2023-01-30-莱坊-London_Offices_Spotlight_2022_Q4_7页_249kb

London Market Overview Summary

Core Content

This report provides an overview of the London commercial real estate market, focusing on leasing and investment trends across key submarkets. The data is sourced by Knight Frank Research and includes statistics for the period from Q4 2021 to Q4 2022, with a breakdown of vacancy rates, prime headline rents, and market activity.

Key Themes

1. London Take-up Slightly Below Long-term Trend

   • Overall leasing activity in London has shown a slight decline compared to long-term averages, indicating a slower pace of market absorption.

2. West End Availability Falls for a Third Successive Quarter

   • The West End core submarket continues to experience reduced availability, with a vacancy rate of 5.3% in Q4 2022.

3. Lower Levels of Investment Transactions as Market Adjusts to Higher Interest Rates

   • Investment activity has decreased due to the impact of rising interest rates, leading to a drop in market turnover.

Submarket Prime Headline Rents and Vacancy Rates

*Rent free period on a 10-year lease

Leasing Market Trends

West End

• Take-up: 1.31 m sq ft in Q4 2022, slightly below the long-term average of 1.15 m sq ft.
• Availability: 5.13 m sq ft in Q4 2022, showing a -24.9% change from the previous year.
• Vacancy Rate: 5.6% in Q4 2022, with a -2.0% change over the last 12 months.
• Active Requirements: 1.43 m sq ft in Q4 2022, reflecting a -6.8% change from the previous quarter.

City & Southbank

• Take-up: 1.50 m sq ft in Q4 2022, with a 27.8% increase in the last 3 months.
• Availability: 12.72 m sq ft in Q4 2022, up by 30.2% over the last 12 months.
• Vacancy Rate: 9.5% in Q4 2022, with a 2.0% increase over the last 12 months.
• Active Requirements: 4.59 m sq ft in Q4 2022, showing a -9.0% change from the previous quarter.

Docklands & Stratford

• Take-up: 0.16 m sq ft in Q4 2022, with a -45.3% change in the last 3 months.
• Availability: 3.81 m sq ft in Q4 2022, up by 41.8% over the last 12 months.
• Vacancy Rate: 16.0% in Q4 2022, with a 4.6% increase over the last 12 months.
• Active Requirements: 0.15 m sq ft in Q4 2022, with a -76.5% change from the previous quarter.

Key Leasing Deals

West End

• The Earnshaw, 77-91 New Oxford Street: 140,044 sq ft, occupied by GlaxoSmithKline PLC (GSK), rent: £95.00
• 20 Manchester Square, W1U 3PZ: 81,281 sq ft, occupied by Lazards LLP, rent: £80.00
• N2, Victoria, 1 Bressenden Place: 25,589 sq ft, occupied by HPS Investment Partners LLC, rent: Confidential
• Air W1, 20 Air Street: 24,192 sq ft, occupied by Bregal Investments London Ltd, rent: Confidential
• The Kensington Building, 127 Kensington High Street: 22,931 sq ft, occupied by Luxottica, rent: Confidential

City & Southbank

• 2 Aldermanbury Square, EC2V 5DL: 321,000 sq ft, occupied by Clifford Chance LLP, rent: £80.00
• Blossom Yard + Studios, Blossom Street: 114,003 sq ft, occupied by Reed Smith LLP, rent: £80.00
• 5 Broadgate, EC2M 7LE: 104,108 sq ft, occupied by Grant Thornton LLP, rent: £69.50
• 99 Queen Victoria Street, EC4V 4EH: 88,126 sq ft, occupied by WeWork, rent: Confidential
• The Hallmark Building, 52-56 Leadenhall Street: 50,722 sq ft, occupied by Knotel Management UK Limited, rent: £55.00

Investment Market Trends

West End

• Turnover: £0.90 bn in Q4 2022, showing a -42.9% change from the previous year.
• Availability: £2.66 bn in Q4 2022, with a 161.3% increase over the last 12 months.
• Under Offer: £1.03 bn in Q4 2022, with a -64.1% change from the previous year.
• Yield: 3.75% in Q4 2022, up by 0.50% over the last 12 months.

Key Investment Deals

• Fenwick, 53/63 New Bond Street: £430.0 m, capital value: £4,296, purchaser: Lazari Investments Ltd
• 50 Broadway, SW1H 0BL: £110.0 m, capital value: £1,516, yield: 3.94%, purchaser: Private Investor (Middle Eastern)
• 6 Duke Street, SW1Y 6BN: £62.5 m, capital value: £1,783, yield: 4.28%, purchaser: Darin Partners Ltd
• Berkshire House, 168-173 High Holborn: £50.0 m, capital value: £892, yield: 5.51%, purchaser: Clivedale London Jesta Hotels
• Byron House, 7-9 St James' Street: £45.8 m, capital value: £1,264, yield: 5.38%, purchaser: Dao Estate Limited

Development Pipeline

• London Development Pipeline: Highlights the balance between completed, under construction, pre-let, and speculative developments.
• City & Southbank Development Pipeline: Indicates a shift in market dynamics with lower turnover and increased availability.
• Docklands & Stratford Development Pipeline: Shows a rise in availability and a decrease in take-up, with speculative developments playing a significant role.

Contacts

• Head of London Offices: Philip Hobley (philip.hobley@knightfrank.com, +442078611192)
• Chairman, London Offices: Angus Goswell (angus.goswell@knightfrank.com, +44 20 7861 5150)
• London Leasing: Dan Gaunt (dan.gaunt@knightfrank.com, +44 20 7861 1314), Ian McCarter (ian.mccarter@knightfrank.com, +442078611506), Abby Brown (abby.brown@knightfrank.com, +44 20 7861 1306)
• London Lease Advisory: Simon Austen (simon.austen@knightfrank.com, +44 20 7861 1341)
• London Development: Andrew Tyler (andrew.tyler@knightfrank.com, +44 20 7861 1319)
• London Capital Markets: Jamie Pope (jamie.pope@knightfrank.com, +44 20 3909 6814), Nick Braybrook (nick.braybrook@knightfrank.com, +442078611309), Anthony Barnard (anthony.barnard@knightfrank.com, +44 20 7861 1216), Oliver Sprackling (oliver.sprackling@knightfrank.com, +442038260661)
• London Tenant Representation: Richard Proctor (richard.proctor@knightfrank.com, +442078615159)
• Flexible Office Solutions: Amanda Lim (amanda.lim@knightfrank.com, +442038260661)
• London Research: Shabab Qadar (shabab.qadar@knightfrank.com, +442078611234)
• ESG Consulting: Jonathan Hale (jonathan.hale@knightfrank.com, +442078611181)

General Note

• This report is prepared by Knight Frank Research and acknowledges the assistance of London office teams.
• Data is sourced from LOD and Knight Frank.
• All data and analysis are for general information only and not to be relied upon for decision-making.

Technical Note

• All figures are based on sq ft.net.
• Take-up includes space let, pre-let, or acquired for occupation.
• Availability includes space available for immediate occupation and under construction.
• Rent free periods are on a 10-year lease.
• Investment figures include office-focused transactions of £1 m and above.