad, W6 G-4 110,277 A £57.50 AXA 42,098

123 Buckingham Palace Road, SW1 2 & 3 82,452 A £45- £59.50 PA Consulting, BskyB 40,987

25 Wilton Road, SW1 G-6 78,995 A £75.00 Royal London

Albany House, 94-98 PettyFrance, SW1 Entire 60,479 A £40.00 TFL

TABLE 7

Significant July transactions

TABLE 8

Significant supply

04

Market Watch | West End offices

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