MARKET UDPATE H1 218 & WEST LONDON
MARKET UPDATE Q2 218 & WEST LONDON Following a strong first quarter, take up in the Thames Valley fell below the long term half year average due to a slower second quarter with no transactions in excess of 5, sq ft being concluded. However, the second half of 218 is expected to outperform the first with a number of larger active HQ requirements including Virgin Media, Sanofi, Xerox, KPMG and Mondelez. Looking ahead, there are only three new schemes now under construction speculatively across the Thames Valley and availability is set to fall to its lowest level for 2 years by 221 if take up continues at the long run average. In the meantime, annual demand and supply will reach a point of equilibrium for the first time since 21. CONTENTS 4 WEST LONDON 12 Despite take-up falling in the Thames Valley, the South East recorded a strong second quarter totaling 1.12m sq ft of transactions, 28% ahead of the first quarter and in line with the long term quarterly average. CHARLES DADY INTERNATIONAL PARTNER 2 & WEST LONDON MARKET UPDATE
TOTAL OCCUPATIONAL COSTS M4 CORRIDOR 1 READING 8 HAMMERSMITH (INC. WHITE CITY) STOCK (SFT) 11,7, CURRENT SUPPLY (SFT) AVE 5 YR ANNUAL TAKE-UP (SFT) 1,86,461 475,293 VACANCY RATE 15.43% 3 4 5 6 7 8 STOCK (SFT) 6,1, CURRENT SUPPLY (SFT) AVE 5 YR ANNUAL TAKE-UP (SFT) 1,19,3 286,925 VACANCY RATE 18.18% PRIME RENT (PSF) 38. TOTAL OCCUPANCY COSTS (PSF) 55.5 1 PRIME RENT (PSF) 59. TOTAL OCCUPANCY COSTS (PSF) 86. 2 2 BRACKNELL 3 MAIDENHEAD 4 SLOUGH 5 UXBRIDGE 6 HEATHROW 7 CHISWICK (INC. STOCKLEY PARK) STOCK (SFT) 4,7, STOCK (SFT) 3,3, STOCK (SFT) 6,2, STOCK (SFT) 5,8, STOCK (SFT) 4,8, STOCK (SFT) 3,, CURRENT SUPPLY (SFT) 393,41 CURRENT SUPPLY (SFT) 458,814 CURRENT SUPPLY (SFT) 1,1,737 CURRENT SUPPLY (SFT) 622,56 CURRENT SUPPLY (SFT) 775,22 CURRENT SUPPLY (SFT) 42,884 AVE 5 YR ANNUAL TAKE-UP (SFT) 165,463 AVE 5 YR ANNUAL TAKE-UP (SFT) 133,567 AVE 5 YR ANNUAL TAKE-UP (SFT) 96,91 AVE 5 YR ANNUAL TAKE-UP (SFT) 85,942 AVE 5 YR ANNUAL TAKE-UP (SFT) 16,296 AVE 5 YR ANNUAL TAKE-UP (SFT) 11,363 VACANCY RATE 8.37% VACANCY RATE 13.9% VACANCY RATE 16.16% VACANCY RATE 1.73% VACANCY RATE 16.15% VACANCY RATE 14.3% PRIME RENT (PSF) 25. PRIME RENT (PSF) 39. PRIME RENT (PSF) 34. PRIME RENT (PSF) 35. PRIME RENT (PSF) 35. PRIME RENT (PSF) 54. TOTAL OCCUPANCY COSTS (PSF) 4. TOTAL OCCUPANCY COSTS (PSF) 58. TOTAL OCCUPANCY COSTS (PSF) 51. TOTAL OCCUPANCY COSTS (PSF) 56. TOTAL OCCUPANCY COSTS (PSF) 54. TOTAL OCCUPANCY COSTS (PSF) 8. 3 & WEST LONDON MARKET UPDATE
THAMES VALLEY
MARKET OVERVIEW TAKE-UP CHANGE FROM PREVIOUS PERIOD COMPARED TO AVERAGE SUPPLY CHANGE FROM PREVIOUS PERIOD Q2 218 278,985-19% -14% TOTAL STOCK 56,8, Q1 218 345,32-15% +6% TOTAL SUPPLY 6,122,924 -.13% 217 TOTAL 1,347,67 +19% -1% GRADE A SUPPLY 2,56,41 5 YEAR QUARTERLY AVERAGE 336,549 YEARS SUPPLY (BASED ON 1 YEAR AVERAGE) 4.29 1 YEAR AVERAGE 1,427,595 VACANCY RATE 1.78% -.1% 5 & WEST LONDON MARKET UPDATE
MARKET TAKE UP TAKE UP (BY SIZE BAND) TAKE UP BY SECTOR 2,, 1,5, 1,, 37% 3% 8% 5% 1% 1% ENERGY FIN FMCG M&D OTHER PHARMA 5, PROF 1% RETAIL 29 21 211 212 213 214 215 216 217 Q2 218 7% 9% % 1% SERVICED OFFICES SERVICES TMT -9,999 1,-24,999 25,-49,999 5,+ Take up in Q2 was 14% lower than the 5 year quarterly average totalling 278,985 sq ft There were 18 transactions in Q2 with an average deal size of 15,5 sq ft, which is 4% above the previous quarter of 11, sq ft The TMT sector has been the most active over the last 15 months accounting for 37% of the market Despite high interest levels, serviced office companies are the 5th most active sector in the market 6 & WEST LONDON MARKET UPDATE
MARKET TAKE UP TOP 5 TRANSACTIONS PROPERTY NAME TOWN DATE TOTAL AREA () OCCUPIER ONE GLOBESIDE MARLOW MAY-18 36, AMICUS PHARMA THE PORTER BUILDING SLOUGH JUN-18 31,7 SPACES (REGUS) READING INTERNATIONAL READING JUN-18 24,5 SYMANTEC R+ READING MAY-18 19,584 MOORE STEPHENS FUTURE WORKS SLOUGH APR-18 16,7 CENTRAL WORKING 7 & WEST LONDON MARKET UPDATE
AVAILABILITY AVAILABILITY AVAILABILITY BY TOWN 1,, 2,, 8,, 6,, 4,, 1,5, 1,, 5, 2,, 29 21 211 212 213 214 215 216 217 Q2 218 Total Supply Grade A Other 5 yr ave 1 yr ave Bracknell Heathrow Grade A High Wycombe Total Maidenhead Marlow Oxford Reading Slough Uxbridge Windsor Wokingham Availability has remained flat over the last three years and now sits just ahead of the 5 year average, and 16.5% below the 1 year average Despite a number of speculative development completions, Grade A availability has remained stable A number of markets such as Oxford, Windsor and High Wycombe are starved of Grade A supply Availability is set to fall over the coming quarters with limited developments due to complete in 218 8 & WEST LONDON MARKET UPDATE
KEY DEVELOPMENT COMPLETIONS There are only 3 schemes currently under construction in the Thames Valley, outlined below: DEVELOPMENT PIPELINE 6, 2 5, 3 4, 1 3, 2, 1, 124 ARLINGTON BP 32, LANDLORD APAM/PATRON THE LANTERN, MAIDENHEAD 2, LANDLORD BERWICK HILL 1 VICTORIA STREET, WINDSOR 44, LANDLORD L&G Q3 218 Q4 218 Q1 219 Q2 219 Q3 219 Q4 219 Q1 22 Q2 22 Q3 218 Q4 218 Q4 219 OUT OF TOWN TOWN CENTRE TOWN CENTRE 9 & WEST LONDON MARKET UPDATE
FUTURE SUPPLY DYNAMIC 1,, 9,, 8,, DOTCOM BOOM GLOBAL ECONOMIC CRISIS EU REFERENDUM 7,, 6,, Sq Ft 5,, 4,, 3,, 2,, 1,, 2 22 24 26 28 21 212 214 216 218 22 222 224 Supply Take-Up 1 & WEST LONDON MARKET UPDATE
RENTS RENTAL GRAPH CURRENT RENT 4. 38. 36. 4. 35. 3. PER 34. 32. 3. 28. 26. 24. 22. 2. 27 28 29 21 211 212 213 214 215 216 217 218 PER 25. 2. 15. 1. 5.. Stockley Park Uxbridge Slough Maidenhead Bracknell Reading Marlow High Wycombe Oxford Headline rents have remained stable throughout 218 and are expected to remain stable throughout the rest of 218 with a number of competing Grade A buildings in the market All markets in the Thames Valley have surpassed their previous peak Incentive packages have increased in markets where there are above average levels of supply 11 & WEST LONDON MARKET UPDATE
DEMAND DEMAND NAMED DEMAND 1,8, 1 1,6, 9 1,4, 8 7 1,2, 6 1,, 5 8, 4 6, 3 4, 2 2, 1 Q1 214 Q2 214 Q3 214 Q4 214 Q1 215 Q2 215 Q3 215 NUMBER Q4 215 Q1 216 Q2 216 Q3 216 Q4 216 Q1 217 Q2 217 Q3 217 Q4 217 Q1 218 Q2 218 Required space Average No. of requirements The average size of requirement increased in Q2 218 to 18, sq ft which is significantly ahead of the average of 15, sq ft There had been a steady decline in the number of requirements between Q2 217 and Q1 218, but that has recovered this quarter in line with the long term average 12 & WEST LONDON MARKET UPDATE
WEST LONDON
MARKET OVERVIEW WEST LONDON TAKE-UP CHANGE FROM PREVIOUS PERIOD COMPARED TO AVERAGE SUPPLY CHANGE FROM PREVIOUS PERIOD Q2 218 158,937 +2% -3% TOTAL STOCK 23,, Q1 218 131,997-32% +19% TOTAL SUPPLY 2,199,144-2.37% 217 TOTAL 678,43-1% +4% GRADE A SUPPLY 1,21,931 5 YEAR QUARTERLY AVERAGE 163,326 YEAR S SUPPLY (BASED ON 1 YEAR AVERAGE) 3.41 1 YEAR AVERAGE 644,337 VACANCY RATE 9.56% -.23% 14 & WEST LONDON MARKET UPDATE
MARKET TAKE UP WEST LONDON WEST LONDON TAKE UP (BY SIZE BAND) TAKE UP BY SECTOR 1,2, 1,, 1% 1% 12% ENERGY 8, 6, 4, 34% 22% FIN FMCG OTHER PHARMA 2, 29 21 211 212 213 214 215 216 217 Q2 218 18% 5% 7% PROF SERVICED OFFICES TMT -9,999 1,-24,999 25,-49,999 5,+ Take-up in Q2 increased by 2% on the previous quarter, totalling 158,937 sq ft in line with ithe quarterly average There were 7 transactions in Q2 leading to an average deal size of 18,15 sq ft, which is 5% above the average of 12, sq ft The TMT sector has been the most active over the last 15 months accounting for 34% of the West London market Serviced offices are the second most active sector in the market accounting for 18%, a trend that is likely to continue throughout 218 15 & WEST LONDON MARKET UPDATE
MARKET TAKE UP WEST LONDON TOP 5 TRANSACTIONS PROPERTY NAME TOWN DATE TOTAL AREA () OCCUPIER 1 LYRIC SQUARE HAMMERSMITH MAY-18 4, THE OFFICE GROUP THE OLD COURTHOUSE RICHMOND JUN-18 36, WILLIAM GRANT & SONS MEDIAWORKS WHITE CITY JUN-18 32,5 AUTOLUS WATERFRONT HAMMERSMITH APR-18 13,2 CRF HEALTH 7 CHISWICK PARK CHISWICK APR-18 6,1 YOURSPACE 16 & WEST LONDON MARKET UPDATE
AVAILABILITY WEST LONDON WEST LONDON AVAILABILITY AVAILABILITY BY TOWN 2,5, 7, 6, 2,, 1,5, 1,, 5, 4, 3, 2, 1, 5, 29 21 211 212 213 214 215 216 217 218 Total Supply Grade A 1 yr ave Hammersmith Grade A Chiswick Total White City Brentford Ealing Wimbledon Richmond Availability in West London is at a 1 year high, 37% above average, largely down to over 5, sq ft delivered in White City With a large amount of space expected to transact throughout 218, supply is expected to reduce in line with the long term averages With only 35, sq ft in four schemes set to be delivered in the market before 22, availability is not likely to increase With a large amount of Grade A supply across all markets, incentives have moved out in all key centres Wimbledon and Richmond remain limited on Grade A supply but there are 2 speculative schemes currently under construction 17 & WEST LONDON MARKET UPDATE
KEY DEVELOPMENT COMPLETIONS WEST LONDON The following schemes are the only schemes currently under construction in West London: 1 WEST LONDON DEVELOPMENT PIPELINE 3, 4 25, 2, 15, 2 3 1, 5, WEMBLEY PARK WELLINGTON, WIMBLEDON 22/24 WORPLE ROAD, WIMBLEDON 245 HAMMERSMITH ROAD 55, LANDLORD QUINTAIN 26, LANDLORD THREADNEEDLE 4, LANDLORD HENDERSON 245, LANDLORD L&G Q3 218 Q4 218 Q1 219 Q2 219 Q3 219 Q4 219 Q3 219 Q1 219 Q1 219 Q2 219 TOWN CENTRE TOWN CENTRE TOWN CENTRE TOWN CENTRE 18 & WEST LONDON MARKET UPDATE
RENTS WEST LONDON WEST LONDON RENTAL GRAPH CURRENT RENT 7. PER 65. 6. 55. 5. 45. 4. 35. PER 6. 5. 4. 3. 2. 1. 3. 25. 2. 29 21 211 212 213 214 215 216 217 218. Hammersmith Chiswick White City Brentford Ealing Wimbledon Richmond Prime headline rents have been consistently increasing over the past 1 years at an average of 4.5% per annum With total supply above the 1 year average, the majority of key centres are well supplied with Grade A stock. We expect rents may re-balance in 218 as there is more competition for occupiers, before returning to growth 19 & WEST LONDON MARKET UPDATE
DEMAND WEST LONDON WEST LONDON DEMAND NAMED DEMAND 1,4, 8 1,2, 7 1,, 8, 6, 4, 6 5 4 3 2 2, 1 Q1 214 Q2 214 Q3 214 Q4 214 Q1 215 Q2 215 Q3 215 NUMBER Q4 215 Q1 216 Q2 216 Q3 216 Q4 216 Q1 217 Q2 217 Q3 217 Q4 217 Q1 218 Q2 218 Required space Average No. of requirements Despite good take up levels, occupier demand has fallen below the long terms quarterly average for the previous three quarters. We have seen a rise in the total floor space required in-line with levels seen in Q3 and Q4 217. The average size of requirement is 15, sq ft across the market 2 & WEST LONDON MARKET UPDATE
CONTACTS CHARLES DADY INTERNATIONAL PARTNER T +44 () 27 152 5273 E charles.dady@cushwake.com JAMIE RENISON INTERNATIONAL PARTNER T +44 () 27 152 5421 E jamie.renison@cushwake.com