LONDON MARKETS Analysis of the London office market Winter 2017/18

International Property Consultants

2017 Take-up Q4

3.2

£67.50

£68.50

ft)

£110 dP

rime Rent (

y

r pe

A Availabi lity ade Gr

11.1

27%

MILLION SQ FT

Q4

201

y ilit 7 Availab

H2 2017 key deals

www.geraldeve.com

Pr

ft)

t Ci

t

En

sq

s We

MILLION SQ FT

ft) sq

Mi dt

rime Rent (p nP er ow

ime

R e nt ( p e

rs

q

ant Space Ten

4.8%

24.2%

Av te ailab ility Ra

Key schemes under construction

Deutsche Bank 496,000 sq ft

70 Farringdon Street 825,000 sq ft

City

Goldman Sachs/Tishman Speyer

Dentsu Aegis 312,000 sq ft

10 Fenchurch Avenue 398,000 sq ft (67,000 sq ft available space)

King’s Cross & Euston

Generali Real Estate/Greycoat/CORE

WeWork 135,500 sq ft

52-54 Lime Street & 27 Leadenhall Street (The Scalpel) 398,000 sq ft (262,000 sq ft available space)

Shoreditch

WRBC Development

Lloyds 125,400 sq ft

60-70 St Mary Axe 326,000 sq ft (166,254 sq ft available space)

City

TH Real Estate

Boston Consulting Group Ltd 123,500 sq ft

Two Southbank Place 282,440 sq ft

Fitzrovia

Braeburn Estates ( JV Canary Wharf Group/Qatari Diar)/Almacantar

EXECUTIVE SUMMARY Quarterly take-up by region Source: Gerald Eve 4.5

Availability by grade Source: Gerald Eve

Million sq ft

14

4.0

Million sq ft

12

3.5 10

3.0 2.5

8

2.0

6

1.5

4

1.0 2

0.5 0

East

West

Midtown

Southbank

Five year average

New

Refurbished

Q4 2017

Q3 2017

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Q1 2016

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2017

Q3 2017

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Q1 2016

Q4 2015

Q3 2015

Q2 2015

Q1 2015

0

Unrefurbished

Media & Tech drives London occupier demand

An increasing number of occupiers are sub-letting space

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.

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 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.

Central London development pipeline Source: Gerald Eve 7

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.

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.

Million sq ft

6 5

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.

4 3 2 1

Completed

Under Construction Let

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

0

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.

Under Construction Available

3

THE RISE OF SERVICED OFFICES Traditional 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. The number of traditional leases signed in central London Source: Gerald Eve

Central London vacancy rate by office size Source: CoStar Group

1400

130

1200

120

10

%

8

1000

110

800 100

6

600 90

400

4

Number of leases (LHS) % change (index 100 = 2011)

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.

www.geraldeve.com

2017

2016

2015

2014

2013

2012

2011

2010

2009

2 2008

2017

2016

2015

2014

70 2013

0 2012

80

2011

200

Central London buildings under 25,000 sq ft Central London all office buildings

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.

OUTLOOK Positive employment growth

Consumer spending squeeze

Central 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.

Nominal 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

Media and tech sector to drive demand

Serviced offices continue to rise

Certain 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.

Occupiers 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.

Speculative developments to decrease

High investment demand for London offices

Amid 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.

The 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.

5

K

LONDON OFFICE RENTS ross & Eus ’s C to n ing Grade A

£80.00 £60.00 Re

Grade B nt

F re e 1 8 m o n t

hs

Scala The British Library Regent’s Park

Fitzrovia

Grade A

£82.50 £60.00 Re

ylebone Mar

Grade B nt

F re e 2 4 m o n t

hs

Grade A

£82.50 £65.00

dington Pad Grade A

Re

£71.00 £55.00 Re

F re e 2 1 m o n

nt

t Fr on The Wallace e e 2 1 m

Grade A

hs

£77.50 £65.00

Collection

Soho

Selfridges

Grade B nt

vent Garden Co

BBC

Grade B

t

hs

Re

Grade A

£90.00 £70.00

& St Jame fair s’s ay M Grade A Re

£110.00 £87.50

Hyde Park

Re

Lincoln Inn Fiel

Grade B nt

F re e 2 1 m o n t

hs

Royal Opera House

So

Grade B nt

F re e 2 1 m o n t

hs The National Gallery

Grade B nt

F re e 2 1 m o n

th

s

Green Park London Eye St James’s Park Buckingham Palace

ightsbridge Kn

Royal Albert Hall

Palace of Westminster

Grade A

Harrods

Science Museum

o

ia Vict rAbbey Westminster

£90.00 £67.50

V&A

Re

Grade A

£75.00 £55.00

Grade B nt

F re e 2 1 m o n

th

s

Westminster Cathedral

Re

www.geraldeve.com

Grade B nt

F re e 2 4 m o n

th

s

edi Shor tch

& Clerk en don we ng Sadler’s Wells rri Grade A

Grade A

ll

Fa

Geffrye Museum

£65.00 £55.00 Re

£70.00 £50.00

Grade B nt

F re e 2 1 m o n t

Re

hs

Re

Grade A

Grade A

F re e 2 4 m o n t

Re

St Paul’s Cathedral

Brick Lane Market

The Old Truman Brewery

£68.50 £60.00

Barbican Centre

hs

hs

Old Spitalfields Market

City

Grade B nt

F re e 2 4 m o n t

Midtown

£67.50 £55.00

n’s lds

Grade B nt

Grade B nt

F re e 2 4 m o n t

hs Whitechapel Gallery

Bank of England 30 St Mary Axe Mansion House

omerset House

National Theatre

Tate Modern

Tower of London

hbank Sout

Southbank Centre

Grade A

City Hall

£65.00 £45.00 Re

Tower Bridge

Grade B nt

F re e 1 8 m o n t

hs

London South Bank University

Imperial War Museum

Ten year term Southwark Park

See inside back cover for definitions

7

Edgware Road

Paddington

PADDINGTON Contact Patrick Ryan London Offices Mobile +44 (0)7792 078397

Lancaster Gate

Hyde Park

£71.00

63%

3

Prime Rents

Corporate take-up

Underground Stations

10.7%

240,000 sq ft

0

Availability Rate

Under Construction

Michelin Star Restaurants

30.6%

84,500 sq ft

34

Tenant Space

Under Offer

Pubs

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.

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.

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.

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.

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.

Demand Quarterly take-up and five year average 140

Supply Availability by grade

000s sq ft

500

120

Development Development pipeline

000s sq ft

600

000s sq ft

500

400

100

400 300

80

300 60

200 200

40 100

Take-up Five year average

Source: Gerald Eve

www.geraldeve.com

New Refurbished Unrefurbished

Completed Under construction available Under construction let

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

Q4 2017

Q3 2017

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Q1 2016

Q4 2015

Q3 2015

Q2 2015

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

Q1 2015

0

2009

0

100

2008

20

Baker Street

Edgware Road

MARYLEBONE

The Wallace Collection

Marble Arch

Contact Sophie Daw London Offices Mobile +44 (0)7880 454161

£82.50

56%

5

Prime Rents

Serviced Offices take-up

Underground Stations

2.4%

215,800 sq ft

4

Availability Rate

Under Construction

Michelin Star Restaurants

15.6%

225,377 sq ft

51

Tenant Space

Under Offer

Pubs

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.

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.

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.

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.

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.

Demand Quarterly take-up and five year average 000s sq ft

400

Development Development pipeline

000s sq ft

450

180

000s sq ft

400

160

350

300

140

300

120 100

250

200

200

80

150

60

100

40

100 50

20

New Refurbished Unrefurbished

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

Q4 2017

Q3 2017

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Q1 2016

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2017

Q3 2017

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Q1 2016

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Take-up Five year average

2010

0

0

2009

0

2008

200

Supply Availability by grade

Completed Under construction available Under construction let

Source: Gerald Eve

9

Oxford Circus

MAYFAIR & ST JAMES’S

Bond Street

Piccadilly Circus Hyde Park Corner Hyde Park

Green Park St James’s Park

Contact Patrick Ryan London Offices Mobile +44 (0)7792 078397

£110.00

56%

6

Prime Rents

Finance & Banking take-up

Underground Stations

4.7%

267,000 sq ft

24

Availability Rate

Under Construction

Michelin Star Restaurants

17.4%

399,556 sq ft

71

Tenant Space

Under Offer

Pubs

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.

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.

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%.

Demand Quarterly take-up and five year average 400

Supply Availability by grade

000s sq ft

1200

350

Development Development pipeline

000s sq ft

600

1000

500

800

400

600

300

400

200

200

100

0

0

000s sq ft

300 250 200 150

Take-up Five year average

Source: Gerald Eve

www.geraldeve.com

New Refurbished Unrefurbished

Completed Under construction available Under construction let

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

Q4 2017

Q3 2017

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Q1 2016

Q4 2015

Q3 2015

Q4 2017

Q3 2017

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Q1 2016

Q4 2015

Q3 2015

Q2 2015

Q1 2015

0

Q2 2015

50

Q1 2015

100

Hyde Park

KNIGHTSBRIDGE

Green Park

Victoria Sloane Square

Contact Rhodri Phillips London Offices Mobile +44 (0)7768 615296

£90.00

76%

2

Prime Rents

Corporate take-up

Underground Stations

5.3%

0 sq ft

6

Availability Rate

Under Construction

Michelin Star Restaurants

7.7%

22,912 sq ft

31

Tenant Space

Under Offer

Pubs

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.

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.

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.

000s sq ft

90

90

80

250

70 60

200

60

50

150

40

40

30

100

20

50

10

10

New Refurbished Unrefurbished

2020

2019

Q4 2017

Q3 2017

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Q1 2016

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2017

Q3 2017

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Q1 2016

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Take-up Five year average

2018

0

0

2017

0

2016

20

2015

30

2014

50

2013

70

2012

80

000s sq ft

2011

300

2010

000s sq ft

Development Development pipeline

2009

100

Supply Availability by grade

2008

Demand Quarterly take-up and five year average

Completed Under construction available Under construction let

Source: Gerald Eve

11

Green Park Hyde Park

Green Park

Hyde Park Westminster

VICTORIA

St James’s Park

Palace of Westminster

Victoria

Contact Rhodri Phillips London Offices Mobile +44 (0)7768 615296

Pimlico

£75.00

23%

5

Prime Rents

Finance & Banking take-up

Underground Stations

5.3%

224,400 sq ft

2

Availability Rate

Under Construction

Michelin Star Restaurants

23.7%

193,292 sq ft

79

Tenant Space

Under Offer

Pubs

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.

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.

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.

Demand Quarterly take-up and five year average 350

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.

Supply Availability by grade

000s sq ft

800

Development Development pipeline

000s sq ft

700

700

300

600

600

250

500

500

200

000s sq ft

400

400 300

300

Take-up Five year average

Source: Gerald Eve

www.geraldeve.com

New Refurbished Unrefurbished

Completed Under construction available Under construction let

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

Q4 2017

Q3 2017

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Q1 2016

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2017

Q3 2017

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

0

Q1 2016

0 Q4 2015

0 Q3 2015

100

Q2 2015

100

Q1 2015

50

2010

200

200

2009

100

2008

150

Tottenham Court Road Oxford Circus Soho Square Gardens

SOHO Golden Square

Piccadilly Circus

Leicester Square

Contact Sophie Dickens London Offices Mobile +44 (0)7763 206550

£90.00

33%

4

Prime Rents

Media & Technology take-up

Underground Stations

3.8%

64,700 sq ft

3

Availability Rate

Under Construction

Michelin Star Restaurants

24.8%

36,179 sq ft

72

Tenant Space

Under Offer

Pubs

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.

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.

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.

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.

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%.

Demand Quarterly take-up and five year average 160

Supply Availability by grade

000s sq ft

350

140

Development Development pipeline

000s sq ft

350

300

300

250

250

200

200

150

150

100

100

20

50

50

0

0

0

120 100

000s sq ft

Take-up Five year average

New Refurbished Unrefurbished

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

Q4 2017

Q3 2017

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Q1 2016

Q4 2015

Q3 2015

Q4 2017

Q3 2017

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Q1 2016

Q4 2015

Q3 2015

Q2 2015

Q1 2015

40

Q2 2015

60

Q1 2015

80

Completed Under construction available Under construction let

Source: Gerald Eve

13

University College London

Russell Square

FITZROVIA

Great Ormond Street Hospita

RIBA

Goodge Street

British Museum

Wigmore Hall

Holborn

Contact Sophie Dickens London Offices Mobile +44 (0)7763 206550

£82.50

62%

5

Prime Rents

Professional Services take-up

Underground Stations

3.9%

451,000 sq ft

5

Availability Rate

Under Construction

Michelin Star Restaurants

26.2%

129,022 sq ft

58

Tenant Space

Under Offer

Pubs

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.

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.

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.

Demand Quarterly take-up and five year average 450

Tottenham Court Road

Oxford Circus

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%.

Supply Availability by grade

000s sq ft

500

Development Development pipeline

000s sq ft

800

000s sq ft

400 400

350

700

300

600

300

250

500

200

400

200

150

300

100

200

100

50

100

Source: Gerald Eve

www.geraldeve.com

New Refurbished Unrefurbished

Completed Under construction available Under construction let

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

Q4 2017

Q3 2017

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Q1 2016

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2017

Q3 2017

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Q1 2016

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Take-up Five year average

2009

0

0

2008

0

KING’S CROSS & EUSTON

Mornington Crescent

King’s Cross Euston

Contact Cathal Diamond London Offices Mobile +44 (0)7766 977175

£80.00

88%

6

Prime Rents

Media & Technology take-up

Underground Stations

1.5%

180,000 sq ft

0

Availability Rate

Under Construction

Michelin Star Restaurants

25.2%

16,988 sq ft

55

Tenant Space

Under Offer

Pubs

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 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.

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.

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.

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.

Demand Quarterly take-up and five year average 350

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.

Supply Availability by grade

000s sq ft

300

300

Development Development pipeline

000s sq ft

400 350

250

250

000s sq ft

300

200

200

250 150

150

200 100

Take-up Five year average

New Refurbished Unrefurbished

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

Q4 2017

Q3 2017

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Q1 2016

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2017

Q3 2017

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Q1 2016

0

Q4 2015

0 Q3 2015

0 Q2 2015

100

Q1 2015

50

2009

150

50

2008

100

Completed Under construction available Under construction let

Source: Gerald Eve

15

Lincoln’s Inn Fields

COVENT GARDEN

Covent Garden

Leicester Square

River Thames

Charing Cross

Contact Sophie Daw London Offices Mobile +44 (0)7880 454161

Embankment

£77.50

44%

6

Prime Rents

Media & Technology take-up

Underground Stations

2.5%

303,000 sq ft

1

Availability Rate

Under Construction

Michelin Star Restaurants

20.9%

249,694 sq ft

63

Tenant Space

Under Offer

Pubs

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.

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.

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.

500 450

500

400 350

400

400

300

300

250

300

200

200

Take-up Five year average

Source: Gerald Eve

www.geraldeve.com

150 100

New Refurbished Unrefurbished

Completed Under construction available Under construction let

2020

2019

2018

2017

2016

2015

2014

Q4 2017

Q3 2017

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Q1 2016

Q4 2015

Q3 2015

0 Q2 2015

Q4 2017

Q3 2017

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Q1 2016

Q4 2015

0 Q3 2015

0 Q2 2015

100

Q1 2015

100

Q1 2015

200

2013

500

000s sq ft

2012

600

000s sq ft

2011

600

2010

000s sq ft

Development Development pipeline

2009

700

Supply Availability by grade

2008

Demand Quarterly take-up and five year average

King’s Cross

Euston

MIDTOWN

Farringdon

Museum of London

Contact Rhodri Phillips London Offices Mobile +44 (0)7768 615296

Chancery Lane

Amy Bryant London Offices Mobile +44 (0)7551 172931

Picadilly Circus Leicester Square

Blackfriars

£67.50

36%

7

Prime Rents

Media & Technology take-up

Underground Stations

5.6%

153,000 sq ft

0

Availability Rate

Under Construction

Michelin Star Restaurants

28.3%

241,695 sq ft

76

Tenant Space

Under Offer

Pubs

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.

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 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.

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.

450 400

1400

350

1200

300

1000

250

800

200

600

150

400

Take-up Five year average

New Refurbished Unrefurbished

2020

Q4 2017

Q3 2017

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Q1 2016

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2017

Q3 2017

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Q1 2016

Q4 2015

0

Q3 2015

0 Q2 2015

50

0 Q1 2015

200

2019

100

50

2018

100

2017

150

2016

200

2015

250

2014

300

2013

350

000s sq ft

2012

400

000s sq ft

2011

1600

2010

000s sq ft

Development Development pipeline

2009

450

Supply Availability by grade

2008

Demand Quarterly take-up and five year average

Completed Under construction available Under construction let

Source: Gerald Eve

17

FARRINGDON & CLERKENWELL

Old Street

Barbican Farringdon

Contact Fergus Jagger London Offices Mobile +44 (0)7787 558756

Chancery Lane

£65.00

62%

5

Prime Rents

Media & Technology take-up

Underground Stations

5.2%

991,250 sq ft

2

Availability Rate

Under Construction

Michelin Star Restaurants

11.4%

110,292 sq ft

118

Tenant Space

Under Offer

Pubs

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.

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).

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.

Demand Quarterly take-up and five year average 600

Supply Availability by grade

000s sq ft

1200

Development Development pipeline

000s sq ft

1,000

1000

500

000s sq ft

800

80

400

600

50 300 60 200

400

40

Take-up Five year average

Source: Gerald Eve

www.geraldeve.com

200

New Refurbished Unrefurbished

Completed Under construction available Under construction let

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

Q4 2017

Q3 2017

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Q1 2016

Q4 2015

Q3 2015

Q2 2015

0 Q1 2015

Q4 2017

Q3 2017

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Q1 2016

Q4 2015

0 Q3 2015

0 Q2 2015

20

Q1 2015

100

Farringdon Liverpool Street

CITY Cannon Street

Contact Steve Johns London Offices Mobile +44 (0)7833 401249

£68.50

57%

14

Prime Rents

Finance & Banking take-up

Underground Stations

6.2%

5,532,500 sq ft

4

Availability Rate

Under Construction

Michelin Star Restaurants

26.7%

1,480,963 sq ft

180

Tenant Space

Under Offer

Pubs

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.

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%.

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.

Demand Quarterly take-up and five year average

Supply Availability by grade

Million sq ft

6

1.4

Development Development pipeline

Million sq ft

4.0

Million sq ft

3.5

5

3.0

1.2

4

2.5

0.8 3

2.0

0.6

1.5

2

0.4

1.0

Take-up Five year average

0.5

New Refurbished Unrefurbished

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

Q4 2017

Q3 2017

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Q1 2016

Q4 2015

Q3 2015

Q2 2015

0 Q1 2015

Q4 2017

Q3 2017

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Q1 2016

Q4 2015

0 Q3 2015

0 Q2 2015

1

Q1 2015

0.2

2008

1.6

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.

Completed Under construction available Under construction let

Source: Gerald Eve

19

SHOREDITCH

Shoreditch High Street Brick Lane Market

Whitechapel Old Spitalfields Market

Liverpool Street

Contact Steve Johns London Offices Mobile +44 (0)7833 401249

£70.00

70%

4

Prime Rents

Serviced Offices take-up

Underground Stations

5.7%

647,750 sq ft

3

Availability Rate

Under Construction

Michelin Star Restaurants

22.0%

59,933 sq ft

69

Tenant Space

Under Offer

Pubs

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.

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.

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.

Demand Quarterly take-up and five year average 000s sq ft

600

Development Development pipeline

000s sq ft

500

000s sq ft

450

400

500

350 300

400 350

400

300

250

250

300

200

200

150

200

100

150 100

100

50

50 0

Take-up Five year average

Source: Gerald Eve

www.geraldeve.com

New Refurbished Unrefurbished

Completed Under construction available Under construction let

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

Q4 2017

Q3 2017

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Q1 2016

Q4 2015

Q3 2015

0 Q2 2015

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Q1 2016

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2014

Q3 2014

0

Q1 2015

450

Supply Availability by grade

Oxo Tower

Embankment

Tate Modern

London Bridge Waterloo

SOUTHBANK

Elephant and Castle

Contact Fergus Jagger London Offices Mobile +44 (0)7787 558756

£65.00

53%

7

Prime Rents

Corporate take-up

Underground Stations

2.7%

957,240 sq ft

1

Availability Rate

Under Construction

Michelin Star Restaurants

30.9%

154,056 sq ft

133

Tenant Space

Under Offer

Pubs

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.

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.

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.

Demand Quarterly take-up and five year average 600

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.

Supply Availability by grade

000s sq ft

700

Development Development pipeline

000s sq ft

1,000

600

500

000s sq ft

800

500

400

600

400 300 300 200

400

200

Take-up Five year average

200

New Refurbished Unrefurbished

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

Q4 2017

Q3 2017

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Q1 2016

Q4 2015

Q3 2015

Q2 2015

0 Q1 2015

Q4 2017

Q3 2017

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Q1 2016

Q4 2015

0 Q3 2015

0 Q2 2015

100

Q1 2015

100

Completed Under construction available Under construction let

Source: Gerald Eve

21

CENTRAL LONDON INVESTMENT 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.

Contact Lloyd Davies London Offices Mobile +44 (0)7767 311254

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 2017 central London net investment Source: Property Data, Gerald Eve

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 performance forecast Sources: MSCI, Gerald Eve

Net investment (£ billion)

8.0

2.0

7.0

1.5

6.0

%

5.0

1.0

4.0

0.5

3.0

0

2.0

-0.5

1.0

-1.0

Overseas investors UK institutions Quoted Prop Co

www.geraldeve.com

Private Prop Co Private investors Occupiers Others

Capital growth Income return Total return

2022

2021

2020

2019

Q4 2017

-3.0 Q3 2017

-2.0

-2.5 Q2 2017

-2.0 Q1 2017

-1.0

2018

0

-1.5

2017

2.5

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.

GERALD EVE IN THE MARKET

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, Mayfair We have successfully advised Global Holdings on the leasing of 21,000 sq ft to Alfred Dunhill.

The Harley Building, 77 New Cavendish Street, Fitzrovia We 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, Victoria We recently acquired 31,300 sq ft in Landsec’s landmark development on behalf of BlueCrest Capital.

DEFINITIONS Floor quality

Prime headline rents

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’.

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.

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 +

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.

Current letting policies may dictate some floors are not available in isolation

23

LONDON OFFICES Agency & Investment

Lease Consultancy

Lloyd Davies Partner Tel. +44 (0)20 7333 6242 Mobile +44 (0)7767 311254 [email protected]

Tony Guthrie Partner Tel. +44 (0)20 3486 3456 Mobile +44 (0)7585 960695 [email protected]

Fergus Jagger Partner Tel. +44 (0)20 7653 6831 Mobile +44 (0)7787 558756 [email protected]

Graham Foster Partner Tel. +44 (0)20 7653 6832 Mobile +44 (0)7774 823663 [email protected]

Steve Johns Partner Tel. +44 (0)20 7653 6858 Mobile +44 (0)7833 401249 [email protected]

Research

Rhodri Phillips Partner Tel. +44 (0)20 3486 3451 Mobile +44 (0)7768 615296 [email protected]

Alex Dunn Associate Tel. +44(0)203 486 3495 Mobile +44 (0)7917 587230 [email protected]

Patrick Ryan Partner Tel. +44 (0)20 7333 6368 Mobile +44 (0)7792 078397 [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. © All rights reserved The reproduction of the whole or part of this publication is strictly prohibited without permission from Gerald Eve LLP.

02/18 www.geraldeve.com