CITY FLOOR REVIEW. A floor-by-floor analysis of the City office market Q

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1 CITY FLOOR REVIEW A floor-by-floor analysis of the City office market Q2 14

2 SECOND QUARTER REVIEW THE QUARTER IN NUMBERS 217 taken-up during Q2, totalling 1.4 million 563 currently marketed as available, totalling just over 4.9 million Several large pre-lets were concluded during Q2 as occupiers, with an eye on the supply/demand imbalance, prepare ahead of upcoming lease events. This, combined with the lack of speculative development, further limits the future supply of to the market. We have recorded several large requirements for space during Q2, with a noticeable increase from companies in the legal sector. Both the amount of space under offer and the number of recorded requirements increased during Q m under offer at the end of Q2, within 179 only 4 in the development pipeline due to be delivered to the market between over, in size 1, recorded requirements for office space during Q2, equating to almost two per available floor SUPPLY OF FLOORS IN THE CITY Number of 1 784,31 1,817, , 1 15, ,586 1,67,295. / prime rents flat during Q2, but supply/demand dynamic suggests further rises this year 1, 2,5 2,51 4, Floor size category () 4,1 7, 7,1 1, 1,1,,+

3 DEMAND TAKE-UP BY FLOOR SIZE CATEGORY 1,-2,5 68 2,51-4, 36 7,1-1, ,161 1,1-, 38 11, ,719 4,1-7, ,328, , ,221 Source: Gerald Eve TAKE-UP REQUIREMENTS Occupational take-up showed continued growth during the second quarter, recording a 16% increase by the number of transacted. The increased volume of space transacted was driven by activity on between 1,1-, in size. By postcode it was the handful of large deals agreed in EC2 which both drove overall totals in the City and ensured that EC2 had the strongest demand profile of all City locations in Q2. By floor size category, whilst the larger floorplates added to the overall volume of space transacted during the quarter, it was the smaller space which drove the number of taken-up. There were 14 taken up below 4, in size during Q2. KEY TRANSACTIONS Building Tenant Size () No. of 2 New Ludgate, EC2 Mizhuo 153,482 9 Holborn Place, EC1 Octopus Investments,961 2 Finsbury Dials, EC2 Post Office 53,293 3 The Heron Tower, EC2 Salesforce 5, Bouverie St, EC4 Tipall Limited 47,183 7 The number of recorded requirements increased by 14% during Q2. The profile by floor size category continued, by number, to be weighted to smaller floorplates, with 347 requirements for space less than 2,5 in size. Companies with the larger requirements are acutely aware of the supply shortage of large floorplates and, well in advance of future lease events, are reviewing all options now. KEY REQUIREMENTS Tenant Size () Lease Expiry Ashurst LLP, 18 / Wells Fargo, 19 DLA Piper 15, Royal Bank of Canada 13, 16 / 17 Withers 7, 17

4 Q2 14 SUPPLY Here we detail our findings on the supply of by each postcode, indicating the number of available for each floor size category as well as the respective quality of each available floor. SUPPLY million Down quarter on quarter EC1 The market is well positioned to capitalise on the shortage of new space across EC1 and the distinct lack of available with medium to large floorplates. ANGEL Floor size () 1,-2,5 2,51-4, 4,1-7, 7,1-1, 1,1-,, ,559 52,562 5, ,858,13 EC1 GOSWELL ROAD OLD STREET OLD STREET EC1 Number of 7 available ,745 CLERKENWELL ROAD HAC CHANCERY LANE A HOLBORN ST BARTHOLOMEW S HOSPITAL LONDON WALL EC2 FARRINGDON ROAD ST PAUL S Floor size () 1,-2,5 2,51-4, FLEET STREET EC4 ST PAUL S MANSION HOUSE 4,1-7, 7,1-1,,675 1,1-,,1+ 83,335 49,887 MILLENIUM BRIDGE RIVER THAMES New Refurbished Unrefurbished Postcode boundary City boundary Source: Gerald Eve 9 EC ,38 Number of 7 available 3 5 2, ,185 EC4 The profile of supply in EC4 has not materially changed during Q2, with a relatively high number of between 4,1 and 7, being marketed. The redevelopment of 71 Queen Victoria Street bolsters the number of available large floorplates over, in size.

5 289, ,435 Floor size () 1,-2,5 GREAT EASTERN STREET SHOREDITCH HIGH ST 2,51-4, 4,1-7, 7,1-1, 1,1-,,1+ 3,265 9 EC2 1 Number of 7 available ,47 298,45 77,944 38,579 EC2 Developments such as 1 Cheapside and Alphabeta, both of which are expected to complete before the end of the year, have added to the number of available large floorplates this quarter. The increased level of take-up has reduced the overall number of in the market. SPITALFIELDS LONDON WALL EC3 EC3 continues to have a shortage of new between 2,51 and 4, and relative to the total pace available, still has a high percentage of unrefurbished on the market. Developments at the Leadenhall Building and 67 Lombard Street does increase the balance of large new being marketed. EC3 Floor size () 1,-2,5 2,51-4, LOWER THAMES STREET 4,1-7, 7,1-1, ST KATHERINE DOCKS 1,1-, RIVER THAMES, ,891 EC3 RIVER THAMES 758,932 Number of 7 available ,897 45,297 45,676

6 FUTURE SUPPLY FLOORS IN DEVELOPMENT PIPELINE BY FLOOR SIZE CATEGORY Number of to be added to future supply 1 Source: Gerald Eve , 2,5 2,51 4, 4,51 7, 7,1 1, 1,1,,+ Floor size category () The above chart demonstrates, by floor size category, the number of which are expected to be added to supply through the development pipeline during the course of the next three years. Relative to other floor size categories, there is an increased number of expected to be delivered to the market between 7,1-1, and 1,1-, in size in 16. Low levels of development together with the increase in occupiers committing to space has meant that the future supply of is weak across all other floor size categories. SCHEMES UNDER CONSTRUCTION 1 KING WILLIAM STREET This SWIP and Endurance Land owned scheme is due to deliver nine totalling 12,32 to the market in 15. MONUMENT BUILDING Due for completion at the start of 16, this Skanskaowned scheme is expected to deliver 1 totalling 92, LONDON WALL PLACE This Oxford Properties owned scheme is due to be delivered to the market in 17, offering 15 totalling 1,732.

7 DEFINITIONS Availability Floorspace over 1, in size and available to move into within six months which may or may not be vacant but which is actively marketed by an appointed agent. We monitor availability in central London at an individual floor level as well as by the total volume of space. Each floor is assigned a floor size category and is graded for quality. The availability data covered in this report represents buildings within the postcodes EC1, EC2, EC3 and EC4, as depicted in the map. The floor area in adopted throughout is the net internal area. Availability is accurate two weeks prior to the end of the quarter. Floors which are under offer but are yet to complete are not included in our analysis. Newly available space Space on the open market (including developments) which are within 6 months of completion. This includes units of secondhand space which are undergoing refurbishment. Requirement A declared requirement for office accommodation with appointed agents, which needs to be satisfied in the foreseeable future. Our requirements data covers all of the postcodes EC1, EC2, EC3 and EC4, unless otherwise stated. If the requirement has a preferred size range, the average size of the requirement is used. Given requirements often include a range of targeted geographies, we have included the requirement for each of the sub-markets when analysing individual sub-markets, but, when calculating overall City requirements, duplicates are removed. Prime headline rents The rent being paid which may not take account of concessions such as rent free periods or other incentives. We have adopted the best achieved methodology and where there is no evidence; rents are recorded on the basis of the best hypothetical transaction which could be achieved at the end of that quarter. Our definition of a prime transaction covers a 1, office in a low rise, grade A building signed on a ten year lease. Incentives This refers to the concessions offered by a landlord to a tenant as part of the negotiation process. Incentives usually adopt the form of rent free periods, but can also be in the form of capital contributions or the fit-out of the building. Floor quality 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. Under offer Space which a prospective occupier has agreed in principle to occupy, but is most likely to not as yet be under any legal or contractual obligation to do so. Take-up Occupational transactions including offices let or sold to an occupier, developments pre-let or pre-sold to an occupier or an owner occupier purchase of a freehold or long leasehold. Quality of choice This is a subjective measure holistically assessing the appropriateness of current availability to modern office requirements. Whilst our figures may represent a large number of available in particular size categories or postcode geographies, the floorplate efficiencies or amenities on offer within this supply may not meet all the expectations of modern office tenants and the quality of choice would be lower. Floor / Floorplate As well as the total volume of space being marketed as available, we also monitor the number of which account for this total volume. We monitor whether it is a full floor or part floor which is being marketed, although for our statistics, we treat an individuallymarketed part floor as one floor. If a floor is capable of subdivision to accommodate two suites, but can likewise be occupied together, we use the total floor plate for that floor. Future supply This is essentially a review of development due to be delivered to the market and does not include space bought to the market in the future due to lease expiries or the natural churn of stock. We cover those over 1, in size which are being developed and are due to be delivered to the market.

8 CONTACTS Gerald Eve s London office team provides specialist advice across the spectrum including agency, investment, lease consultancy, rating, valuation, planning and development and project management. To find out more about us and what we could do for you please visit our website at or contact the following people direct: CITY Simon Prichard Head of City Office Tel. +44 () Mobile +44() sprichard@geraldeve.com Fergus Jagger Office Agency Tel. +44 () Mobile +44 () fjagger@geraldeve.com Andrew Mears National Investment Tel. +44 () Mobile +44 () amears@geraldeve.com WEST END Lloyd Davies Head of West End Agency Tel. +44 () Mobile +44 () ldavies@geraldeve.com Paul Pride Office Agency Tel. +44 () Mobile +44 () ppride@geraldeve.com Graham Foster Lease Consultancy Tel. +44 () Mobile +44 () gfoster@geraldeve.com PLANNING & DEVELOPMENT Hugh Bullock Head of Planning and Development Tel. +44 () Mobile +44 () hbullock@geraldeve.com Lisa Webb Planning Tel. +44 () Mobile +44 () lwebb@geraldeve.com Jeremy Randall Planning Tel. +44 () Mobile +44 () jrandall@geraldeve.com GERALD EVE S UK OFFICE NETWORK London (City) 46 Bow Lane London EC4M 9DL Tel. +44 () London (West End) 72 Welbeck Street London W1G AY Tel. +44 () Birmingham Bank House 8 Cherry Street Birmingham B2 5AL Tel. +44 () Cardiff 32 Windsor Place Cardiff CF13BZ Tel. +44 () Glasgow 1 West George Street Glasgow G2 2HG Tel. +44 () Leeds 1 York Place Leeds LS1 2DR Tel. +44 () Manchester No1 Marsden Street Manchester M2 1HW Tel. +44 () Milton Keynes Avebury House Avebury Boulevard Milton Keynes MK9 1AU Tel. +44 () West Malling 35 Kings Hill Avenue West Malling Kent ME19 4DN Tel. +44 () For more information on any of the facts and figures in this publication, please contact: Steve Sharman Tel. +44 () Disclaimer & copyright This brochure 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. 7/14