Savills Research UK Commercial West End Office Market Watch Vacancy rate falls further to 3.3% as top rent hits £120 per sq ft Q3 Q4 10 yr average 4 3 2 n The highest reported rent of 2014 was achieved in November, £120 per sq ft at 33 Davies Street, W1. Troy Asset Management took c. 6,000 sq ft. on the third floor. 2013 *2014 2011 2012 2010 2009 2008 2007 n Completions include 157,000 sq ft at The Adelphi, 63,000 sq ft of which, has been leased to NeueHouse. 2006 0 2005 1 2004 n Next month we will start to see a rise in Grade A and overall supply with approximately 584,000 sq ft of developments and refurbishment completions entering the supply pipeline. n The largest transaction to complete in November was 31,607 sq ft at 10 Bloomsbury Way, WC1 to Criteo. n As forecast, the vacancy rate has fallen further to 3.3%, this equates to 4.0m sq ft of supply. Grade A supply has been steadily declining over the course of 2014, it stood at 74% of total supply in January and now accounts for 69%. Q2 5 n Interestingly, tenant controlled space accounts for 21% of total supply, up on 11% at the beginning of the year. n Of the TMT companies to acquire space this year, Media & Entertainment companies have been the most active, accounting for 45%, followed by Internet Technology companies accounting for 29%. Q1 6 n Despite this take-up is 20% above long-term average levels and will exceed take-up in 2011 and 2012. We are currently tracking 635,000 sq ft of under offers. n The dominant business sector so far this year is the Technology, Media & Telecoms sector (TMT) accounting for 29% of take-up. This is significantly down on the TMT's sectors share last year of 37% but is ahead of the longterm average of 24%. Take-up 2003 n November take-up reached 244,188 sq ft, the second consecutive month in which take-up was below the long term monthly average of 288,300 sq ft. This slowdown has resulted in take-up for the first 11 months of 2014 reaching 3.6m sq ft, at the same point last year take-up had reached 3.8m sq ft. GRAPH 1 sq ft (million) Supply and demand snapshot December 2014 Source: Savills Research, *Q4 2014 data to end November GRAPH 2 Take-up by business sector Retail & Leisure 10% Unknown Banking 2% 6% Business & Consumer Services 16% Public Services 10% Property 2% Professional 4% TMT 29% Manufacturing & Industry 2% Insurance & Financial Services 13% Extraction & Utilities 6% Source: Savills Research TABLE 1 Key November stats Stats Monthly change Take-up 244,188 sq ft  Supply 4.0m sq ft  Vacancy Rate 3.3%  Top rent (psf) £120.00  2.3m sq ft  Demand Source: Savills Research savills.co.uk/research 01 Market Watch | West End offices Analysis close up TABLE 3 TABLE 2 Supply Take-up Month Year to date Sq ft Sq ft % change on previous year % change on average Total % Grade A % chg on prev mnth Vacancy rate (%) Nov-13 369,822 3,755,530 39% 28% 4,446,402 73% -5.1% 3.7% Dec-13 329,664 4,085,194 33% 22% 4,644,988 75% 4.5% 3.8% Jan-14 254,077 254,077 -75% -13% 4,438,999 74% -4.4% 3.7% Feb-14 265,389 519,466 -55% -3% 4,474,644 74% 0.8% 3.7% Mar-14 363,789 883,255 -38% 6% 4,622,003 73% 3.3% 3.8% Apr-14 386,685 1,269,940 -21% 24% 4,323,746 76% -6.5% 3.6% May-14 381,345 1,651,285 -7% 27% 4,175,057 74% -3.4% 3.5% Jun-14 326,527 1,977,812 -5% 18% 4,193,382 74% 0.4% 3.5% Jul-14 318,879 2,296,691 0% 22% 4,186,477 71% -0.2% 3.5% Aug-14 445,119 2,741,810 2% 30% 4,189,683 71% 0.1% 3.5% Sep-14 383,167 3,124,977 -2% 25% 4,053,774 68% -3.2% 3.4% Oct-14 224,565 3,349,542 -1% 21% 4,075,206 68% 0.5% 3.4% Nov-14 244,188 3,593,730 -4% 20% 4,023,249 69% -1.3% 3.3% TABLE 4 TABLE 5 Rents Demand & Under Offers Average £ per sq ft Top Grade A Grade B WE Potential demand (sq ft) Prime* Rent free** 717,000 WE Active demand (sq ft) 1,563,500 2,280,500 Nov-13 £75.00 £64.32 £39.40 - - WE Total demand (sq ft) Dec-13 £110.00 £67.11 £45.14 £99.85 8 % change on 12 month ave Jan-14 £115.00 £57.01 £41.34 - - Total under offer (sq ft) 634,652 Feb-14 £95.00 £67.31 £42.50 - - Under offer this month (sq ft) 42,991 Mar-14 £115.00 £68.79 £33.88 £99.13 8 % change on ave 6% Apr-14 £100.00 £64.52 £37.86 - - Landlord controlled supply 53% May-14 £115.00 £58.30 £43.64 - - Tenant controlled supply 21% Jun-14 £110.00 £84.31 £34.83 £103.33 9 Jul-14 £90.00 £54.59 £30.00 - - Aug-14 £107.50 £74.81 £37.50 - - Sep-14 £107.50 £73.27 £35.99 £98.25 9 Oct-14 £92.00 £66.88 £45.10 - - Nov-14 £120.00 £63.95 £33.10 - - -23% TABLE 6 Development pipeline Sq ft Refurb Devs Total % Pre-let 2014 478,300 1,294,396 1,772,696 61% 2015 254,800 1,907,954 2,162,754 28% 2016 370,000 2,707,421 3,077,421 7% 2017 0 1,767,000 1,767,000 3% Total 1,103,100 7,676,771 8,779,871 Completions due in the next 6 months are included in the supply figures 02 22% *Average prime rents for preceeding 3 months ** Average rent free on leases of 5 years for preceeding 3 months Market Watch | West End offices TABLE 7 Significant November transactions Sq ft Grade Achieved rent Tenant Lessor pt 7, 8, 9 31,607 A Confidential Criteo London & Regional 5 Merchant Square, W2 9 22,891 A £58.00 NCR European Land & Property 10 Portman Square, W1 2 18,535 A £90.00 Ontario Teachers Pension Plan British Land Medius, 2 Sheraton Street, W1 2 12,200 A £72.50 WeWork Deerbrook Group 14 Curzon Street, W1 LG-5 11,658 A Confidential London Executive Offices Ignis Asset Management 25 Argyll Street, W1 5 9,454 A £60.00 Tyche Consulting Stenham 5 Merchant Square, W2 pt 10 9,000 A £56.50 Helios Towers Africa European Land & Property 33 Davies Street, W1 3 6,007 A £120.00 Troy Asset Management Grosvenor Pegasus House, 37-43 Sackville Street, W1 1 5,066 A £76.50 Hansteen Holdings Aviva Investors Berkeley Square House, Berkeley Square, W1 4 suite 3 3,165 A £69.00 Lapithus Servicing Eastdil Secured Address Floor/s 10 Bloomsbury Way, WC1 TABLE 8 Significant supply Address Floor/s Sq ft Grade Quoting rent Park House, Park Street, W1 2-5, 7, 8 143,010 A £97.50 QNB Telstar House, 2 Eastbourne Terrace, W2 1-6 106,812 A £47.19 Rio Tinto 10 Bloomsbury Way, WC1 1-6 105,642 A £60's 62 Buckingham Gate, SW1 3-pt6 83,805 A £70.00 Land Securities 2 Fitzroy Place, Mortimer Street, W1 Bldg 81,233 A NQ Aviva / Exemplar 8 St James's Square, SW1 Bldg 67,500 A NQ Green Property Ampersand, 180 Wardour Street, W1 1, 2, 3, 4 64,660 A NQ Resolution / Peterson Group 91 Wimpole Street, W1 Bldg 57,000 A NQ Lazari Air W1, 20 Air Street, W1 4, 5 50,980 A NQ Telefonica 2 Kingdom Street, W2 7, 8 50,000 A £57.50 Oxford House, 76 Oxford Street, W1 1-6 44,329 B NQ 2 Stephen Street, W1* 1-4 42,840 A £75.00 125 Shaftesbury Avenue, WC2 1, 2 41,792 A NQ 80 Strand. WC2 5 40,090 A £65.00 Walmar House, Regent Street, W1 B-6 38,361 A NQ 03 Lessor U/O London & Regional Astra Zeneca y Great Portland Estates Derwent London Almacantar Pearson y Great Portland Estates *4th floor, 6,340 sq ft under offer. Market Watch | West End offices MAP 1 Savills West End office submarkets Please contact us for further information Tracy Collins Director 0207 409 8958 [email protected] Liell Francklin Director 0207 409 8712 [email protected] Nick Pearce Associate Director 0207 409 8740 [email protected] Freddie Corlett Associate Director 0207 409 8764 [email protected] Tim Wadhams Director 0207 409 8803 [email protected] Brian Allen Director 0207 409 8778 [email protected] Mark Gilbart-Smith Director 0207 409 5925 [email protected] Andrew Wedderspoon Kuldeep Lalli Associate Research 0207 409 8706 0207 016 3832 [email protected] [email protected] Savills plc Savills is a leading global real estate service provider listed on the London Stock Exchange. 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