Central London Market Report Q4 2012 - Jones Lang LaSalle

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Summary of statistics Sizes in 000 sq ft Units of 5,400 sq ft and above Take-Up TOTALS Grade A Off-plan Under construction New completed Second hand (incl. refurbished) 100,000+ 50,000 - 99,999 10,000 - 49,999 Sub 10,000 Banking & Finance Professional Services Service Industries Manufacturing Industries Public Admin. & Institutions Other Net Absorption TOTALS Prime Rents & Rent Free Prime Rent Rent Free (months) Net Effective Demand (As at 31 Dec 2012) TOTALS 100,000+ 50,000 - 99,999 10,000 - 49,999 Sub 10,000 Banking & Finance Professional Services Service Industries Manufacturing Industries Public Admin. & Institutions Other Supply (As at 31 Dec 2012) Total Current Supply VACANCY RATE (% of total stock) 100,000+ 50,000 - 99,999 10,000 - 49,999 Sub 10,000 Speculative Development (As at 31 Dec 2012) TOTALS 2013 2014 2015 Capital Transactions £millions TOTALS UK Purchasers Overseas Purchasers Property Companies Institutions Privates & Other Investors Prime Yield (As at 31 Dec 2012) West End City Docklands / East London Central London 2011 2012 2012 2011 2012 2012 2011 2012 2012 2011 2012 2012 Q1-Q4 Q4 Q1-Q4 Q4 Q1-Q4 Q4 Q1-Q4 Q4 3,201 2,521 621 3,444 4,160 1,244 496 475 40 7,141 7,156 1,905 2,315 1,730 533 1,774 3,120 1,082 488 228 34 4,577 5,078 1,649 216 20 0 0 190 84 250 0 0 467 209 84 402 491 156 197 219 52 0 0 0 599 711 207 806 237 60 583 692 462 102 97 0 1,491 1,025 523 1,777 1,773 405 2,663 3,059 646 144 377 40 4,585 5,210 1,091 600 127 0 197 673 415 250 165 0 1,047 965 415 267 256 115 411 681 146 59 75 0 737 1,012 261 1,516 1,426 351 1,774 1,922 472 143 203 34 3,433 3,551 858 817 713 154 1,062 884 210 44 32 6 1,923 1,628 370 13% 9% 9% 21% 13% 12% 7% 10% 54% 16% 11% 12% 7% 12% 14% 24% 22% 28% 0% 1% 0% 15% 17% 23% 52% 53% 53% 40% 51% 57% 20% 21% 46% 44% 51% 55% 10% 13% 20% 5% 5% 3% 62% 0% 0% 11% 8% 8% 14% 5% 1% 5% 7% 0% 10% 68% 0% 9% 10% 0% 5% 6% 2% 5% 1% 0% 0% 0% 0% 4% 3% 1% 2011 2012 2012 2011 2012 2012 2011 2012 2012 2011 2012 2012 Q1-Q4 Q4 Q1-Q4 Q4 Q1-Q4 Q4 Q1-Q4 Q4 1,647 382 76 148 -476 214 83 27 -64 1,985 -137 210 2011 2012 2012 2011 2012 2012 2011 2012 2012 Q3 Q4 Q3 Q4 Q3 Q4 £95.00 £95.00 £95.00 £55.00 £55.00 £57.00 £38.50 £38.50 £38.50 16 16 16 22 24 24 £82.33 £82.33 £82.33 £44.92 £44.00 £45.60 Total Active Potential Total Active Potential Total Active Potential Total Active Potential 5,941 2,957 2,984 9,836 5,370 4,466 1,756 603 1,153 13,412 6,786 6,627 2,562 1,152 1,410 4,800 2,148 2,652 1,462 375 1,087 5,705 2,148 3,558 1,236 563 673 2,034 1,117 917 233 168 65 2,818 1,393 1,425 1,847 1,021 827 2,568 1,704 864 60 60 0 4,171 2,633 1,538 296 221 75 433 400 32 0 0 0 718 611 107 8% 7% 10% 24% 17% 32% 41% 23% 51% 21% 16% 25% 10% 13% 8% 23% 30% 14% 26% 77% 0% 19% 26% 12% 72% 74% 71% 49% 47% 51% 32% 0% 49% 53% 51% 56% 6% 5% 8% 2% 3% 1% 0% 0% 0% 4% 5% 4% 3% 1% 4% 2% 2% 2% 0% 0% 0% 3% 2% 3% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Total Grade A Grade B Total Grade A Grade B Total Grade A Grade B Total Grade A Grade B 3,764 2,937 709 8,195 6,136 2,024 1,428 1,365 63 13,387 10,437 2,796 4.1% 3.2% 0.8% 7.5% 5.7% 1.9% 7.0% 6.7% 0.3% 6.1% 2.8% 8.9% 470 470 0 3,025 3,025 0 548 548 0 4,043 4,043 0 728 588 71 699 639 60 419 419 0 1,846 1,646 131 1,770 1,322 410 3,576 1,976 1,494 401 357 44 5,746 3,655 1,948 798 557 228 1,046 495 469 61 42 19 1,905 1,093 717 Total Over 50,000- Total Over 50,000- Total Over 50,000- Total Over 50,000- 100,000 99,999 100,000 99,999 100,000 99,999 100,000 99,999 2,679 1,980 699 5,953 5,212 741 522 522 0 9,154 7,714 1,440 1,500 1,137 363 2,753 2,195 558 522 522 0 4,775 3,854 921 651 315 336 2,567 2,384 183 0 0 0 3,218 2,699 519 528 528 0 633 633 0 0 0 0 1,161 1,161 0 2011 2012 2012 2011 2012 2012 2011 2012 2012 2011 2012 2012 Q1-Q4 Q4 Q1-Q4 Q4 Q1-Q4 Q4 Q1-Q4 Q4 4,720 5,895 1,810 6,029 8,994 2,361 42 512 55 10,791 15,401 4,226 2,070 2,126 395 2,258 1,656 654 30 131 41 4,357 3,913 1,090 2,651 3,769 1,415 3,772 7,338 1,707 12 380 14 6,435 11,487 3,136 1,619 1,741 263 976 1,357 261 30 90 0 2,625 3,188 524 1,437 1,532 520 2,951 5,701 1,493 0 68 41 4,387 7,301 2,054 1,664 2,622 1,027 2,103 1,936 607 12 353 14 3,780 4,911 1,648 Sub £10m £10-£50m £80m+ Sub £40m £40-£125m £125m+ 4.00% 4.25% 4.75% 5.00% 5.25% 5.25% 2
On Point • Central London Market • Fourth Quarter 2012 3 The Central London Market Market Indicators (QoQ) West End City Docklands Take-up F F A Supply A A F Overall Vacancy Rate E A F Grade A Vacancy Rate E E F Occupier Demand F A F Prime Rent E F E Under Construction A F E Investment Volumes F F E The Economy for London Bulletin January 2013 Frantic tax debates in the US at the start of 2013 provided a sobering reminder that the global Chart economy GDP growth is still forecasts fragile. The compared Source: Jones Lang LaSalle avoidance of the impending fiscal cliff was a relief for markets, but only a temporary Chart one, GDP 5 with growth agreement forecasts on spending compared still required Source: Jones Lang LaSalle over the next couple of months. 4 In the Eurozone, the economic 5 news has remained downbeat, especially for the fringe economies. But the underlying health of 3 Source: Jones Lang LaSalle 4 the single currency area looks 5 more secure since the ECB’s 2 pledge to buy bonds, which had a 3 sustained impact in lowering spreads. Nonetheless, 4 swingeing austerity means the economic 1 outlook remains weak in 2013. % of forecasts % of forecasts December’s Autumn Statement provided few surprises. With the double-dip de-railing fiscal consolidation, there was no extra spending to support the recovery. Corporation tax cuts were welcomed, but will be clawed back in a further squeeze on welfare and other spending. On the monetary front, the Bank of England appears to have abandoned Quantitative Easing for the time being. A lack of evidence of the effectiveness of the most recent injections is likely to blame, as banks continue to use the extra liquidity to bolster capital, not lending. % of forecasts Chart GDP growth forecasts compared 5 4 3 2 1 Chart GDP growth forecasts compared Source: Jones Lang LaSalle 1.0% 0.9% 0 Inner London 2.1% 2.0% 2.6% -1 2 -0.3% -0.5% 3 0.6% Inner London UK 0 2.1% 2.0% 2.6% Last year was 1 not a vintage one for the UK. Even 2 if Christmas trading is healthy, -0.3% the economy -1-0.5% will at 0.6% best be flat in 2012 as UK Rest of UK 2012 2013-16 0 2.1% 2.0% 2.6% 1 a whole. After a second dip, output will start 2013 more than 3% below its -1 -0.3% -0.5% 0.6% 2008 peak, with little prospect of returning there Rest of UK 2012 0 2013-16 before 2015. There have been some brighter signs. Jobs have -1 been created at a healthy rate and lower inflation has eased 2012 the 2013-16 pressure on real incomes. But with confidence fragile, any upturn is likely to be faltering, at least until later this year. GDP is forecast to rise to by about 1% overall, better than 2012, but not strong by historic standards. % of forecasts 1.5% 2.3% 2.2% 2013 2014-16 Inner London UK Rest of UK 3.2% “With confidence fragile, any upturn is likely to be faltering, at least until later this year.” Inner Lon UK Rest of U The London economy appears to have been the UK’s most resilient and is certainly where much of the recent jobs impetus has been concentrated. But business sentiment has slipped even in the capital, with the Lloyds-TSB’s index mirroring the national downtrend last year. Oxford Economics project that the capital will pull away again in 2013 and consistently out-perform the national economy thereafter. Central London’s growth for the current year is about 0.5 percentage points higher than the UK benchmark and this margin is sustained over a four year horizon.
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