2015

The London Commercial Property Market: An Overview of 2015

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4th Quarter – Commercial Property Market in London

As 2015 comes to an end, it’s time to sum up the key trends that have characterised the commercial property market in London over the past 12 months. The latest RICS UK Commercial Market Survey highlighted the growing demand experienced across all commercial property sectors, and in particular with regards to office and industrial properties. As expected, increased demand has resulted in higher prime rental values across all sectors. These averaged a 9.4 per cent increase in office rental prices, 7 per cent for retail stock, and just below 4 per cent for industrial properties (1).

The retail market benefited from exceptional levels of consumer confidence, which are at their highest since the late 90s. Annual change rates for retail rents in the West End averaged 14 per cent, whereas in the City they stayed at 4 per cent (2). Citywide, rental growth averaged 13.2 per cent. Vacancy rates dropped to 3 per cent, a figure that stands in stark contrast with this year’s national average at 14 per cent. Another key trend this year had to do with the performance of the industrial market, which experienced a boost as the e-commerce sector solidified its presence (3).

Office Market – Q4 2015

During the last quarter of 2015, the London office market has continued to display robust activity levels. At the beginning of Q4, year-to-date take up levels amounted to 9.7 million square feet, a figure that represents a 3 per cent increase over last year’s values. Most transactions involved firms involved in sectors like professional services, media and technology, and banking.

According to research data published by BNP Paribas, during November and December the main trends affecting the London office market were above-average leasing activity and a surge in investment levels. Vacancy rates dropped to 4.28 per cent in November, although this figure is likely to increase with the delivery of more than 7 million square feet of Grade A space over the course of 2016. Year-to-date take up rates reached 12.40 million square feet in early December (4). Continue reading “The London Commercial Property Market: An Overview of 2015” →

Overview of London’s Commercial Property Market – 3rd Quarter 2015

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Across the United Kingdom, the third quarter of 2015 has been marked by acceleration in GDP growth rates and by the strong performance of the service sector. These factors have had a positive effect on the country’s commercial real estate market, which has experienced increased stability and growing demand over the past three months. This trend has been particularly evident in the British capital, as summarised in the report below.

London Office Market: Trends and Highlights

In line with previous trends earlier this year, the office market in central London has continued to be driven by increased demand and record rental values have been the predominant theme in the West End and core city office locations. A Cushman & Wakefield market report revealed that in August 2015, availability for all office space types in Central London dropped to 9.7 million square feet, a figure that represents a 3.7 per cent decrease over the previous quarter. This record-breaking figure is also below the decade’s average, which stands at 15 million square feet. According to the report, the amount of office space under offer in central London has also increased substantially during this past quarter, growing by more than 4 per cent, or 60 per cent higher than the past 10-year average. It is estimated that there are currently 4.4 million square feet of office space under offer in central London.

Another key trend that has emerged over the past quarter is related to the large number of FinTech start-ups that have been launched across London. CBRE market analysts have reported that FinTech clusters are now well defined in areas like Canary Wharf, which is home to nearly 10 per cent of all recent start-ups in this industry sector. Office space in the South Bank is also highly sought after by FinTech start-ups, with postcodes like EC2A and EC1V following suit, and with another FinTech cluster evolving in and around Tech City, also in East London. If current market trends are anything to go by, in the near future we can expect to see a surge in demand for incubator space coming mainly from FinTech firms, as well as larger floorplate requirements, given that many of these companies are ready for expansion. Continue reading “Overview of London’s Commercial Property Market – 3rd Quarter 2015” →

Overview of London’s Commercial Property Market – 2nd Quarter 2015

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During the second quarter of 2015, we have seen a continuation of the market trends that characterised the first quarter of the year. Overall, the London commercial property market has experienced sustained rental growth in most sub-markets, but particularly in the West End. Researchers attribute continued rental growth to the healthy levels of leasing activity and to the rather reduced supply of Grade A space, and they affirm that increasing rental prices will be the predominant theme in the city’s commercial property market for the rest of the year.

This trend is particularly evident in the London office market. According to PropertyWeek.com, supply shortages in the city’s office stock are becoming “serious” and total supply dropped by 4 per cent between January and May 2015.

The London office market Q2 2015

Rising prices are the main theme in areas like Shoreditch, Clerkenwell, and Southbank. This trend is contributing to reduce the office cost disparities that have characterised the city core market for years. It is expected that price gaps across postcodes will be further reduced as these sub-markets become more consolidated. Another sub-market that has greatly benefited from strong demand is Hammersmith. Property Week has reported that this office sub-market is becoming a highly-sought after location that has gone from being a peripheral market to an extension of the West End. Similarly, those areas of the Thames Valley that are closer to the city have witnessed a noticeable surge in demand. This increase in demand is most likely caused by the improved transport links that will become a reality thanks to the Crossrail project. According to Colliers International, by the end of this year the office market in this area is expected to grow by 13 per cent.

Demand for serviced offices in London has experienced further growth during the past quarter. The number of serviced office space in central London has grown by 11 per cent so far, and growth is even more impressive in areas like the Southbank, where growth levels are around 17 per cent. In fact, Property Week reports that this sub-sector has outperformed all other market sectors not only in London, but also nationwide.

As far as new office developments are concerned, the most noteworthy deal closed during the second quarter of the year involves the agreement signed by Brookfield Mutiplex. This US-based firm has agreed to develop a £1 billion office complex in what will be London’s biggest skyscraper. The building will be located at 100 Bishopsgate, and once completed it will add 900,000 square feet to the city’s office stock. Other important projects in the city’s development pipeline include 5 Broadgate (700,000 square feet), 1 Bank Street (nearly 670,000 square feet), and 1 Angel Court (300,000 square feet). Continue reading “Overview of London’s Commercial Property Market – 2nd Quarter 2015” →

London in top place as the world’s most expensive office market

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The London office property market has cemented its position in top place among a host of prestigious global property markets for the third year running.Throughout 2014, several indicators suggested that the average cost of office floor space in the capital was rapidly rising. Take up rates rose consistently during 2014, and so did the level of transactions and the amount of office space under offer. This year, London has consolidated its position as the most expensive office market at international level, ahead of key global players like New York or Hong Kong. Take a look at the details behind the stellar performance of the London office property market.

London: The world’s most expensive location for office space


A recently released Cushman and Wakefield study entitled ‘Office Space Across the World’ published a comparison of rental costs between some of the world’s most desirable office locations, which in addition to London included New York, Hong Kong, Paris, Sydney, and Tokyo. London came in top place as the world’s most expensive office market for three consecutive years. Over the past year, average office rental values in the city have increased by 4.6 per cent. The cost of office floor space in London is still far from returning to pre-recession values, as it remains 13% per cent lower than its 2007 values, but market analysts predict that the current trends are here to stay. As the availability of office space continues to decline, prices will rise even further throughout 2015 and beyond.

The main reason behind this upward trend is the ever-shrinking gap between supply and demand. London’s reputation as a global business centre attracts both entrepreneurs and experienced business owners to the British capital, and the effect of unwavering demand on the commercial real estate market is obvious. In the West End, supply has been dwindling since 2007, and currently vacancy rates hover around 3 per cent. This has allowed landlords to rise prices accordingly, pushing average costs to a new record high of £1,681.40/ m2 per year. To put this figure into perspective, consider the average costs of prime office space in the world’s second and third most expensive locations. In Hong Kong, office space in the central business districts averages £1,173.54 / m2 per year, whereas in New York average costs are in the region of £833.53/ m2 per year. Increasing costs seem to be a global trend, since during the past year office rental values have grown by an average of 7 per cent across the major global office markets. Continue reading “London in top place as the world’s most expensive office market” →

London Office Space 2015: Farringdon

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Farringdon is strategically located just outside of the financial and economic hub of the City of London. Along with Clekenwell and Shoreditch, the area makes up the City Fringe North. It is one of two City fringe areas, with the other located to the east and comprising of Aldgate, Spitalfields, and Tower Hill.

Office Space in Farringdon

Farringdon refers to a historic area around Farringdon Station in the London Borough of Islington. Comprising of the wards of Farringdon Within and Farringdon Without, Farringdon is split between areas that once lay inside and outside the London Wall. Like many parts of London just north of the City, office space in Farringdon features warehouse and factory conversions. Sizes typically range from 1,500 to 5,000 square feet, according to property consulting firm Carter Jonas. The area often attracts media and creative industries looking for more affordable office space than traditional locations like Covent Garden, North Oxford Street, and Soho. The northern City fringe also attracts companies in the technology sector, particularly due to its close location to capital markets for tech companies in nearby Shoreditch and popular business incubator programmes in the area. Continue reading “London Office Space 2015: Farringdon” →

London Office Space Growth Areas 2015: Whitechapel

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In close proximity to London’s major financial district Bishopsgate, Whitechapel is quickly rising as a prominent spot for growing businesses. Alongside this excellent locale, Whitechapel is serviced by numerous travel links. Using these links – whether taking the one of the numerous bus lines that service the area or hopping on the underground – Liverpool Street is only 6 minutes travel, while Canary Wharf is only 20. Another advantage of the Whitechapel area is that, as it is approximately three and a half miles from the city centre, the majority of it is outside the congestion area.

The current position of London office space has reached a plateau after a period of growth following a stagnant period. Confidence in the London market remains at a comfortable high, despite the general referendum occurring in 2015. However, as construction rates begin to level off, West End rental rates have begun to rise significantly. As a result of this, many new and already established businesses look to areas of London which have been previously undiscovered – such as Whitechapel. Having transport services to the city centre and other business parks as easily found as those in Whitechapel makes this region an in-demand location. Continue reading “London Office Space Growth Areas 2015: Whitechapel” →

London Office Space Growth Areas 2015: King’s Cross

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Despite high political tensions in 2015 as general and mayoral elections loom – and particularly as the EU referendum comes ever closer – confidence in London as a commercial hub appears to remain stable. However, construction levels are slowly coming to a standstill as projects finish and no new ones begin, causing rental rates in the West End to begin rising significantly. As such, businesses looking for commercial property in London are beginning to broaden their horizons in terms of office markets.

London office space rates remained at a steady level in 2014, with investments totalling just under £20 billion being pumped into the sector. That being said, 2014 ended with some surprises as some of London’s ‘trophy assets’ were seen to change hands – for example the famous Gherkin, which was purchased last year by the Brazilian/New York dynasty Safra. Indeed, with rental prices continually on the increase, a second surprise was seen as some of the previously more obscure sub-markets of London began to billow with success. Continue reading “London Office Space Growth Areas 2015: King’s Cross” →

London Commercial Property Conferences, Events and Meetups for 2015

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There is a wealth of opportunities to learn about London’s property market through conferences and other forums in the capital. These gatherings bring together practitioners, policy and decision makers, investors and others. They are opportunities to network and build relationships, while also making deals with new partners and investors.

The RICS Commercial Property Conference on 27 November 2015 provides market insight through keynotes and panels. The second edition of the conference is also an opportunity to debate macro triggers that impact property market growth. In 2014, speakers included GVA Chief Executive Rob Bould, real estate columnist Peter Bill, Legal & General Property Managing Director Bill Hughes, and Union Investment Real Estate’s Head of Investment Management International Martin Brühl. Other speakers represented leaders in the market, including Deutsche Bank, Segro, DTZ, Grosvenor and more.

The Royal Institution of Chartered Surveyors (RICS) stages a variety of conferences, seminars and workshops in London each year. Established by Royal Charter, RICS accredits some 118,000 professionals around the world. More than 50 RICS conferences and seminars are scheduled in London throughout 2015, including events that delve into dispute resolution, construction regulations, contract negotiation, and more. RICS will also organise the RICS Building Surveying Conference on 23 April 2015, the RICS Property Leaders’ Summit on 5 June 2015, and the RICS Residential Conference on 2 July 2015. To learn more about RICS conferences and other events in 2015, visit www.rics.org/uk/training-events. Continue reading “London Commercial Property Conferences, Events and Meetups for 2015” →

Key Office Space Trends and Statistics for London 2015

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The London commercial property market is expected to show positive results in 2015. During the last year, office property market sector has shown of a number of trends including accelerated rental growth, declining vacancy rates, and stable investment yields are some of the key trends that have characterized the office market across most London areas over 2014.

The key trends expected across the London office space rental market include increased demand, vacancy rates as low as 4.5%, an increase in rental costs across London up by 4.3% overall and the commercial property market as a whole expected to experience double digit growth.


London office rental market 2015 - Key trends infographic

Who’s Taking London Office Space in 2015?

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Principal occupier industries for office space for 2015

Being one of the world’s economic powerhouses, the British capital attracts a wide range of talented individuals, wealthy investors, and real estate agents from all over the world. The city’s thriving economy and great expansion rates have had an indirect effect on the commercial property market, which has just experienced one of its most promising years since the onset of the recession. According to real estate experts, what in 2014 were promising trends will become strong and continued levels of growth during 2015. In fact, the commercial property market in London is set to experience the highest levels of rental growth since 2007.

In particular, the real estate office market is expected to be one of the best performing sectors this year. This is mainly due to the fact that an important number of jobs are being created in certain industry sectors that are traditionally office-based. This report provides an overview of the principal occupier industries for office space in London.

Sectors to watch out for in 2015

The financial and banking industries have been slowly recovering from the effects of the recession, but according to market analysts, other industry sectors are set to surpass the office take-up rates of these traditionally important industries. The creative sector is among the key industries that have profiled themselves as some of the main occupiers in London. For the past five years, this sector has been booming across London, and especially in areas like the northern city fringe (Shoreditch, Old Street, Clerkenwell, etc.). Continue reading “Who’s Taking London Office Space in 2015?” →