THE OCCUPIER – CENTRAL LONDON OFFICE MARKET NEWS Q3 2018
THE OCCUPIER – CENTRAL LONDON OFFICE MARKET NEWS Q3 2018
The UK’s leading occupier-only real estate consultancy firm launches its quarterly report ‘The Occupier’ focusing on the workforce influencing property decisions.
DeVono Cresa launches its latest quarterly central London office market report ‘The Occupier’. Shaun Dawson, Head of Insights for DeVono Cresa highlights “It has been another solid quarter for leasing activity across central London, as 2018 is turning out to be a year of the super-sized deal with tenants attracted to the best-in-class”. DeVono Cresa research shows that 2.8 million sq ft was transacted in Q3 bringing the annual total to 9.5 million sq ft for the year so far. The total matches that recorded for the same period (Q1-Q3) in 2017 and in 2015 and 2014. “The volume of activity clearly highlights the strength of demand and commitment at a time where business uncertainty is heightened” states Dawson. Our latest report has a distinctly familiar tone to that of our previous reports this year with headlines of strong demand, reducing levels of availability and minimal movement of prime rents.
Yet, it is the size of deals that has been noteworthy this year. No sooner had the ink dried on the Chinese Embassy deal at Royal Mint Court, then another mega deal comes along. This time tech giant Facebook pre-let 600,000 sq ft at the King’s Cross Central scheme to become the largest deal since 2013. Coincidentally, this was when Google also committed to a new King’s Cross building, which is now under construction. 10 other deals over 100,000 sq ft have been transacted this year, this does not include large deals from the emerging submarkets of Stratford and White City.
Our report comments on tenant demand for the shiny and new has increased, pre-letting or early-letting during construction accounted for 29% of take-up for the year-to-date, this is up from 19% in 2016 (Q1-Q3). Coupled with the leasing of existing Grade A space, take-up is now nearly 50:50 with secondhand.
Not surprisingly the technology sector with the Facebook pre-let has driven leasing in Q3. The sector accounted for 37% of take-up. The financial sector continues to be ever present, although with a somewhat reduced appetite it still notched up 13% in Q3. The largest deal for this sector was Investec Asset Management taking 122,000 sq ft at 55 Gresham Street, advised by DeVono Cresa. Yet, overall it has been the corporate sector that has driven demand in 2018. In particular the serviced office providers, who account for 12% of take-up for the year-so-far. It seems as though the race to gain more coverage has kept a pace, with no sign of slowing, just yet.
Available office space has recorded another quarterly decrease now totalling at 15.4 million sq ft across central London at the end Q3 2018. This represents a drop of 6% since the start of the year with levels in Midtown and Southbank driving down the overall figure. Despite this, the amount of available space suggests that there is still plenty of stock out there. Yet we are starting to see a squeeze in some areas and some size ranges, more of which will play out over the rest of the year.
There is a price point and tenants have continued to achieve favourable rents and incentives. Prime Grade A rents across all central London submarkets recorded growth of 1% quarter-on-quarter, this rises to 3% growth over the year. Headline rents for traditional core markets have remained steady for another quarter with a couple of exceptions. Grade A rents in Soho have risen to £97.50 per sq ft and Grade B now at £72.50 per sq ft. Over in the City, the western fringe areas of Clerkenwell/Farringdon new schemes are now commanding £80.00 per sq ft and upward pressure continues in East London – Hackney/Dalston/London Fields now at £42.50 per sq ft. Nevertheless, the overall subdued rental movement seen so far this year is expected to remain going into 2019.
Chris Lewis, Head of Office Agency & Consulting explains “Our latest data busts the myth that businesses have been stalling their property decisions in light of political and economic uncertainty. Yes, tenants are being cautious, but as a result of other factors some firms just have to get on with things”. Lewis continues “there was 4.1 million sq ft under offer at the end of Q3, up on the previous quarter, not all will complete in the next couple months, but leasing is on course for another above-average year”.
As the end of 2018 is in sight, businesses are now switching their focus to 2019 and the events that the year will bring, not least of all the UK’s exit from the European Union.
To find out more and review our latest market analysis see attached report and for further information or data please get in touch.
Our report can also be downloaded here The Occupier News – Q3 2018
Lucky Voice Acquires its Largest Venue in London
Occupier-only real estate consultancy firm, DeVono Cresa represent private karaoke company, Lucky Voice on the acquisition of their latest London venue.
The company (which already has three venues in Soho, Islington and Brighton) will open its fourth site on Chancery Lane in early 2019.
The venue (which is approximately 5,000 sq ft) will be home to the company’s largest VIP karaoke room, for over 25 people. It will hold a late license until 3am on week-days and 4am at weekends, a significant contribution to the late-night economy not just the Holborn area but for central London as a whole.
Close to the transport hubs of Holborn, Chancery Lane and Farringdon, the new venue puts Lucky Voice in the heart of a location which has a diverse audience ranging from the flourishing creative industries, traditional professional firms, the long-standing legal sector and of course a thriving student area..
DeVono Cresa has supported Lucky Voice with commercial real estate advice for just over three years. Associate Director at DeVono Cresa, Reehan Khanche comments: ‘The new venue on Chancery Lane presented the perfect location for Lucky Voice to expand their operation and we are delighted to have secured the brand’s first new site in London for more than a decade.’
Lucky Voice Managing Director Charlie Elek says: ‘We’re excited to bring another late-night entertainment venue to the area, and to be playing our part in keeping the Mayor’s dream of a 24-hour city alive. The success of Lucky Voice reflects the fact that there truly is a demand for after-hours entertainment in our Capital, and after three years’ carefully monitoring the market, with the support of DeVono Cresa, we identified and secured the perfect location that will cater for this.’
Lucky Voice plans to invest over £1.5m developing the new site, following a hiatus to develop its online karaoke and franchise offerings. This new venue marks the latest milestone in a period of development for Lucky Voice and the company plans for another London site for 2019, and other major UK cities in the coming years.
Boutique investment bank takes unexpected turn to a flexible workplace solution
DeVono Cresa relocates independent boutique investment bank from its traditional leasehold office to a modern serviced office space in the City – all within three weeks.
A real success story for the Serviced Office Advisory team at DeVono Cresa, as initially the client was convinced that a flexible solution would not cater for their business needs.
Initially briefed on a longer-term leasehold office search, the team suggested including a few flexible workplaces, as part of the office viewing schedule.
The team was delighted to have changed the perception of serviced spaces by showing our client the very best workplace solutions available on the market.
DeVono Cresa Joint CEO Luke Philpott joins BizNow panel to discuss the future of East London
DeVono Cresa’s Joint CEO Luke Philpott joined a panel of business leaders at East London’s Biznow event recently to discuss what it is that’s attracting occupiers to the emerging area and what big tenants really think about moving business to East London.
Occupier-only real estate consultancy firm, DeVono Cresa advise leading online mortgage broker, Habito on the acquisition of 13,700 sq ft at The Loom, E1.
Habito, the UK’s leading online mortgage provider, have signed a lease to occupy 13,742 sq ft of office space at Helical’s 'The Loom' on Gower's Walk, London E1. DeVono Cresa has once again supported Habito to deliver a real estate solution that accommodates its rapid expansion, having first supported this leading fintech start-up in 2016, when they acquired their current space within this characterful warehouse building.
DeVono Cresa’s in-house design and build team – Dthree will once again deliver Habito’s workspace.
Garreth Griffith, Chief of Staff at Hey Habito, said: “We are delighted to be upsizing once again within The Loom as it offers us the creative space that our growing number of employees expect. DeVono Cresa has helped us to realise our ambition of providing a sustainable and ‘appropriate’ long term home for the business. Having given us total visibility of what was available on the market, serendipity and opportunity have collided, resulting in a great solution for us here at The Loom.”
Chris Lewis, Head of Office Agency and Consulting at DeVono Cresa added “Increasingly tenants are looking for more flexibility in their commercial real estate strategy, to allow for fast growth and success, such as we have seen from Habito. We are delighted to have been able to provide a future proofed solution for Habito, working closely with Helical, who have been constructive and pragmatic in order to provide a solution that works, both financially and operationally. Personally, I am delighted that we have continued to engender trust from Habito and they looked to us once again to provide the business with the end to end real estate support they required.”