Central London Market Report Q4 2012 - Jones Lang LaSalle

10 On Point • Central London Market • Fourth Quarter 2012
The City Office Market
Occupier Take-up and Net Absorption
Leasing activity picked up in the final quarter of the year
with 1.2 million sq ft let in 53 transactions.
4.2 million sq ft was let in the whole of 2012, that is 22%
more than 2011 when the total was 3.4 million sq ft but
remains below the long term 20 year average of
5.1 million sq ft. West End: Take-Up 5 2001-2011 Q1
For the first time in two years, Source: the Jones City Lang delivered LaSalle a deal of
more than quarter West of End: a million 5 Take-Up sq ft. 2001-2011 JLT’s acquisition 4Q1
of
287,500 sq ft Source: in St Botolph’s Jones Lang House LaSalle boosted take-up and
accounted for 5
4
3
23% of the space let in the quarter.
Inevitably, the insurance sector accounted for the largest
4
3
2
share of take-up in the quarter, with 38% of the total.
The TMT sector accounted for only 5% of take-up in Q4
3
2
1
2012 with only 60,400 sq ft in seven transactions. This is
in stark contrast
2
to the rest 1 of the year. In the 0 first three
2002 2003
quarters, 710,000 sq ft was let to the TMT sector.
The amount 1of space under 0 offer rose in Q4 to 1.2 million
2002 2003 2004 2005 2006 2007
sq ft, a minimal increase of 9% over the quarter from 1.1
million sq ft 0at the end of September. This provides for an
2002 2003 2004 2005 2006 2007 2008 2009
encouraging start to 2013 City: and includes Demand 18
111,800 2002-2011 sq ft Q2 under
Source: Jones Lang
offer to Amlin Plc in the Leadenhall Building 16LaSalle
and 90,145
sq ft in 20 Fenchurch City: Demand 18
Street, 2002-2011 under offer Q2 14to Liberty Re.
m sq ft
m sq ft
Occupier Demand 12
8
14
Demand remained broadly 10 stable in Q4 at 6just over 9.8 million
12
sq ft, of which 5.3 million 8sq ft was active and 4 the balance
10
was potential demand. 6
2
Ogilvy and Mather
8
WPP’s 4 search for 250,0000
sq ft extends
to the City market 6 and is the 2 largest active search in this part
of the market; 4 Cameron McKenna 0 and Bird & Bird are both
in the market 2 for up to 200,000 sq ft and KPMG is seeking
150,000 sq 0ft, as is, potentially, Mishcon de Reya.
West End: Take-Up 5 2001-2011 6 Q1
Source: Jones Lang LaSalle
Source: Jones Lang LaSalle
2010
West End: Vacancy Rates 2002-2011 Q1
Existing Supply and the Development Source: Jones Lang Pipeline LaSalle
West End: Vacancy Rates 2002-2011 Q1
Overall supply was 8.2 million 9%
Source: Jones Lang LaSalle
sq ft, at the end of Q4 2012,
which translates into a manageable 8%
9%
vacancy rate of 7.5%.
Almost three quarters of
7%
8%
the space available was of Grade A
6%
quality and 7% that equates to a Grade A vacancy rate of 5.7%.
5%
There was 6% just under 4.0 million sq ft speculatively under
4%
construction 5% at the end of Q4.
availability (%) of overall stock
m sq ft
Source: Jones 16 Lang LaSalle
18
14
16
4%
3%
2%
1%
0%
June 02
02
m sq ft
June 03
availability (%) of overall stock
03
June 04
3%
2%
1%
0%
04
June 02
Mar 02
June 05
05
June 03
Mar 03
m sq ft
June 06
06
June 04
Mar 04
m sq ft
12
10
June 05
June 07
June 06
June 08
m sq ft
June 07
June 09
4
3
2
1
0
2004
2008
2005
2009
2011
m sq ft
2006
8
4
2
0
2010 13
City: Take-Up 2003-2012
Source: Jones Lang LaSalle
West End: Take-Up 2001-2011 Q1
Source: Jones Lang LaSalle
June 10
2002
June 08
June 11
2003
City: Demand 2002-2011 Q2
June 02
07
Mar 05
June 03
08
Mar 06
June 04
09
Man 07
June 05
10
Man 08
June 06
m sq ft
June 09
availability (%) of overall stock
11
Mar 09
11
2004
9
7
5
3
1
June 07
2004
2005
Off Plan
2006
2007
Under Construction Second hand
City: 2008 Demand 2009 2003-2012
2010 2011
Source: Jones Lang LaSalle
Second hand New
2007
Dec 03
2011
2005
New
Dec 04
Active
2006
Dec 05
2007
Off Plan
2008
Under Construction
Dec 06
2008
Dec 07
2009
Dec 08
2009
2010
Dec 09
Off Plan
Off Plan
Under C
Off Plan
Under Construction Second
New
Under Construction Second hand
2010
2011
Second hand
2011
New
Potential Rolling 12 Month Take-Up
City: Vacancy Rates 2003-2012
Source: Jones Lang LaSalle
Rolling 12 Month Take-Up
14%
June 10
12%
10%
8%
6%
4%
2%
0%
Mar 10
Dec 03
June 08
June 11
Dec 04
June 09
Overall
Grade A
Mar 11
Dec 05
June 10
Active
Potential
Dec 06
June 11
Dec 07
Overall
Grade A
Dec 08
Active
Potential
Dec 10
Dec 11
2012
New
Dec 12
Rolling 12 Month Take-Up
Dec 09
Dec 10
Dec 11
Dec 12
Potentia
Active
Rolling 1
Gra
Ove