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June 20, 2012

Brookfield snaps up £500m worth of London offices

Filed under: News — Tags: , , — Office Space @ 6:00 am

A Canadian developer has snapped up more than £500 million worth of office space in London from Hammerson, with the massive efforts spearheaded by former Hammerson boss, Martin Jepson.

Mr Jepson, who left Hammerson in 2011 to join Brookfield, is working hammer-and-tongs to achieve the Canadian developer’s goal of building up a city office space portfolio that tops £5 billion. Hammerson had been in talks with Brookfield for quite some time in regards to the office space sale of its London offices, with Hammerson restructuring its business to place a higher concentration on retail assets such as its Brent Cross shopping centre.

Brookfield spent a sum of £518 million for around 75 per cent of Hammerson’s properties currently up for sale. Properties to change hands include 125 Old Broad Street and 99 Bishopsgate. The Old Broad Street location has been a thorn in Hammerson’s side, with the developer having to spend resources to repair the building’s glazing problems in the wake of glass panes falling from the building’s windows.

Other properties changing hands include the Principal Place development site as well as Leadenhall Court. The former, which has office space planning permission for 57,000 square feet of offices in addition to a rental tower, had been reluctantly put up for sale by Hammerson after potential tenant CMS Cameron McKenna got cold feet in the early months of 2012.

Hammerson is left with only a few remaining assets within London, though the developer is hoping to parcel them off over the next year and a half.

June 8, 2012

Central London demand at highest level since 2009

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Central London’s office space market has picked up recently, with demand rising to the highest its been since 2009 as a result of interest finally catching up with the diminished supply of city office space, Jones Lang LaSalle recently found.

The commercial premises consultancy found that total demand figures stand at 12.6 million square feet currently after potential tenant demand increased by more than 12 per cent over the last year. JLL City agency head, Dan Burn, remarked that central London is shaking off its torpor as signs of life begin to creep back in – an innervation he attributed to the technology, media, and telecoms sector expanding.

While things are indeed looking up, it’s not all coming up roses. Demand was still under the 10-year average by five per cent, JLL warned, leading many to believe that the eurozone crisis and ongoing economic uncertainty have left firms reticent to relocate to new office accommodation, which means that leasing volumes are remaining modestly low.

It’s true that JLL expects that new office take up will be stagnant in the shorter term, the property consultancy did say that it found some evidence that select firms were regaining their lost confidence and have started to actively seek new opportunities. Mr Burn said that JLL has begun to see indications that 2012’s second half could have more activity in store for it than the first six months of the year, as quite a few quiet discussions have begun to take place on both existing office developments and those slated for completion in the immediate future.

May 24, 2012

Double-dip recession? What double-dip recession?

Filed under: News — Tags: , — Office Space @ 6:00 am

You’d be hard pressed to see any evidence of the debt crisis inundating the eurozone or the double-tip depression that the UK economy has slipped into by examining the London office space market, according to two Shaftesbury and Great Portland Estates, two West End property developers, even as other reports emerge to the contrary.

Great Portland reported a record-breaking amount of commercial office space letting over the last two months.  Its Central London properties, valued at £2 billion, underwent a 9.2 per cent increase in value as a result, Great Portland added.

Overseas investors are driving the upturn in the property market in London, with telecoms, media, and technology companies increasing their office requirements within the West End, said Great Portland’s chief executive, Toby Courtauld.  The West End property market has remained favourable, even in the face of the turbulence facing the eurozone economy and the double-tip recession here at home, Mr Courtauld added.

New space demands made by tenants are trending towards long-term averages, the chief executive said, while new space remains relatively scarce, driving up rent and value.  The telecoms, media, and technology sector has been a particular source of strong interest in keeping Great Portland in the black, said Mr Courtald, whose statements were strongly echoed by Shaftesbury, a developer owning more than 12 acres of West End properties, Carnaby Street included among them.

Shaftesbury chief executive, Brian Bickell, said that the West End of London is still both prosperous and busy, even in the face of economic uncertainties elsewhere, with Shaftesbury’s portfolio being nearly completely let over the first six months of the financial year.

May 18, 2012

Eurozone crisis wreaking havoc with London office market

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Surprise, surprise – the eurozone debt crisis has wreaked havoc with the office space market in the nation’s capital, according to Land Securities.

Land Securities, one of the largest commercial premises developers at work in the UK and the masterminds behind the Walkie Talkie building, has been doing its best since the worldwide economic downturn.  The firm’s chief executive, Robert Noel, said recently that businesses are understandably gun-shy about committing to new offices due to the chilling effect that the eurozone debt crisis has had on business confidence.

Land Securities, which is also developing projects in the City and the West End in addition to the Walkie Talkie, is expected to be close to closing the first deal for the new skyscraper with both Kiln and Markel, though there is yet to be any movement on office lettings in other locations, such as the Shard.

Demand has been much lower than expected as of late in London, Mr Noel said.  However, there are a high number of leases due to expire next year, and the chief executive feels that this, plus low development levels will offer demand that will actually outstrip supply from 2013, though these conditions are being delayed due to business confidence being so low right now.

This economic uncertainty has led to the entire property portfolio for Land Securities, is growing much more slowly than it did in 2011.  Values only grew by a relatively small 2 per cent in the year to March, which compares quite unfavourably with the previous year’s growth figure of 9.7 per cent.

April 26, 2012

Office space in London to be swamped this summer

Office space in London is set to be swamped this summer once the Olympic season reaches full swing, with one recently published report finding that few businesses are permitting staff to seek out alternative or flexible working arrangements in order to avoid the inevitable quagmire.

MWB Business Exchange, a provider of serviced office space in the UK, found that, among the 430 firms in London who were considered to be within the ‘travel hotspots’ most likely to be swamped by Olympic traffic, 89 per cent said that the Summer Games would lead to business being disrupted by a significant margin.  Despite this, only 11 per cent of respondents demonstrated a willingness to allow their staff to work from home while the Olympics are in full swing, and less than three out of ten have considered allowing staff to adopt more flexible working hours in order to avoid becoming lost in the sea of humanity that rush hour will bring to the area, the commercial office space provider also found.

Kathryn Hunt, Olympics head for MWB, said that companies risk transforming their staff into ‘workathletes’ by not allowing them to pursue a remote working solution or at least considering the adoption of a more flexible work schedule.  Not only does this put the health of workers at risk, but also can lead to a decline in competitiveness as a result, added Ms Hunt, who also accused businesses and the Government of being asleep at the wheel when it comes to their approach to the economy and productivity during the Olympic season.

Time is running out very rapidly, the industry expert warned, stating that companies who have not put thought into how to manage the crowds are going to find themselves hit extremely hard as a result.

March 8, 2012

Office space in London’s Square Mile undergoes decline

Filed under: News,Office Space London — Tags: , , — Office Space @ 6:00 am

Office space in London’s Square Mile has undergone a decline recently due to economic difficulties, as businesses have reduced the amount of office space per worker, according to DTZ.

The real estate adviser’s newest report revealed that a drive towards space efficiency on the part of commercial office space tenants has led to an occupancy cost slump of 7.3 per cent.  The total average annual occupancy cost per desk space has now declined to £8,720 inclusive of property taxes, rents, and maintenance expenses, DTZ found.

The size of the average workstation in London has contracted as well, with 2010’s 11 square metre figure now declining to just 10 square metres.  The difference is meaningful when compared with other international centres for business such as New York, where the average amount of space per worker is a comparably massive 20.9 square metres.

DTZ’s head of occupier research, Karine Woodford, remarked that cost-cutting has become big once more, with occupiers looking to reduce their space requirments per employee as they await new Eurozone developments to be completed.  One particularly common theme has been consolidation, according to the occupier research head, especially within the insurance and banking sectors, and these industries have contracted even sharper to an average of 8 square metres per worker.

The reduction in space has been interpreted as the uphill battle faced by the UK property market, according to DTZ’s global head of research, Hans Vrensen.  However, Mr Vrensen was quick to say that the situation is temporary, adding that the true impetus behind the push is due to firms looking for cost savings in any way they can, and does not represent a permanent market feature going forward.

February 27, 2012

New office space in London may not be built, report says

Filed under: News,Office Space London — Tags: , , — Office Space @ 6:00 am

One out of every two commercial office space developments in the London development pipeline may not be built due to insufficient pre-lets, lack of funding, and cautious tenants, a new report from an asset consultancy says.

EC Harris discovered that more than 150 development schemes for new office space in London are currently in the pipeline, which could bring as much as 53 million square feet of new accommodation to the capital through 2016.  Yet the research discovered that fully half of these schemes may not even begin due to developers finding it difficult to secure a sufficient number of pre-lets.

Anywhere from 25 million square feet to 70 million square feet of office space rental agreements are expected to reach expiry by 2016, a key component behind the rationale for many developers to construct additional space.  However, a significant number of occupiers have a wariness concerning the current economic landscape, leading them to consider negotiation extensions to their current contracts in lieu of entering into pre-let agreements.

Tighter funding opportunities and the growing euro crisis may also play a role in firms from relocating to new buildings, according to the report.  The study’s author, Richard Taylor, said that London development pipeline has a massive investment and potential, yet the realities of the market are quite different, with a significant number of these schemes struggling to find external funding and pre-lets.

Mr Taylor said that projects need to seek the creation of significant market advantages to differentiate themselves in order to stand a chance of completion.

February 22, 2012

City office space rents plummet, firms look to capitalise

With office space rental prices in the City of London plummeting to their lowest levels in a quarter of a century, several high-powered financial companies are looking to capitalise on newly affordable City office space, sources say.

Jones Lang LaSalle recently commented that, based on information provided from British Land’s latest survey of office space in London, many firms in the capital could be relocating once the leases on their current commercial premises expire.  One such firm, consultancy company Jardine Lloyd Thompson, is currently on the lookout for 200,000 square feet of office accommodation, with a JLT spokeswoman commenting that the firm is considering several options in the run-up to a number of its leases coming to term next year.

Another company currently exploring options, law firm Nabarro Nathanson, is scouring the second hand markets at London Wall’s Alban Gate to accommodate its needs for 125,000 square feet of space.  A representative for the law firm remarked that it will continue to explore options ahead of the 2014 expiration of its current lease, adding that it would not be appropriate to comment further while discussions are underway.

According to an Old Mutual spokesman, the firm is on the search for 80,000 square feet to house its UK headquarters, as its current lease runs its course in September of 2013.  Old Mutual is determining whether or not their existing property will be suitable for the company’s future requirements, the spokesman affirmed, while also stating that the company has begun to review alternate possible sites, though it is still too early to announce any decisions that have been made.

February 21, 2012

Harvey Nash relocates to new City commercial premises

One global professional services group has decided to relocate to commercial premises within the City of London later this year, thus retaining the capital as its worldwide headquarters, commercial office space experts recently reported.

Harvey Nash has proudly proclaimed its confidence in the City’s reputation as a worldwide business hub by relocating its current office space in London to Heron Tower, EC2.  The professional services group is understood to have plans to invest as much as £2 million in new technology and capital expenditure through July of this year, with total lease expenditures on its new City office space to top £10 million over the next decade.

Harvey Nash undertook a rigorous selection process for its new worldwide headquarters, examining cities such as Hong Kong, Zurich, Dublin, and New York possible sites.  However, several critical factors played a role in the group’s decision to choose the capital as its global base for the next ten years, including how London has been a global ‘human capital hotspot,’ attracting the young and skilled not just from Ireland and the UK but from other European and Asian countries as well.

The capital has also developed a reputation for having one of the most innovative and fastest growing online media sectors worldwide save California, with office accommodations in Silicon Roundabout sought after more and more, while the regions east of the City and Shoreditch growing to global pre-eminence in a mobile and digital market that has grown by leaps and bounds.  Harvey Nash expressed how impressed it has been with the decisions of the Coalition Government and the Mayor of London to increase the international competitiveness of the UK and London, though it did acknowledge that there is still room for improvement.

February 10, 2012

New British Land offices help boost Q3 financial performance

Filed under: News,Office Space London — Tags: , , — Office Space @ 6:00 am

British Land’s third quarter financial performance was helped by a raft of new commercial premises in the capital, according to the organisation.

In its Q3 results statement, the commercial office space development firm noted that its development programme for office space in London had secured £32 million in annual income from pre-letting more than 50 per cent of its speculative developments.  UBS took up a massive 700,000 square feet in pre-let space at 5 Broadgate, as well as Aon agreeing to 191,000 square feet at the Leadenhall Building, with the insurance firm wanting to base its new global headquarters at the central London offices.

A joint venture between Blackstone and British Land, the bespoke UBS building is set to be complete by 2014’s fourth quarter.  Demolition is currently underway at 4 and 6 Broadgate.

Chris Grigg, British Land’s chief executive, commented on the financial results, remarking that even though the lion’s share of its development programme is not to be completed for at least another 12 to 18 months, it is already 50 per cent pre-let.  The success British Land has enjoyed in the capital translates to an increase in pre-tax underlying profits by 6.3 per cent over 2010 figures to £68 million, and the valuation of the commercial property firm has also risen by 0.1 per cent over the 2011’s third quarter.

In related news, technology firms have found to have been pouring into London over the past 12 months, with the so-called Silicon Roundabout overflowing with start-ups to the point where tech companies have begun to spread out into the outlying regions of the capital.

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