Central London Market Report Q4 2012 - Jones Lang LaSalle

4 On Point • Central London Market • Fourth Quarter 2012
The Central London Market
Occupier Take-up and Net Absorption
Just over 1.9 million sq ft was let in the final quarter of the
year, taking the total for the whole year to 7.2 million sq ft. The
rate of take-up was surprisingly consistent in 2012, ranging
Source: Jones Lang LaSalle
narrowly between 1.6 and 1.9 million sq ft per quarter. This was
disappointing after a promising end to 2011, when 2.2 million sq
Source: Jones 10 Lang LaSalle
ft was let in Q4. In fact, 2012 turned out to have been the most
subdued letting market
Central
since
London:
2003. Occupiers
Net Absorption
8
have been
2002-2011
slow to
Q2
Source: Jones Lang 10 LaSalle 6
commit to relocations in an economic
8
environment that remains
4
uncertain. The annual 10 average take-up over the last 10 years has
6
2
been 9.3 million sq 8 ft, but volumes for three of the last four years
4
have been well below 6 that level at around 7.1
0
million sq ft, with
2
only 2010 bucking
4the recent trend, when take-up -2 exceeded
0
12.0 million sq ft.
-4
Net absorption m sq ft
2
0
In the absence of banking and finance,
-4
2002 2003 2004 2005
TMT has once again been
-2
the dominant taker of space over -62012 as a whole, accounting
-4
2002 2003 2004 2005 2006
for 22% of the total. This sets a new high for the sector’s market
-6
share, although insurance has also played an important role
2002 2003 2004 2005 2006 2007 2008 2009
over the year. In Q4, while TMT accounted for 15% of take-up,
the insurance sector made up 28%. Insurance activity is tightly
focussed around EC3 and has shored up volumes in the City.
Just 4% of the Central space let London: during Demand 2012 was and in units Supply of more Balance than 2011 Q2 6
Source: Jones Lang LaSalle
Central London: Demand and Supply Balance 2011 Q2
200,000 sq ft and that was the result Source: of one Jones single Lang LaSalle letting to
5
10
10
4
JLT, an insurance Central occupier, London: in Q4. Demand 10In fact this was the first
9
and Supply Balance 2011 Q2
letting of this scale
Source:
since
Jones Lang
Q3 2011.
LaSalle9
3
8
More than half of all space
18
2
26
let (55%) in
10
8
2012 7 was in units of less than 25,000 sq ft and a
9
7
296
1
quarter was 6in units smaller than 10,000 sq ft. The proportion 296
8
6
0
of small unit 5lettings inevitably rises in a year when large
100,000 +
7
5
296
transactions 4
16
Total Existing Supply
are not a feature. The market for units under
6
4
16
25,000 sq ft
3 15
is reassuringly reliable, with at least 3.5 million
5
3 15
113 341
11
113 341
2
26
Active Demand
11
sq ft turning over every 16 year for the 20 past decade. 26
Total Existing Supply
Total size m Total sq ft size m sq ft
4
1
3
0
2
15
11
100,000 +
Net absorption m sq ft
-2
Total size m sq ft
Occupier Demand 1
9 100,000 + 50-100,000 92
Size Band (sq ft) 10
There is currently 0 13.4 million sq ft of demand, either active or
100,000 + 50-100,000 10-50,000
potential, across Central London, including requirements where
Size Band (sq ft)
space is under offer but the deal has not yet been signed. It splits
fairly evenly between active and potential demand at 6.8 million
sq ft and 6.6 million sq ft respectively. Demand has been around
11.0 to 13.0 million sq ft for nine to 10 years, with the exception
being 2007 when it rose to 18.1 million sq ft. The last time there
was a prolonged period of higher demand was in the lead up to the
dotcom bubble in 1996 to 2001 when it ranged between 16.0 and
18.0 million sq ft and peaked in 2000 at 24.6 million sq ft.
Central London: Net Absorption 10 2002-2011 Q2
8
6
4
2
0
-2
-4
-6
2003 2004 2005
Central London: Net Absorption 2002-2011 Q2
Net absorption m sq ft
-6
2007
2010
2006
2008
Net absorption m sq ft
2011
yoy
2007
Total size m sq ft
2009
Central London: Net Absorption 2003-2012
Source: Jones Lang LaSalle
2008
2010
West End
2009
City
2011
yoy
2006
2007
2008
2009
2010
2011
2012
Central Docklands London: Demand and Supply Balance 2012
Source: Jones Lang LaSalle
10
9
8
23
7
2
9 20 92
1
10
113 3419 0
92
10
26
0
0
50-100,000 20
10-50,000
5-10,000
10-50,000
5-10,000
Size Band (sq 0 ft)
5-10,000
2010
2011
yoy
West End
City
Docklands
19 16
Speculative Construction
Active Demand
Speculative Construction
West End
City
Docklands
261
114
10
50-100,000 10-50,000
Size Band Total (sq Existing ft) Supply
Active Demand
250
Speculative Construction
77
0
5-10,000
“2012 turned out to have been
the most subdued letting market
since 2003.”
Docklands
City
West End
Total Exis
Active De
Speculat