Guide to Rents, Rent Free Periods & Market Trends

RESEARCH

Guide to rents, rent free periods & market trends Q2 2017 ADVISOR’S HOW IS THE LONDON OFFICE MARKET FARING others having made post-EU referendum GRADES OF OFFICE ACCOMMODATION decisions to expand their operations in For marketing purposes office accommodation is generally SINCE THE REFERENDUM ON EU MEMBERSHIP? London. The technology sector continues categorised into Grades which are defined as follows: MUCH AS THE CARTER JONAS RESEARCH TEAM to plug the gap in the demand for office HAD PREDICTED WHEN THE REFERENDUM RESULT space left by the banking and financial Grade A services sector, post 2008/09 credit crisis, New or newly refurbished office space where the building WAS ANNOUNCED, THE MARKET HAS NOT GONE particularly in the City of London, where the

TENANT specification includes suspended ceilings and fully accessible raised INTO FREE FALL BUT HAS, INSTEAD, ENTERED occupier profile is gradually shifting away floors for data/telecoms cable management, passenger lift and air A PERIOD OF READJUSTMENT, REFLECTING from financial services. conditioning facilities. A LOWER LEVEL OF DEMAND, WITH RENTS As recently highlighted by The Coalition For A Digital Economy, if the UK is to continue Grade B DECLINING AND RENT FREE PERIODS INCREASING. to dominate the European technology scene Office space that may only incorporate under floor or perimeter it is essential that post-Brexit immigration and trunking for data/telecoms cable management, rather than fully visa regulations are ‘gig-economy friendly’ accessible raised floors, and/or air cooling facilities, instead of an Vacancy levels are, in parallel, gradually RENT FREE PERIODS to ensure that UK based firms can recruit the air conditioning system that dehumidifies, filters and draws fresh air increasing as new office developments Rent free periods across all the London office brightest and the best tech entrepreneurs and into the building. Grade B space also tends to be of a generally lower reach completion. Supply has been further sub-markets have continued to increase by, developers from a global talent pool. quality building specification. boosted by increased vacancy in second typically, 1 - 2 months for a 10 year lease since hand stock as some tenants implement agile January this year. In many parts of London it EMERGING MARKETS & THE “Refitted” working and hot desking policies to reduce is now possible to secure rent free periods of ELIZABETH LINE/CROSSRAIL Office space that is ‘as new’, having been completely refitted their property footprint and trade up into new, 10-12 months on a five year lease and 20-24 Regeneration initiatives, including transport throughout, to include new fixtures and fittings to the common parts more efficient, buildings. months on a ten year lease. infrastructure improvements, in areas including and reception area, new building services – including air conditioning White City, Battersea, Greenwich Peninsula, and passenger lift facilities, electrical, plumbing and lighting systems, RENTS A MORE ‘TENANT-FRIENDLY’ Wood Wharf in Docklands, Royal Albert Docks and new raised floors, suspended ceilings and sanitary ware. The Landlords of buildings that have been on the MARKET at Silvertown, Old Oak Common and Wembley specification of works will comply with the latest health and safety market for much over six months, and where While the economic uncertainty that Brexit are creating new business districts, with lower legislation and may also include re-cladding the exterior of the building. there is little tenant interest, are beginning has brought is unwelcome it has, nevertheless, rent and business rates profiles, to rival the to lower their advertised rents, typically by created opportunities for tenants to take City, Midtown and West End . “Refurbished” £2.00-£5.00 per sq ft per annum, and in advantage of a weaker office market. The Elizabeth Line/Crossrail is scheduled to Space is defined as office accommodation where the landlord some cases by as much as £8.00 per sq ft per Those tenants with lease expiries or break become operational by December 2018 and has redecorated and recarpeted the available office space (but annum – a trend that is beginning to gather options should be able to secure far better will put further pressure on the landlords of not necessarily the common parts) and overhauled, but not pace, in particular, in the City office market. rent and rent free period letting packages properties located in the established central renewed, the building services, such as the air conditioning and Contrast with the West End sub-market than could have been negotiated a year ago business districts to offer competitive letting passenger lift facilities. where rents on some super prime buildings as landlords become increasingly anxious not packages as the number of options available in Mayfair and St James’s have been marked to lose their existing tenants to rivals and as to footloose tenants increases. Some will down by up to £15.00 per sq ft per annum as landlords with space to let compete more inevitably consider a relocation of all or part occupiers become increasingly reluctant to aggressively against one another to secure of their operations to lower cost, Crossrail- Table 1 pay rents over the psychologically significant new tenants. linked, Thames Valley locations where rents Typical Current and Forecast Rents For New and Refitted Grade A Space £100 per sq ft per annum. Weaker market conditions are also and business rates costs for new and refitted Source: Carter Jonas Research The discounts that can be negotiated on encouraging landlords to offer tenants greater Grade A space, in areas such as Maidenhead advertised rents have continued to widen lease flexibility – shorter leases and more and Reading, are typically £32.50-£37.50 per £ per sq ft per annum and are now typically 3 - 7.5% in contrast to frequent break options. It is also proving sq ft per annum and £7.00-£9.00 per sq ft per discounts of 2.5 - 5% at the beginning of easier to secure more ‘tenant friendly’ lease annum respectively. Location Q2 2017 Q2 2018 Q2 2019 the year. features such as service charge caps, reduced Mayfair/St James's - Prime £115.00 £107.50 £102.50 There are, however, some isolated or no rent deposits and less restrictive lease WHAT WILL HAPPEN TO RENTS Marylebone £88.50 £85.00 £82.50 cases where the upper floors of newly assignment/transfer, sub-letting and break OVER THE NEXT TWO YEARS? constructed buildings continue to set new option pre-conditions. We anticipate that rents in the London office Soho £90.00 £87.50 £85.00 rent benchmarks, including a reported £110.00 market will decline by 4-6% during 2017 and Fitzrovia £80.00 £77.50 £75.00 per sq ft per annum in Soho at 30 Broadwick THE TECHNOLOGY SECTOR by 10-12% for the period up to Q2 2019 – see Victoria £77.50 £73.50 £70.00 Street, over £90.00 per sq ft at The Post The digital economy continues to be an Table 1. We forecast that the greatest falls will Paddington £65.00 £62.50 £60.00 Building, Museum Street in Bloomsbury, and important driver of demand for London office be in the City, Docklands and Victoria – areas Holborn £67.50 £65.00 £62.50 circa £190.00 per sq ft is understood to have space with the likes of Expedia, Amazon, where large scale new developments have, or been agreed at 5 St James’s Square. Apple, Google, Facebook, Snap Group and are shortly to reach completion, and which are King's Cross £82.50 £80.00 £78.50 reliant on large scale, capital intensive, office Covent Garden £80.00 £77.50 £75.00 relocations, typically in excess of 20,000 sq ft. City - Prime £67.50 £65.00 £60.00 Clerkenwell & Shoreditch £65.00 £62.50 £58.50 REASONS TO BE CHEERFUL! There is, therefore, good reason for tenants to Southwark £67.50 £65.00 £62.50 be cheerful – increased choice, falling rents, Spitalfields £67.50 £65.00 £62.50 Michael Pain longer rent free periods and more tenant Aldgate East £55.00 £52.50 £50.00 Head of Tenant Advisory Team friendly lease terms – trends that are likely to Hammersmith £57.50 £53.50 £50.00 020 7016 0722 gather pace this year and continue for at least [email protected] the next 18-24 months until the terms of the Canary Wharf £47.50 £45.00 £42.50 UK’s exit from the EU are known. Stratford £47.50 £42.50 £42.50 KEY WEST END LETTINGS: KEY WEST W1 Street, 80 Charlotte Arup 133,600 sq ft to SW1 Market, James’s 2 St 1 Formula sq ft to 21,000 W1 Street, 7 Clarges Capula sq ft to 23,700 W1 Avenue, 77 Shaftesbury Snap Inc. sq ft to 20,000 Place, North, Bressenden Nova SW1 Child & Child sq ft to 22,000 SW1 Street, LSQ, 30 Panton Hearst sq ft to 70,000 The loss of office stock to higher stock of office loss The redevelopment residential value of east the migration has catalysed to End businesses West established the City and City fringe, Midtown, money for value of better in search the Yard, Scotland New premises. in HQ Police Metropolitan former – is one such example Westminster, is being redeveloped the property luxury apartments. for • WEST END WEST Over the last few years the West the West years few the last Over a reputation End has developed sub-markets being one of the for periods. free rent with the shortest the EU referendum Following and the subsequent June, last rent demand, in office weakening of the periods in some areas free a point to extended End have West on a par almost now are they where where market with the City office 10-12 typically periods are free rent year lease and 22- a five months for lease (see year a ten 25 months for map). cost office of vacancy pattern current The and Paddington in the Victoria or new by is characterised districts buildings with floor plates refitted sq of 10,000 typically in excess of other areas to ft – in contrast End such as Marylebone, the West and James’s St Mayfair, Fitzrovia, to tend buildings office Soho where be of a smaller scale and the floor usually sub-5,000 more are plates sq ft. both are and Paddington Victoria and international on national reliant relocation with sizeable companies requirements budgets, with office sq of 10,000 typically in excess Brexit staff. 100 or more ft for demand has weakened uncertainty market, of the office in this sector sq ft so than the sub-5,000 more rents that and it is likely market, periods free will decline and rent and so in Paddington more extend of the than other areas Victoria End. West • • • CITY FRINGE EAST CITY FRINGE KEY CITY FRINGE EAST LETTINGS: KEY CITY FRINGE EAST EC2 Folgate, Norton Principal Place, Amazon sq ft to 89,300 of option space) (take-up Rents for new and refitted Grade A space in A space Grade refitted and new for Rents £50.00- between City fringe vary the east in space per sq ft per annum for £55.00 £62.50-£70.00 to district East the Aldgate Spitalfields, located per sq ft per annum at the City core. closer to in the floor space supply of vacant The than in the north lower City fringe is east although under-supply issues City fringe, with the being addressed slowly are forming buildings of the five refurbishment Hill, totalling Tower at Mint Court Royal at scheduled for sq ft, which are 600,000 during H1, 2020. completion comprise will Building, which Butterfly The in Q1, sq ft when complete 335,000 circa of the on the site be developed is to 2021, Portsoken Chambers Building at Lloyds choice tenant and will further boost Street – a pre- fringe market City in the east kick-start let on part is being sought to of the development. construction • • • KEY CITY FRINGE NORTH LETTINGS: EC1 John St, St Angel Building, 403 The Expedia 136,650 sq ft to EC1 Square, 25 Charterhouse Anomaly 12,200 sq ft to Regeneration initiatives, the construction the construction initiatives, Regeneration of promotion buildings and the of new of excellence as a global centre the area factors are sector the technology for the cost erode to conspired have that City fringe. of the north advantages are space A office Grade new for Rents per sq ft typically £62.50 - £67.50 now – per annum in Clerkenwell/Shoreditch as Holborn such on a par with locations of with rents and the City - contrast per sq ft per annum £45.00-£55.00 possible, It is quite ago. years three the north City fringe that therefore, better central, more to will lose ground locations. City and Midtown connected, has sub-market north City fringe The affected adversely been one of the most revaluation rates business the 2017 by typically increased having with rates over £14.50 per sq ft per annum to from the per sq ft per annum where £20.00 transitional is not subject to property which box), Rates Business (see relief as a further undermines the location centrally more to alternative cost lower districts. business located 25 completed Helical Bar’s recently 38,500 comprising Square, Charterhouse of much needed example sq ft, is a rare in Smithfield – an area development new by is constrained development where planning policies. area conservation CITY FRINGE NORTH CITY FRINGE • • • • . CITY Recognising the importance of the technology of the technology the importance Recognising engine important as an increasingly sector the City of London growth, economic for industry with ‘FinTech’ is working Corporation a fintech develop to Finance, Innovate body, innovative attract to Broadgate hub at start-up Mile. to the Square firms technology City office rents have typically declined by typically declined have rents City office per sq ft per annum since £2.50-£5.00 circa demand, post-EU weaker reflecting Q2, 2016, over forecast are Similar falls referendum. 1. 12 months - see Table the next Notwithstanding the scale of new City office City office the scale of new Notwithstanding under construction, currently developments within completion for scheduled and which are months, a significant number 12-18 the next including been part pre-let already have comprising 100 Bishopsgate, Brookfield’s of in 2018, completion sq ft, due for 944,000 has been pre-let. 70% which over The dominance of the banking and insurance of the banking and insurance dominance The to continues market in the City office sectors higher from migrate entrants as new weaken locations. End and Midtown West cost include of this trend examples Recent Bloomsbury to from relocation Deliveroo’s EC4 Bridge House, Cannon sq ft at 50,000 management firm, Rathbone’s, and wealth 8 ft at sq 75,000 to Mayfair from move EC2. Finsbury Circus, It has been widely reported that the banking that It has been widely reported relocate plans to is making contingency sector EU functions to banking Euro-dependant Paris and such as Frankfurt, centres financial of the UK government Dublin in anticipation the chief However, Brexit. a “hard” agreeing and JP Morgan of banks including executives publicly stated recently Goldman Sachs have drift to likely while some City jobs are that a mass lead to to is unlikely Brexit the EU, to jobs. of banking exodus THAT THAT SUB-MARKETS VARIOUS THE MARKET OFFICE THE LONDON FORM SUPPLY, DIFFERENT VERY HAVE EACH FREE RENT RENT AND DEMAND, PERIOD DYNAMICS. • • • • •

SUB-MARKET KEY CITY LETTINGS: EC3 100 Bishopsgate, 256,500 sq ft to Bruckhaus Freshfields Deringer EC4 20 Old Bailey, Withers sq ft to 60,000 EC2 Angel Court, Bupa & sq ft to 56,000 British sq ft to 25,000 Association Bankers Monument Building, 11 Monument St, EC3 11 Monument St, M7 Real 22,200 sq ft to Estate DOCKLANDS & MIDTOWN SOUTH BANK STRATFORD THE 2017 BUSINESS RATES REVALUATION

The 2017 business rates revaluation, which came into effect from 1 April this year, has been an unwelcome additional • Regeneration initiatives, transport • The occupier mix in Covent • The South Bank office market is characterised • Docklands (excluding Canary • Westfield has also recently gained cost to most commercial property infrastructure improvements and Garden continues to change – by low vacancy levels – a consequence Wharf) and Stratford are the planning consent for two office occupiers in London. The areas the development of new Grade moving from one dominated of Southwark and Lambeth Council’s two remaining peripheral central buildings totalling 846,233 sq ft that have seen some of the A buildings in King’s Cross and by the media and creative planning policies that have encouraged the London office sub-markets that on a site adjacent to its Stratford largest increases in business rates Bloomsbury have resulted in new industries that have been redevelopment of commercial properties for continue to offer refurbished Grade shopping centre. for Grade A office space include rent benchmarks of £80.00 - priced out by an influx of higher value residential use. A office space at rents below the City of London, up by an £85.00 per sq ft per annum being financial and professional £40.00 • Historically low vacancy levels have average of 25% and Shoreditch, set in both of these Midtown services firms. Many of these per sq ft per annum. KEY DOCKLANDS LETTING: underpinned rents in districts such as London King’s Cross and Spitalfields all districts. Contrast with rents of firms have migrated from • The Docklands office market is split up by over 35% for properties Bridge and Southwark. Compared with other Columbus Building, Westferry £60.00 - £65.00 per sq ft per higher rental and business London office sub-markets there has been between the prime (Canary Wharf) Circus, E14 not benefitting from transitional annum for Grade A space at both rates cost locations in the a limited decline in rents, while the rents for and secondary (Crossharbour) 13,600 sq ft to Motive Partners relief. However, in some areas, locations a couple of years ago. West End. space with river views have remained broadly markets. Rents for refitted Canary such as Canary Wharf and • Bloomsbury is the one area of static since Q2, 2016. Wharf office space are typically Mayfair, business rates costs have Central London that has bucked £42.50-£50.00 per sq ft per annum remained broadly static. KEY MIDTOWN LETTINGS: • The Shard has set new rent benchmarks for the trend in the decline in rents. in contrast to £32.50-£38.50 the area with rents for upper floors now well WEST LONDON Lettings at two new office The Post Building, 21-31 per sq ft per annum for refitted New Oxford Street, WC1 established above £90.00 per sq ft per annum, Grade A space located in the developments – The Avenue, off • The redevelopment of the BBC TV SUBSTANTIALLY ABOVE 100,000 sq ft to McKinsey reflecting the building’s iconic status. Crossharbour district. The variation Tottenham Court Road and The Centre campus, and neighbouring INFLATION RATES in rents reflects both the age and Post Building at Museum Street, 1 New Oxford Street, WC1 • Waterloo has, for over a decade, been starved sites, at White City is transforming INCREASES IN SOME have both set new rent benchmarks 60,000 sq ft to H&M of much needed Grade A office space. This the quality of the office stock and the area in to a new, vibrant business AREAS OF LONDON ARE for the area since the beginning issue is gradually being addressed with the accessibility to public transport. district to rival the West End and, LIKELY TO FURTHER The Adelphi, John Adam of the year – rents of £85.00 per development of No. 2 Southbank Place , which • The supply of new and refitted not least, Hammersmith. The scheme DEPRESS RENTS IN Street, WC2 incorporates residential, leisure and THOSE SUB-MARKETS sq ft per annum and £90.00 per 35,000 sq ft to PetroChina & will comprise 297,500 sq ft at the former Shell Grade A office accommodation sq ft per annum respectively have 26,800 sq ft to Conde Nast Centre, due for completion in Q3, 2018. in Stratford that is immediately restaurant uses and up to 940,000 sq reportedly been achieved. Publications available is limited to Here East, ft of office space in five buildings with The office cost map overleaf • The long awaited redevelopment of Elizabeth the former Olympic Press and phase one now complete offering circa provides a summary of the typical • Because business rates are based House at York Road, adjacent to Waterloo Broadcast centre. However, supply 290,000 sq ft. rent, business rates and service on the rental value of commercial Station, continues. The site has recently been is set to increase on completion charge costs for each London properties, areas that have purchased by developer HB Reavis and has • Tenant choice of Grade A space in of the FCA’s building at the office sub-market. witnessed high levels of rental planning consent for a 945,000 sq ft mixed use Hammersmith has been boosted International Quarter in April While the Government has growth in recent years will be more office, residential and retail scheme, of which by the recent completion of Kier 2018, where circa 75,500 sq ft is introduced a transitional relief adversely affected by the 2017 c. 750,000 sq ft will comprise offices. The Group’s 58,100 sq ft Kings House available to let. capping mechanism to phase in business rates revaluation. King’s timetable for development of the site has yet to redevelopment at Hammersmith Road. business rates increases, the caps Cross, in particular, has witnessed a be announced. • The development of Crossrail have been set at 42% for 2017/18 significant increase in business rates stations at Canary Wharf and and 32% for 2018/19 which afford costs rising from £22.00 per sq ft Stratford is likely to boost demand KEY WEST LONDON LETTING: little comfort for occupiers facing per annum to, typically, £31.00 per for office space in both sub- 12 Hammersmith Grove, W6 large increases in their rates bills. sq ft per annum for properties that markets when the Elizabeth Line 29,100 sq ft to Medidata There is a right to appeal are not subject to transitional relief. becomes operational at the end of the new 2017 business rates 2018. Journey times from the West assessment if an occupier End, Midtown and City business feels that it is incorrect. More districts will be reduced to less information is available from than 15 minutes. the Carter Jonas Business Rates Team. CITY FRINGE NORTH TYPICAL COSTS FOR NEW/REFITTED MID-RISE £97.00 Rent £65.00 GRADE A OFFICE SPACE OVER 5,000 SQ FT Business Rates £21.00 Service Charge £11.00 CITY FRINGE EAST Total Occupancy Cost £97.00 Q2 2017 SPITALFIELDS ALDGATE EAST Typical Rent Free Periods Costs = £ per sq ft per annum 5 year lease 8-12 £100.50 £84.00 Rent Free Periods = Months 10 year lease 18-24 Rent £67.50 Rent £55.00 Business rates cost estimates include the Crossrail levy but Business Rates £23.00 Business Rates £19.00 take no account of any transitional relief that may be available Service Charge £10.00HACKNEYService Charge £10.00 Total Occupancy Cost £100.50 Total Occupancy Cost £84.00 STRATFORD

MIDTOWN Typical Rent Free Periods Typical Rent Free Periods 5 year lease 10-12 5 year lease 10-12 KING’S CROSS HOLBORN BLOOMSBURY 10 year lease 22-24 10 year lease 22-24 £123.50 £104.50 £122.50 ISLINGTON Rent £82.50 Rent £67.50 Rent £82.50 Business Rates £31.00 Business Rates £27.00 Business Rates £30.00 Service Charge £10.00 Service Charge £10.00 Service Charge £10.00 BOW Total Occupancy Cost £123.50 Total Occupancy Cost £104.50 Total Occupancy Cost £122.50 STRATFORD KING’S CROSS Typical Rent Free Periods Typical Rent Free Periods Typical Rent Free Periods £69.00 5 year lease 8-11 5 year lease 9-12 5 year lease 9-12 Rent £47.50 10 year lease 18-22 10 year lease 20-24 10 year lease 20-24 SHOREDITCH Business Rates £12.00 EUSTON Service Charge £9.50 COVENT GARDEN Total Occupancy Cost £69.00 CLERKENWELL £121.00 Typical Rent Free Periods BLOOMSBURY 5 year lease 10-13 Rent £80.00 10 year lease 21-25 Business Rates £31.00 FITZROVIA Service Charge £10.00 SPITALFIELDS Total Occupancy Cost £121.00 MARYLEBONE

Typical Rent Free Periods PADDINGTON HOLBORN 5 year lease 8-11 ALDGATE POPLAR 10 year lease 17-22 CITY OF EAST SOHO LONDON COVENT GARDEN MAYFAIR

SOUTHWARK

WEST END ST JAMES’S CANARY WHARF MAYFAIR & ST JAMES’S VICTORIA MARYLEBONE LONDON BRIDGE £177.00 £121.50 £137.50 WATERLOO Rent £115.00 Rent £77.50 Rent £88.50 CROSSHARBOUR Business Rates £50.00 Business Rates £33.00 Business Rates £39.00 Service Charge £12.00 Service Charge £11.00 Service Charge £10.00 Total Occupancy Cost £177.00 Total Occupancy Cost £121.50 Total Occupancy Cost £137.50 CITY Typical Rent Free Periods Typical Rent Free Periods Typical Rent Free Periods CITY PRIME CITY SECONDARY 5 year lease 9-12 5 year lease 9-12 5 year lease 9-12 10 year lease 18-24 10 year lease 20-24 10 year lease 20-24 VICTORIA £104.50 £97.00 Rent £67.50 Rent £65.00 FITZROVIA PADDINGTON SOHO Business Rates £27.00 Business Rates £22.00 Service Charge £10.00 Service Charge £10.00 £124.50 £100.25 £140.00CHELSEA Total Occupancy Cost £104.50 Total Occupancy Cost £97.00 Rent £80.00 Rent £65.00 Rent £90.00 Business Rates £33.50 Business Rates £24.25 Business Rates £39.00 Typical Rent Free Periods Typical Rent Free Periods Service Charge £11.00 Service Charge £11.00 Service Charge £11.00 5 year lease 10-12 5 year lease 10-12 Total Occupancy Cost £124.50 Total Occupancy Cost £100.25 Total Occupancy Cost £140.00 10 year lease 22-25 10 year lease 22-25

GREENWICH Typical Rent Free Periods Typical Rent Free Periods Typical Rent Free Periods DOCKLANDS 5 year lease 9-12 5 year lease 9-12 5 year lease 8-11 CANARY WHARF CROSSHARBOUR 10 year lease 20-24 10 year lease 20-24 10 year lease 17-22 SOUTH BANK £78.05 £60.50 £100.25 Rent £47.50 Rent £37.50 Rent £67.50 Business Rates £16.25 Business Rates £12.00 BATTERSEA Business Rates £22.75 Service Charge £14.30 Service Charge £11.00 WEST LONDON Service Charge £10.00 Total Occupancy Cost £78.05 Total Occupancy Cost £60.50

Total Occupancy Cost £100.25 HAMMERSMITH Typical Rent Free Periods Typical Rent Free Periods SUBMARKETS CROSSRAIL LINE Typical Rent Free Periods 5 year lease 11-14 5 year lease 11-14 West End FULHAM £87.00 5 year lease 8-11 10 year lease 23-26 10 year lease 23-26 Rent £57.50 Midtown 10 year lease 18-22 Business Rates £20.50 City Service Charge £9.00 Total Occupancy Cost £87.00 City Fringe North READING HEATHROW CLAPHAM City Fringe East Typical Rent Free Periods South Bank 5 year lease 9-12 10 year lease 20-24 Docklands & Stratford PUTNEY THE TENANT ADVISORY TEAM 38 OFFICES ACROSS THE COUNTRY, Our tenant representation services include: INCLUDING 12 IN • Office search and relocation management CENTRAL LONDON • Relocation budgeting and planning COMMERCIAL OFFICES • Lease and rent review negotiation • London • Bath • Repairs/dilapidations cost assessment • Cambridge and negotiation • Leeds • Building, air conditioning and passenger • Oxford lift surveys • Winchester • Business rates analysis and appeal • Service charge audit

For more data on the Central London office market, office availability, rents and rent free periods and information on budgeting and planning for a lease renewal, rent review or office relocation please contact one of the team.

One Chapel Place, London W1G 0BG carterjonas.co.uk/officesearch

OUR EXPERIENCE KEY CONTACTS Lease negotiations and relocations 10,000 sq ft+ Michael Pain Partner, Head of Tenant Advisory 020 7016 0722 UK Payments Administration [email protected] 43,000sq ft 2 Thomas More Square, E1 Jeremy Gidman Partner, Head of Investment

Frank Hirth 020 7016 0727 236 Gray’s Inn Road, WC1 37,000 sq ft [email protected]

Warner Bros/Shed Media Greg Carter Partner 28,000sq ft 85 Grays Inn Road, WC1 020 7518 3303 [email protected] Nursing & Midwifery Council 23,000sq ft Two Stratford Place, E20 Ed Caines Associate Partner 020 7016 0724 Hackett Limited [email protected] 17,500sq ft The Clove Building, SE1 Luke Wild Associate Partner Circle Housing 020 7016 0725 16,000sq ft Two Pancras Square, N1 [email protected]

Hitachi Rail Europe Tom Forman Associate sq ft 40 Holborn Viaduct, EC1 020 7016 0736 15,000 [email protected]

Salamanca Group 11,000sq ft 50 Berkeley Street, W1

© Carter Jonas 2017. The information given in this publication is believed to be correct at the time of going to press. We do not however accept any liability for any decisions taken following this report. We recommend that professional advice is taken. RESEARCH THE LONDON OFFICE MARKET

RENT & RENT FREE PERIOD GUIDE Q2 2017

LANDLORD’S ADVERTISED Table 1 Source: Carter Jonas Research RENTS & RENT DISCOUNTS London Office Market – Typical Advertised Rents – Q2 2017 (space over 5,000 sq ft) Table 1 illustrates landlord’s typical advertised rents as at Q2, 2017. The Location Grade A Grade B bargaining power in lease negotiations UF: Upper Floors New/Refitted Refurbished Refurbished is moving towards tenants post Brexit City vote as demand for London office space weakens. In many cases it is possible to Prime – Insurance District £62.50 - £72.50 £52.50 - £62.50 £42.50 - £50.00 negotiate deeper discounts on landlord’s (UF = £85.00 - £92.50) (UF = £75.00 - £85.00) advertised rents, typically of 3 – 7%, Secondary - Blackfriars, Moorgate £59.50 - £70.00 £47.50 - £57.50 £40.00 - £47.50 compared with a year ago. (UF = £77.50 - £87.50) (UF = £65.00 - £72.50)

The variation in rents is a consequence of City Fringe the different supply and demand dynamics of each sub-market. The advertised rents North/North West – £62.50 – £70.00 £55.00 – £62.50 £42.50 - £57.50 Clerkenwell, Shoreditch on some Grade B warehouse-style office space in locations such as Farringdon East – Spitalfields £62.50 - £70.00 £55.00 - £60.00 £40.00 - £47.50 and Clerkenwell will typically be higher East - Aldgate East £50.00 - £55.00 £42.50 - £47.50 £37.50 - £40.00 than rents for refurbished ‘corporate’- South Bank style Grade A space in the same location, reflecting the rental premium that creative Waterloo, Southwark, London Bridge £65.00 - £70.00 £55.00 - £62.50 £42.50 - £52.50 and media firms place on such space. (UF= £75.00 - £92.50)

Floors with terraces will usually East London command a rental premium of 5-10% above those set out in the table and the Docklands Prime – Canary Wharf £45.00 - £50.00 £42.50 - £45.00 £32.50 - £37.50 upper floors of buildings that provide Docklands Secondary - Crossharbour £32.50 - £38.50 £25.00 - £31.50 £20.00 - £25.00 panoramic views of London will typically Stratford £37.50 - £47.50 £27.50 - £35.00 £19.50 - £25.00 attract a rental premium of 20-30% above those illustrated in the table. West End

RENT FREE PERIODS Central – Mayfair, St James’s (Prime) £110.00 - £125.00 £85.00 - £105.00 £65.00 - £75.00 Landlords are offering longer rent free Central – Mayfair, St James’s £90.00 - £105.00 £75.00 - £87.50 £60.00 - £70.00 periods than could have been negotiated (Secondary) before the EU Referendum – typically North – Euston £67.50 - £75.00 £52.50 - £65.00 £40.00 - £47.50 an additional 1-3 months on leases of up North East – Fitzrovia £75.00 - £85.00 £62.50 - £72.50 £50.00 - £60.00 to 5 years and 2-4 months on leases of up to 10 years. Table 2 illustrates the North West - Marylebone £80.00 - £90.00 £67.50 - £77.50 £45.00 - £57.50 typical rent free periods that can South – Victoria, Westminster £72.50 - £80.00 £57.50 - £70.00 £47.50 - £57.50 currently be negotiated. (UF = £82.50 - £85.00) NEGOTIATING A LEASE South West - Knightsbridge £80.00 - £95.00 £70.00 - £77.50 £52.50 - £65.00 – THE KEY ISSUES East – Soho, Regent Street £77.50 - £92.50 £65.00 - £75.00 £52.50 - £65.00 While rent discounts and rent free periods West – Paddington £60.00 - £68.50 £49.50 - £59.50 £40.00 - £47.50 will form the key components of all lease (UF = £70.00 - £72.50) negotiations it is also important to ‘future- Midtown proof’ the lease by building in flexibility and mechanisms to limit future property North - King’s Cross £75.00 - £85.00 £52.50 - £75.00 £45.00 - £55.00 costs, by negotiating the following: South - Covent Garden £72.50 - £85.00 £55.00 - £70.00 £45.00 - £55.00 • a service charge cap (UF = £87.50 - £92.50) • ‘tenant-friendly’ rent review East - Holborn £62.50 - £70.00 £52.50 - £62.50 £42.50 - £49.50 valuation provisions • a limitation on the scope of the tenant’s West - Bloomsbury £67.50 - £85.00 £55.00 - £65.00 £45.00 - £50.00

repairing and removal of fixtures and South West London fittings obligations – to minimise future exit costs Chelsea £70.00 - £90.00 £57.50 - £67.50 £40.00 - £50.00 • the removal of any onerous sub-letting Vauxhall, Battersea £52.50 - £60.00 £42.50 - £50.00 £30.00 - £40.00 or lease assignment/transfer West London pre-conditions • the inclusion of a tenant-only Kensington £55.00 - £65.00 £45.00 - £52.50 £37.50 - £45.00 break option(s) Hammersmith, White City £52.50 - £58.50 £45.00 - £52.50 £35.00 - £45.00 • no requirement to provide a guarantor and/or rent deposit. Chiswick £48.50 - £55.00 £42.50 - £47.50 £35.00 - £45.00 GRADES OF OFFICE Table 2 Source: Carter Jonas Research ACCOMMODATION Rent Free Periods By Sub-Market – Q2 2017 For marketing purposes office accommodation is generally categorised Location Typical Rent Free Period Agreed into Grades which are defined as follows: (lettings over 5,000 sq ft) GRADE A 5-year lease 10-year lease New or newly refurbished office space City – Prime – Insurance District 10 – 12 22 - 25 where the building specification includes suspended ceilings and fully accessible City - Secondary - Blackfriars, Moorgate 10 - 12 22 - 25 raised floors for data/telecoms cable City Fringe - North/North West – Clerkenwell, Shoreditch 8 – 12 18 – 24 management, passenger lift and air conditioning facilities. City Fringe – East – Spitalfields, Aldgate East 10 – 12 22 – 24 GRADE B South Bank – Waterloo, Southwark, London Bridge 8 – 11 18 – 22 Office space that may only incorporate under floor or perimeter trunking for Docklands Prime & Secondary 11 - 14 23 - 26 data/telecoms cable management, rather than fully accessible raised floors, and/ Stratford 10 – 13 22 - 25 or air cooling facilities, instead of an air West End - Central – Mayfair, St James’s 9 – 12 18 - 24 conditioning system that dehumidifies, filters and draws fresh air into the West End - West - Paddington 9 - 12 20 - 24 building. Grade B space also tends to be of a generally lower quality West End - East - Soho 8 - 11 17 - 22 building specification. West End - North East - Fitzrovia 9 - 12 20 - 24 “REFITTED” Office space that is ‘as new’, having been West End - North West - Marylebone 9 - 12 20 - 24 completely refitted throughout, to include West End – South - Victoria, Westminster 9 - 12 20 - 24 new fixtures and fittings to the common parts and reception area, new building Midtown – West - Bloomsbury 9 - 12 20 - 24 services – including air conditioning and passenger lift facilities, electrical, Midtown – East - Holborn 9 - 12 20 - 24 plumbing and lighting systems, and new Midtown – South - Covent Garden 8 - 11 17 - 22 raised floors, suspended ceilings and sanitary ware. The specification of works Midtown – North - King’s Cross 8 - 11 18 - 22 will comply with the latest health and safety legislation and may also include West London – Hammersmith 9 - 12 20 - 24 re-cladding the exterior of the building. “REFURBISHED” Space is defined as office accommodation TOTAL OFFICE OCCUPANCY COSTS: The Carter Jonas office costs map where the landlord has redecorated and provides a geographical summary of rent, business rates and building recarpeted the available office space (but service charge costs. A copy of the map is available free of charge. not necessarily the common parts) and overhauled, but not renewed, the building services, such as the air conditioning and For more data on the Central London office market, office availability, rents and passenger lift facilities. rent free periods and information on budgeting and planning for a lease renewal, rent review or office relocation please contact one of the team. THE TENANT ADVISORY TEAM Our tenant representation services include: • Office search and relocation management • Relocation budgeting and planning • Lease and rent review negotiation • Repairs/dilapidations cost assessment and negotiation Greg Carter Michael Pain • Building, air conditioning and Partner Partner, Head of Tenant Advisory passenger lift surveys 020 7518 3303 020 7016 0722 • Business rates analysis and appeal [email protected] [email protected] • Service charge audit • Office fit out procurement and One Chapel Place, London W1G 0BG project management carterjonas.co.uk/officesearch

RENT & RENT FREE PERIOD GUIDE Q3 2018

LANDLORD’S ADVERTISED Table 1 Source: Carter Jonas Research RENTS & RENT DISCOUNTS London Office Market – Typical Advertised Rents – Q3 2018 (space over 5,000 sq ft) The bargaining power in lease negotiations has moved towards tenants, reflecting weaker demand post Brexit vote, Location Grade A Grade B for London office space. In many cases it is possible to negotiate discounts on UF: Upper Floors New/Refitted Refurbished Refurbished landlord’s advertised rents of, typically, City

2.5 - 5%. Prime – Insurance District £62.50 - £70.00 £50.00 - £60.00 £40.00 - £47.50 The advertised rents on some Grade B (UF = £75.00 - £88.50) (UF = £62.50 - £80.00) warehouse-style office space in locations Secondary - Blackfriars, Aldgate £55.00 - £67.50 £45.00 - £55.00 £37.50 - £42.50 such as Farringdon, Clerkenwell and (UF = £70.00 - £80.00) (UF = £62.50 - £75.00)

Shoreditch will typically be higher than City Fringe rents for refurbished ‘corporate’ style Grade North/North West – £62.50 - £75.00 £52.50 - £62.50 £39.50 - £55.00 A space in the same location, reflecting the Farringdon, Shoreditch (UF = £77.50 - £87.50) rental premium that creative and media East – Spitalfields £60.00 - £65.00 £50.00 - £60.00 £37.50 - £47.50 firms place on such space. Floors with terraces will usually East - Aldgate East £50.00 - £57.50 £42.50 - £47.50 £37.50 - £40.00 (UF = £62.50 - £65.00) command a rental premium of 5-10% and the upper floors of tower buildings that South Bank provide panoramic views of London will Waterloo, Southwark, London Bridge £67.50 - £72.50 £52.50 - £66.50 £42.50 - £50.00 attract a rental premium of up to 35%. & Wood Wharf (UF= £75.00 - £93.00) East London THE ELIZABETH LINE EFFECT Docklands Prime £47.50 - £52.50 £37.50 - £42.50 £30.00 - £35.00 New/refitted and refurbished Grade A – Canary Wharf & Wood Wharf (UF = £54.00 - £57.50) (UF = £45.00 - £50.00) office space located near an Elizabeth Line Docklands Secondary - Crossharbour £35.00 - £38.50 £27.50 - £33.50 £22.50 - £27.50 station in areas such as Paddington and Bloomsbury have seen advertised rents Stratford £40.00 - £49.50 £32.50 - £42.50 £20.00 - £28.00 increase, typically by up to £7.50 per sq West End ft per annum since Q3 2017, reflecting the Central - Mayfair, St James's (Prime) £102.50 - £125.00 £85.00 - £97.50 £67.50 - £77.50 vastly improved accessibility to markets (UF= £130.00 - £135.00) and labour supply that Crossrail will bring. Central - Mayfair, St James's £87.50 - £97.50 £75.00 - £85.00 £62.50 - £72.50 (Secondary)

RENT FREE PERIODS North - Euston £67.50 - £75.00 £57.50 - £65.00 £42.50 - £55.00 Table 2 overleaf illustrates the typical North East - Fitzrovia £80.00 - £87.50 £65.00 - £79.50 £50.00 - £60.00 rent free periods that can currently be negotiated on office space North West - Marylebone £77.50 - £87.50 £65.00 - £77.50 £50.00 - £60.00 throughout London. South - Victoria, Westminster £70.00 - £80.00 £55.00 - £69.50 £45.00 - £52.50 (UF = £82.50 - £90.00)

NEGOTIATING A LEASE South West - Knightsbridge £85.00 - £95.00 £65.00 - £79.50 £60.50 - £70.00 – THE KEY ISSUES East - Soho, Regent Street £85.00 - £97.50 £69.50 - £82.50 £55.00 - £67.50 While rent discounts and rent free periods will form the key components of any lease West - Paddington £67.50 - £77.50 £55.00 - £65.00 £42.50 - £52.50 (UF = £80.00 - £90.00) negotiations it is also important to ‘future- proof’ the tenancy by building in flexibility Midtown and mechanisms to limit future property North - King’s Cross £75.00 - £85.00 £60.00 - £70.00 £47.50 - £57.50 costs, by negotiating the following: South - Covent Garden £72.50 - £80.00 £55.00 - £70.00 £47.50 - £55.00 • a service charge cap (UF = £82.50 - £85.00) • ‘tenant-friendly’ rent review East - Holborn £62.50 - £70.00 £52.50 - £62.50 £39.50 - £52.50 valuation provisions (UF = £72.50 - £77.50)

• a limitation on the tenant’s repairing West - Bloomsbury £75.00 - £90.00 £60.00 - £72.50 £45.00 - £55.00 and removal of fixtures and fittings South West London obligations – to minimise future exit costs Chelsea £77.50 - £90.00 £65.00 - £75.00 £47.50 - £60.00 • the removal of any onerous sub-letting Vauxhall, Battersea £52.50 - £60.00 £42.50 - £50.00 £30.00 - £40.00 or lease assignment/transfer West London pre-conditions • the inclusion of a tenant-only Kensington £55.00 - £65.00 £45.00 - £52.50 £37.50 - £45.00 break option(s) Hammersmith £52.50 - £57.50 £42.50 - £52.50 £35.00 - £42.50

• no requirement to provide a guarantor White City £45.00 - £55.00 £40.00 - £45.00 £32.50 - £40.00 and/or rent deposit. Chiswick £48.50 - £55.00 £39.50 - £47.50 £35.00 - £40.00 GRADES OF OFFICE Table 2 Source: Carter Jonas Research ACCOMMODATION Rent Free Periods By Sub-Market – Q3 2018 For marketing purposes office accommodation is generally categorised Location Typical Rent Free Period Agreed into Grades which are defined as follows: (lettings over 5,000 sq ft) GRADE A 5-year lease 10-year lease New or newly refurbished office space City - Prime - Insurance District 11 - 13 23 - 26 where the building specification includes fully accessible raised floors for data/ City - Secondary - Blackfriars, Aldgate 11 - 13 23 - 26 telecoms cable management, passenger City Fringe - North/North West - Farringdon, Shoreditch 9 - 12 20 - 24 lift and air conditioning facilities. GRADE B City Fringe - East - Spitalfields, Aldgate East 10 - 12 23 - 24 Office space that may only incorporate South Bank - Waterloo, Southwark, London Bridge 9 - 12 21 - 24 under floor or perimeter trunking for data/telecoms cable management, rather Docklands - Canary Wharf & Crossharbour 12 - 14 24 - 27 than fully accessible raised floors, and/ or air cooling facilities, instead of an air Stratford 10 - 13 24 - 27 conditioning system that dehumidifies, West End - Central - Mayfair, St James's 9 - 12 20 - 24 filters and draws fresh air into the building. Grade B space also tends to West End - West - Paddington 9 - 12 20 - 24 be of a generally lower quality building specification. West End - East - Soho 8 - 12 20 - 24

“REFITTED” West End - North East - Fitzrovia 9 - 12 20 - 24 Office space that is ‘as new’, having been completely refitted throughout, to include West End - North West - Marylebone 9 - 12 20 - 24 new fixtures and fittings to the common West End - South - Victoria, Westminster 10 - 12 22 - 24 parts and reception area, new building services – including air conditioning Midtown - West - Bloomsbury 9 - 12 20 - 24 and passenger lift facilities, electrical, plumbing and lighting systems, and new Midtown - East - Holborn 10 - 12 21 - 24 raised floors, ceilings and sanitary ware. Midtown - South - Covent Garden 10 - 12 21 - 24 The specification of works will comply with the latest health and safety and Midtown - North - King's Cross 8 - 11 19 - 23 building regulations and may also include re-cladding the exterior of the building. West London - Hammersmith & White City 10 - 13 22 - 25 “REFURBISHED” Space is defined as office accommodation TOTAL OFFICE OCCUPANCY COSTS: The Carter Jonas London office where the landlord has redecorated and occupancy costs map provides a geographical summary of rent, recarpeted the available office space (but business rates and building service charge costs. If you would like a free not necessarily the common parts) and copy of the map, please contact a member of our Team. overhauled, but not renewed, the building services, such as the air conditioning and passenger lift facilities. For more data on the Central London office market, office availability, rents and rent free periods and information on budgeting and planning for a lease renewal, rent review or office relocation please contact one of the Team. THE TENANT ADVISORY TEAM Our tenant representation services include: • Stay-put/relocate cost appraisals • Lease and rent review negotiation • Office search and relocation management • Relocation budgeting and planning • Repairs/dilapidations cost assessment Greg Carter Michael Pain and negotiation Partner Partner, Head of Tenant Advisory • Building, air conditioning and 020 7518 3303 020 7016 0722 passenger lift surveys • Business rates analysis and appeal [email protected] [email protected] • Service charge audit • Office fit out procurement and One Chapel Place, London W1G 0BG project management

Guide to Rents & Rent Free Periods Office Occupancy Cost Map Q3 2018 ADVISOR’S DESPITE BREXIT UNCERTAINTY, LOW VACANCY CONTINUES TO UNDERPIN THE MARKET

What is the London office market like for space in areas with no Elizabeth Line station tenants at the moment? How is it likely to have remained broadly static during Q3, TENANT develop in the run-up to Brexit and beyond? although rents for second-hand space in These are the two most common, and secondary locations have declined in many pertinent, questions that I get asked by clients, sub-markets across Central London. as a property professional specialising in tenant advisory work. LESS CHOICE & HIGHER RENTS In a market as diverse and sophisticated FORECAST FROM H1 2020 as the London office market, the answers to these questions are not clear cut but I will The hiatus in the property development attempt to simplify them in this commentary. pipeline, precipitated by the Brexit vote, has resulted in a below trend level of new RECORD RENTS ACHIEVED NEAR developments reaching the Central London ELIZABETH LINE STATIONS office market. Supply side constraint are likely to persist for the next couple of years Despite the recent disappointing which will result in reduced tenant choice for announcement that commencement of new and refitted space, placing landlords in Elizabeth Line / Crossrail services is to be a stronger bargaining position. However, the delayed at least until the second half of next stock of vacant second-hand, refurbished, year, this temporary setback is unlikely to dent space is likely to increase one the next rental growth in those areas of the West End, 12-18 months as tenants trade up into Midtown, City and City fringe that will have new buildings. the benefit of an Elizabeth Line station. Providing that there is no hard Brexit, from The Elizabeth Line represents a major H1 2020 it is quite possible that there will be infrastructure project that will revolutionise a return of unwelcome rental growth for new east / west transport connectivity across and refitted office space above 5,000 sq ft in London. Crossrail has already led to increased some sub-markets, including the West End, inward investment in the public realm and Midtown and the South Bank where vacancy new office, retail, leisure and residential levels are particularly low. development in the vicinity of the various Crossrail stations. THE SUB-5,000 SQ FT Office rents for new Grade A space in MARKET / CO-WORKING AND Elizabeth Line connected locations such as SERVICED OFFICES Paddington, Bloomsbury and Farringdon have risen to record levels - from £60.00 - £70.00 There is increasing evidence indicating per sq ft per annum just before the Brexit vote that the market for office space of sub-5,000 to, typically, £75.00 - £90.00 per sq ft per sq ft, for up to 50 desks, that is available annum now. on conventional / non serviced leases, is This trend demonstrates that occupiers suffering - with vacancy increasing and rents are willing to pay a rental premium for Grade declining in many area of London as the A space with good accessibility, including a co-working and serviced office sectors direct link to Heathrow airport and the Thames continue to expand market share. Valley and Essex labour pools. Gone are the days when businesses that based themselves in serviced offices were LOW VACANCY IS stigmatised as being ‘transient’. The advent UNDERPINNING RENTS of agile working, the emergence of a new source of demand – the tech / creative The Elizabeth Line has brought about a shift start-up – and the arrival of a new, smarter, north in the centre of gravity of the London ‘younger’, class of serviced / co-working office market, away from more established space provider from America are factors that markets such as Victoria in the West End, have conspired to underpin the growth in the Covent Garden in Midtown and London Bridge co-working / serviced office sector. on the South Bank. However, historically low An increasing number of small and mid- levels of office vacancy in most size ranges size businesses, typically employing up to above 5,000 sq ft continue to underpin rents 50 staff – not just from the technology and in these locations where the influence of creative sectors – are choosing co-working Crossrail is less powerfully felt. / serviced offices which is a very cash-flow Michael Pain The Carter Jonas Research Team’s Q3 2018 positive accommodation option. There’s no Head of Tenant Advisory Team 020 7016 0722 survey of the London office market shows that need to tie up scarce working capital in an [email protected] landlord’s advertised rents for new Grade A expensive fit out and the lease flexibility that co-working and serviced office staff – without which the providers offer is another important productivity and profitability consideration for fast growing of their businesses will suffer. businesses. Organisations that better ‘‘ EMPLOYERS Landlords of ‘conventional’ office understand what motivates ARE BECOMING space in the sub-5,000 sq ft office the millennial workforce are INCREASINGLY AWARE market are reacting to this structural focussing more on ‘quality of OF THE IMPORTANCE OF market change in several ways, space and place’ and less on CREATING AN OFFICE including reducing rents, offering cost – and they will almost ENVIRONMENT, AND longer rent-free periods and more certainly prosper at the flexible leases or fitting the space expense of those competitors CULTURE, THAT WILL out for the tenant and subsidising or who fail to grasp these issues. ATTRACT, AND REINFORCE rentalising some / all of the cost. Landlords, too, are more THE RETENTION OF, HIGH However, not all occupiers will alive to the demand for better CALIBRE STAFF – WITHOUT consider co-working / serviced office build quality and design and WHICH THE PRODUCTIVITY space. Some businesses in the legal, are developing buildings with AND PROFITABILITY OF accountancy, IT and financial services occupiers’ ‘wellness’ in mind – THEIR BUSINESSES sectors have shied away – citing including features that provide WILL SUFFER. ” privacy, data security and branding high levels of natural light, / identity issues as reasons to stick better ventilation and high with the conventional leasing model. water quality.

RECRUITMENT – ‘QUALITY OF SPACE AND PLACE’

Ten years ago the majority of office occupiers would have put Table 1 Typical Current & Forecast Rents - New & Refitted Mid-Rise Grade A Space Over cost at the top of the list of deciding 5,000 Sq Ft factors when selecting office space. While cost is undoubtedly still an important consideration that will £ per sq ft per annum influence a business’ relocation decision, it is highly significant that Location Q3 2018 Q3 2019 Q3 2020 today’s generation of office occupiers Mayfair/St James's - Prime £105.00 £102.50 £102.50 are also placing the quality of the MaryleboneSource: Carter Jonas Research £85.00 £85.00 £87.50 space and the public realm around the building as being fundamentally Soho £92.50 £92.50 £95.00 important relocation variables. What Fitzrovia £85.00 £85.00 £87.50 has caused this shift in mindset? Victoria £75.00 £75.00 £77.50 Workforce demographics. As time Paddington £75.00 £75.00 £77.50 passes, the ‘millennial’ generation is becoming increasingly dominant in Holborn £65.00 £65.00 £67.50 the labour market. Bloomsbury £85.00 £85.00 £87.50 Research shows that in the list of King's Cross £82.50 £82.50 £85.00 ‘must-haves’ when job hunting the Covent Garden £77.50 £75.00 £75.00 typical ‘millennial’ will consider the Southwark £67.50 £67.50 £70.00 quality of the office environment, and the vibrancy of the public City Prime £65.00 £62.50 £62.50 realm around the building to be key City Secondary £60.00 £57.50 £57.50 priorities when deciding to apply for Shoreditch £65.00 £62.00 £62.00 / accept a job. Farringdon £75.00 £75.00 £77.50 THE LINK BETWEEN REAL Spitalfields £65.00 £62.00 £62.00 ESTATE & PROFITABILITY Aldgate East £55.00 £52.50 £52.50 Hammersmith £57.50 £55.00 £55.00 Employers are becoming White City £52.50 £50.00 £50.00 increasingly aware of the importance of creating an office environment, Canary Wharf £50.00 £47.50 £47.50 and culture, that will attract, and Stratford £47.50 £45.50 £46.50 reinforce the retention of, high calibre NORTH CITY FRINGE NORTH CITY KEY NORTH CITY FRINGE LETTINGS REPORTED DURING Q3, 2018 EC1 – 83,000 Road, 119 Farringdon Ray, The / media) (technology LinkedIn sq ft to sq ft EC1 – 55,000 Close, One Bartholomew Desk (media) Trade The to pre-let EC1 – Smithson, 6-9 Briset Street, The Macmillan sq ft – Pan 35,700 (media / publishing) the recent completion of Helical’s of Helical’s completion Supply - the recent sq ft of which 88,700 Tower’, sq ft ‘The 171,000 has and WeWork, Fartech to has been pre-let completed, of new, the availability increased roundabout. near Old Street A stock Grade Demand - as neighbouring sub-markets, fringe City the City and east including Midtown, and vie for as ‘tech-hubs’ themselves reinvent and location central more Their occupiers. is enabling them stations Crossrail to proximity expense the at of success a measure achieve to of the North City fringe market. of lettings been a number have - there Rents two the last over Farringdon, in Smithfield and rents record at A space, Grade on new quarters and £85.00 £75.00 be between to reported per sq ft per annum, including the upper This EC1. Close, floors of One Bartholomew been driven has growth rental extraordinary the be close to to of occupiers the desire by Elsewhere Elizabeth Line station. Farringdon remained have rents in the north City fringe, sq ft 5,000 above space for static broadly and the co-working this threshold – below share market has taken sector office serviced and space of conventional the landlords from declining as a consequence. are rents 2 circa by increased periods - have free Rent Q3 2017, lease since year a 5-10 – 3 months for broadly now but are weaker/demand, reflecting details. for – see map overleaf static • • • •

CITY is declining for prime- Supply - is declining for as take A space Grade located and the levels vacancy up erodes keep to pipeline fails development up with demand. bank and Demand - the insurance, been have sectors financial services in the market the dominant ‘players’ a high for during Q3, accounting of lettings. proportion the towards trend The occupier of the City’s diversification from as businesses base continues media and technology the creative, other from migrate sectors by - attracted sub-markets and high costs property lower quality buildings with good connections. transport with activity - tenants Pre-letting typically above requirements, large into entering sq ft, are 25,000 on space agreements pre-letting secure to is under construction that of the Much ahead of rivals. space such developments in new space Lime Street, Scalpel’, 52 as ‘The sq ft) and ‘The EC3 (387,000 EC3 Axe Mary St Can of Ham’, 70 sq ft), has been let before (445,000 of the buildings has construction been completed. mid- prime located, new, - for Rents remained have A space rise Grade and Q3 2017 since static broadly per typically £62.50 - £70.00 are rents sq ft per annum. However, in A space Grade refurbished for declined by have locations inferior £2.50 per sq ft per annum up to the same period. over increased periods - have free Rent 2 circa by Q3, 2017, since marginally leases. See on 5 – 10 year – 4 weeks details. for map overleaf • • • • • • If your business is facing a lease expiry, rent review or break option plan well in advance of in advance well option plan or break review rent a lease expiry, facing is business If your “PLAN AHEAD & AHEAD “PLAN ” EARLY PROCESS THE START the lease event. Consider each of the available property options carefully and how each may each may how and options carefully property each of the available Consider the lease event. productivity. and retention staff policies, recruitment costs, operating the business’s influence relocate / stay-put a prepare team can Jonas Carter the considered, is being move If an office with assist option to of each the costs demonstrate to appraisal options cost property upon request. is available Further information approvals. Board budgeting and obtaining SUB-MARKET 55 Gresham Street, EC2 Street, 55 Gresham Investec – 121,600 sq ft to Management (financial Asset services) EC2 – 75,000 22 Bishopsgate, (insurance) Hiscox sq ft to EC2 – Moorgate, 30-34 Spaces sq ft to 27,000 provider) office (serviced EC2 – Bishopsgate, 201 Bravura 25,600 sq ft to Solutions (IT/software) EC4 Street, 1 King William London sq ft to – 28,000 (serviced Offices Executive provider) office CITY OF LONDON LETTINGS LETTINGS CITY OF LONDON REPORTED DURING Q3, 2018 EAST CITY FRINGE WEST END

• Supply - the east City fringe market has • Supply - vacancy levels continue totalling 7,240 sq ft, at rents of lower levels of vacancy, compared with the to decline as new Grade A space £160 and £170 per sq ft per annum neighbouring north City fringe, across all size in buildings including Nova and respectively – close to record West ranges – a consequence of the loss of the stock Verde in Victoria and 4 Kingdom End rent levels. of office buildings to higher value residential Street and The Brunel Building • Rent free periods - have increased development, particularly in the Aldgate East in Paddington is taken up. Work by circa 1 – 2 months for a 5-10 and Spitalfields areas. The completion of 1 has begun on site clearance to year lease since Q3 2017 but are Braham Street in Q2 2020, comprising 320,000 make way for the 430,000 sq ft currently broadly static. See map sq ft, will bring some much needed increased office, retail and leisure Paddington overleaf for details. choice for tenants, as will the completion of the Square development, incorporating 240,000 sq ft refurbishment and extension of 360,000 sq ft offices, which is due KEY WEST END LETTINGS – Lloyds Chambers at Portsoken Street which is for completion at the end of 2021. In REPORTED DURING Q3, 2018 scheduled for completion during Q4, 2019. Soho, enabling works have started • Demand - those City-based occupiers that have on Derwent’s Soho Place, located The Brunel Building, North traditionally migrated to the east City fringe in above Tottenham Court Road Wharf Road, Paddington, W2 – 77,200 sq ft to Sony Pictures search of better value space – in terms of both Station, which will include 209,000 (media) rent and business rates outgoings – are now sq ft of office space and due for -20,500 sq ft to Hellman & seeing rents in secondary City of London areas completion during H2 2022. Friedman (financial services) decline to a level that makes the economic case • Demand - is sufficient to drive a 123 Buckingham Palace Road, for migrating east marginal. The significant steady stream of 10,000 sq ft plus Victoria, SW1 - 40,000 sq ft to disparity in office occupancy costs is, however, lettings across the West End during WeWork (co-working provider) likely to underpin the continued migration of Q3 2018. Demand appears strongest occupiers to the east City fringe from the higher in Paddington at present – driven 33 Foley Street, Fitzrovia, cost Midtown and West End sub-markets. by Elizabeth Line connectivity, W1 – 11,666 sq ft to Work.Life (serviced office provider) • Rents -Spitalfields rents for new / refitted Grade and because it is one of the few A space have declined by up to £2.50 per sq districts in the West End capable 1 Welbeck Street, Marylebone, ft per annum since Q3, 2017, reflecting rental of accommodating large scale W1 – 44,000 sq ft to Ambulatory decline in adjoining secondary City locations. requirements on floor plates of Surgery International (medical) Elsewhere within the east City fringe rents have 15,000 sq ft plus. 30 Broadwick Street, Soho, W1 remained broadly static. • Rents - due to the factors above, – 10,500 sq ft to Meyer Bergman • Rent free periods - have increased by 2 – 4 rents for new Grade A space in (real estate) weeks for a 5-10 year lease since Q3 2017 and Paddington have increased by up 5 Savile Row, Mayfair, W1 are currently broadly static. See map overleaf to £7.50 per sq ft per annum since – 21,000 sq ft to Cerberus for details. Q3, 2017. In Mayfair and St James’s (financial services / rents for new prime located space private equity) have fallen by a similar quantum. However, in Marylebone, Soho and KEY EAST CITY FRINGE LETTINGS Fitzrovia rents have increased by KEY SOUTH BANK LETTINGS REPORTED DURING - Q3, 2018 up to £2.50 per sq ft per annum, REPORTED DURING Q3, 2018 reflecting accessibility to Crossrail. The Relay Building, Whitechapel High Street, E1 Battersea Power Station, SW8 – 15,897 sq ft let to LADbible (social media) Premium rents can still, however, – 40,000 sq ft to IWG (serviced be achieved on landmark buildings. office provider) 1 Alie Street, E1 – 18,268 sq ft let to Kuoni At Smithson Plaza (formerly The (leisure / travel) Economist Tower), St James’s, South Bank Central, Stamford Street, SE1 - 17,500 sq ft to Pelham Capital has reportedly South Western Trains (Transport) taken the 13th and 14th floors, SOUTH BANK EAST LONDON

• Supply - in common with the Midtown • Supply - Canary Wharf Group’s Consequently some large scale lettings market, the South Bank sub-market has decision to develop four buildings to government departments have taken one of the lowest levels of office vacancy speculatively, totalling 758,000 sq place in the area – the latest being the – limiting tenant choice and mitigating ft, at Wood Wharf, located adjacent pre-let of 240,000 sq ft to HMRC at 14 against a decline in office rents. to Canary Wharf, will increase the Westfield Avenue, E20. • The development pipeline for the next supply of new Grade A space in • Rents - typical advertised rents for few years is very limited. One of the few Docklands, notwithstanding that new Grade A space at Wood Wharf are schemes of significant scale that could over 145,000 sq ft at 15 Water £50.00 - £55.00 per sq ft per annum boost availability is the redevelopment of Street has already been pre-let. with rents at the higher end of the Elizabeth House at York Road, Waterloo. At Crossharbour supply is limited range for upper floors. Revised plans for a mixed use retail, to refurbished first generation • By contrast rents for prime located new restaurant and office scheme, which is Docklands buildings where rents space at the International Quarter in proposed to total over 900,000 sq ft, are lower than those of Canary Stratford are £45.00 - £47.50 per sq ft have been prepared and are subject to and Wood Wharf due to poorer per annum and up to £49.50 per sq ft obtaining planning consent. A date for building quality and inferior rail per annum for upper floors. commencement of the project has yet transport connectivity. • The Crossharbour area of Docklands to be formally announced. Development • In Stratford, the supply of new, prime continues to offer refurbished, air opportunities that would have traditionally located, vacant floor space that conditioned, office space at some of been built out for office use have instead is immediately available is limited the lowest rents in Central London and been developed for higher value hotel and to 42,870 sq ft at Building S5 at peripheral Central London locations – residential developments, which has eroded The International Quarter, which is typically £27.50 - £33.50 per sq ft the stock of office buildings in the area. majority occupied by the FCA, and per annum. One Southwark Bridge, comprising circa Building S9 where there will be circa • Rent free periods - Stratford and 150,000 sq ft, will become vacant when the 60,276 sq ft available on completion Docklands both offer some of the Financial Times moves out of the building in September 2019. longest rent free periods available in early next year. Plans for the refurbishment • Demand - the development of a the Central London and peripheral / redevelopment of the building have yet to Crossrail station at Canary Wharf Central London office markets – 24 – 27 be announced. has underpinned demand for the months on a 10 year lease and 12 – 14 • Demand - tenants from the creative and Docklands area and has been months on a 5 year lease. See map media sectors have been significant drivers cited as a key driver in securing overleaf for details. of demand in recent years – attracted pre-lettings at the Wood Wharf by the vibrant riverside public realm and development. The majority owner associated amenities. Demand is proving of Canary Wharf, Canary Wharf KEY EAST LONDON LETTINGS REPORTED DURING Q3, 2018 surprisingly resilient in the run up to Brexit. Group, is actively pursuing a policy • Rents - have remained broadly static since of targeting ‘fintech’, mainstream The Cabot, 25 Cabot Square, E14 Q3 2017, reflecting low vacancy and are technology and creative businesses – 105,829 sq ft to The Competition typically £67.50 - £72.50 per sq ft per to the Docklands area in order to and Markets Authority (Government / regulator) annum for new and refitted mid-rise Grade diversify the occupier base away A space. Contrast with the upper floors of from banks, financial services and Boatmans House, 2 Selsdon Way, The Shard where rents above £90.00 per corporate law firms. E14 – 19,500 sq ft to Tower Hamlets sq ft per annum were achieved during • Stratford is similarly located on the Homes (property management) Q2, 2018. Jubilee and Elizabeth lines but rents Here East, Queen Elizabeth • Rent free periods - have increased and business rates costs are lower Olympic Park, Stratford, E15 – marginally by 2 – 4 weeks since Q3 2017 for than Canary Wharf and Wood Wharf. 140,000 sq ft to Victoria & Albert a 5 – 10 year lease. See map overleaf Museum and Research Centre for details. MIDTOWN WEST LONDON

• Supply - the Midtown market is one • Supply - Hammersmith has a new of the most under-supplied although KEY MIDTOWN LETTINGS competitor for the title of ‘capital of the recently completed “Bureau”, REPORTED DURING Q3, 2018 the West London office market’ as the former BBC and Imperial College office 90 Fetter Lane, EC4, comprising 11 & 21 Canal Reach & P2 Lewis 60,859 sq ft will provide marginally Cubitt Square, Kings Cross campuses located off Wood Lane at more choice for tenants. The Central, N1 – 611,000 sq ft pre-let White City undergo redevelopment and King’s Cross Central Partnership’s to Facebook (media) attract occupiers. The recent letting of decision to commence the circa 212,000 sq ft to Publicis Media at 2 S1, Handyside Street, N1 – speculative construction of Building 63,000 sq ft to Nike (sportswear) Television Centre has taken a significant S1 at Handyside Street, comprising element of supply out of the White City 195,000 sq ft, would have boosted Summit House, 12 Red Lion office market. There is, however, still Square, WC1 – 42,000 sq ft to tenant choice in the King’s Cross sufficient vacancy in the area to pose The Office Group (serviced serious competition to Hammersmith. market, which is currently starved office provider) of vacant Grade A space, but for L&G’s 245 Hammersmith Road, comprising the fact that Nike has leased circa 1 Waterhouse Square, EC1 – 242,477 sq ft will also heap pressure on the 63,000 sq ft and terms have been 74,958 sq ft to WeWork (co- Hammersmith office market as vacancy working provider) agreed to lease the remainder of levels rise and landlords compete the building to another occupier. Fetter Yard, 86 Fetter Lane, EC4 for tenants. Facebook’s decision to pre-let – 30,000 sq ft pre-let to Marriott • Demand - the West London office market 611,000 sq ft at King’s Cross Central Hotels International (leisure) is still quite active – as the Publicis letting has also boosted the location as a demonstrates, although competition from 15 Fetter Lane, EC4 – 21,000 sq ‘tech’ hub which will also be home ft to Marks and Clerk Elizabeth Line connected areas such to Google’s UK campus, comprising (legal services) as Slough, Maidenhead and Reading – over 1 million sq ft. where rents and business rates costs are • Demand - Midtown occupier significantly lower – could pose a threat to demand emanates from a mix of the longer term health of the West London KEY WEST LONDON LETTINGS uses, including business services, office market. REPORTED DURING Q3, 2018 technology, media, as well as the • Rents - in Hammersmith for new and legal sector, which has traditionally Media Works Building, White refurbished Grade A space have fallen, been associated with Holborn. City Place, Wood Lane, W12 typically by circa £2.50 per sq ft per – 33,000 sq ft to Autolus Demand is proving surprisingly annum since Q3 2017. This trend is likely (Biopharmaceuticals) resilient in the run up to Brexit. to continue for the reasons set out above. • Rents - for new and refitted Grade Waterfront, Hammersmith Rents in White City have held up better, by A space in all the districts that Embankment, W6 – 26,000 sq ft contrast, although it is likely that increased comprise the ‘Midtown‘ market have to Juice Plus (food industry) discounts on advertised rents could materialise over the next 12 – 18 months, remained broadly static since Q3 3 Shortlands, Hammersmith, 2017, save for Holborn and Covent W6 – 11,276 sq ft let to Formula E particularly once Elizabeth Line services Garden, where rents have declined Operations (motorsport) commence – boosting competition from the by circa £2.50 per sq ft per annum. Thames Valley market. • Rent free periods - have increased • Rent free periods - have increased in by 1 – 2 months in Holborn and Hammersmith and White City since Q3 2017 Covent Garden since Q3 2017 for a 5 by circa 1 – 2 months for a 5 – 10 year lease – 10 year lease but are now broadly and may increase by another 1 – 2 months static thoughout Midtown. See map over the next 12 months. See map overleaf overleaf for details. for details. Typical Costs of New Office Space – Key European Cities - Q3, 2018

Prime office Service Real estate Total Occupancy rent charges taxes costs Dublin €646 -700/sq m pa €54 - 86/sq m pa €54 -65/sq m pa €753 -850/sq m pa

Amsterdam €400/sq m pa €50 /sq m pa Negligible €450/sq m pa

Paris €480 - 780/sq m pa €40 - 100 /sq m pa €50/sq m pa €570 - 930/sq m pa

Frankfurt €483/sq m pa €55 - 90/sq m pa Included in €538 - 573/sq m pa service charges

Munich €438/sq m pa €45 - 75/sq m pa Included in €483 - 513/sq m pa service charges

Brussels €300/sq m pa €30-65/sq m pa €20-30/sq m pa €350 - 395/sq m pa

Luxembourg € 560/sq m pa €30-65/sq m pa €20-30/sq m pa €610 – 655/sq m pa

THE TENANT ADVISORY TEAM KEY CONTACTS Our tenant representation services include:

• Stay put/relocate cost appraisals • Repairs/dilapidations cost Michael Pain Partner, Head of Tenant Advisory assessment & negotiation • Office search & relocation 020 7016 0722 management • Building, air conditioning & [email protected] • Relocation budgeting passenger lift surveys & planning • Business rates analysis & appeal Greg Carter Partner 020 7518 3303 • Lease & rent review negotiation • Service charge audit [email protected]

For more data on the London office market, office availability, Frederic Schneider Partner, rents and rent free periods, market trends and information on International Corporate Real Estate budgeting and planning for a lease renewal, rent review or office 020 7518 3243 relocation please contact one of the team. [email protected]

Ed Caines Associate Partner OUR EXPERIENCE 020 7016 0724 Lease negotiations and relocations 10,000 sq ft+ [email protected]

43,000 sq ft 17,500 sq ft Luke Wild Associate Partner UK Payments Administration Hackett Limited 020 7016 0725 2 Thomas More Square, E1 The Clove Building, SE1 [email protected]

39,000 sq ft 16,000 sq ft Georgia Eckert Senior Surveyor Care Quality Commission Circle Housing 020 7062 3092 151 Buckingham Palace Road, SW1 Two Pancras Square, N1 [email protected] 28,000 sq ft 15,000 sq ft Warner Bros/Shed Media Hitachi Rail Europe One Chapel Place, London W1G 0BG 85 Grays Inn Road, WC1 40 Holborn Viaduct, EC1 23,000 sq ft 11,000 sq ft Nursing & Midwifery Council Salamanca Group Two Stratford Place, E20 50 Berkeley Street, W1

© Carter Jonas 2018. The information given in this publication is believed to be correct at the time of going to press. We do not however accept any liability for any decisions taken following this report. We recommend that professional advice is taken. CITY FRINGE EAST SPITALFIELDS ALDGATE EAST TYPICAL COSTS FOR NEW/REFITTED MID-RISE CITY FRINGE NORTH £98.00 £84.00 Rent £65.00 Rent £55.00 SHOREDITCH FARRINGDON GRADE A OFFICE SPACE OVER 5,000 SQ FT Business Rates £23.00 Business Rates £19.00 £97.00 £107.00 Service Charge £10.00 Service Charge £10.00 Total Occupancy Cost £98.00 Total Occupancy Cost £84.00 Q3 2018 Rent £65.00 Rent £75.00 Business Rates £21.00 Business Rates £22.00 Typical Rent Free Periods Typical Rent Free Periods Costs = £ per sq ft per annum Service Charge £11.00 Service Charge £10.00 5 year lease 10-12 5 year lease 10-12 Rent Free Periods = Months Total Occupancy Cost £97.00 Total Occupancy Cost £107.00 10 year lease 22-24 10 year lease 22-24 Business rates cost estimates include the Crossrail levy but take no account of any transitional relief that may be available Rent (refurbished) £50.00 - £60.00 Rent (refurbished) £42.50 - £47.50 Typical Rent Free Periods Typical Rent Free Periods Rents are landlord's advertised rents which will be negotiable, typically by 2.5%-5.0% HACKNEY Rent (refurbished) = typical rent for refurbished Grade A space 5 year lease 9-12 5 year lease 9-12 10 year lease 20 -24 10 year lease 20-24 STRATFORD Rent (refurbished) £52.50 - £62.50 Rent (refurbished) £55.00 - £62.50

MIDTOWN KING’S CROSS HOLBORN BLOOMSBURY £124.00 £102.50 £125.50 ISLINGTON

Rent £82.50 Rent £65.00 Rent £85.00 BOW Business Rates £31.00 Business Rates £27.00 Business Rates £30.00 STRATFORD Service Charge £10.50 Service Charge £10.50 Service Charge £10.50 KING’S CROSS Total Occupancy Cost £124.00 Total Occupancy Cost £102.50 Total Occupancy Cost £125.50 £68.50 Rent £47.50 Typical Rent Free Periods Typical Rent Free Periods Typical Rent Free Periods Business Rates £12.00 5 year lease 8-11 5 year lease 10-12 5 year lease 9-12 SHOREDITCH EUSTON Service Charge £9.00 10 year lease 19-23 10 year lease 21-24 10 year lease 20-24 Total Occupancy Cost £68.50 Rent (refurbished) £60.00 - £70.00 Rent (refurbished) £52.50 - £62.50 Rent (refurbished) £60.00 - £72.50 CLERKENWELL Typical Rent Free Periods COVENT GARDEN BLOOMSBURY 5 year lease 10-13 £119.00 10 year lease 22-27 Rent (refurbished) £32.50 - £42.50 Rent £77.50 FITZROVIA SPITALFIELDS Business Rates £31.00 Service Charge £10.50 MARYLEBONE Total Occupancy Cost £119.00 PADDINGTON HOLBORN

Typical Rent Free Periods ALDGATE POPLAR CITY OF EAST 5 year lease 10-12 SOHO LONDON 10 year lease 21-24 COVENT GARDEN Rent (refurbished) £55.00 - £70.00 MAYFAIR

SOUTHWARK

WEST END ST JAMES’S CANARY WHARF MAYFAIR & ST JAMES’S VICTORIA MARYLEBONE LONDON BRIDGE £167.00 £120.00 £135.00 WATERLOO Rent £105.00 Rent £75.00 Rent £85.00 CROSSHARBOUR Business Rates £50.00 Business Rates £34.00 Business Rates £39.00 Service Charge £12.00 Service Charge £11.00 Service Charge £11.00 Total Occupancy Cost £167.00 Total Occupancy Cost £120.00 Total Occupancy Cost £135.00

Typical Rent Free Periods Typical Rent Free Periods Typical Rent Free Periods CITY DOCKLANDS 5 year lease 9-12 5 year lease 10-12 5 year lease 9-12 10 year lease Rent 20-24 10 year lease 22-24 10 year lease 20-24 VICTORIA SOUTH BANK CITY PRIME CITY SECONDARY CANARY WHARF CROSSHARBOUR Rent (refurbished) £85.00 - £97.50 Rent (refurbished) £55.00 - £69.50 Rent (refurbished) £65.00 - £77.50 £102.50 £93.00 £81.00 £60.50 FITZROVIA PADDINGTON SOHO £100.75 Rent £67.50 Rent £65.00 Rent £60.00 Rent £50.00 Rent £37.50 £130.50 £111.00 £142.50 CHELSEA Business Rates £22.75 Business Rates £27.00 Business Rates £22.50 Business Rates £16.50 Business Rates £12.00 Service Charge £14.50 Service Charge £11.00 Rent £85.00 Rent £75.00 Rent £92.50 Service Charge £10.50 Service Charge £10.50 Service Charge £10.50 Total Occupancy Cost £81.00 Total Occupancy Cost £60.50 Business Rates £34.50 Business Rates £25.00 Business Rates £39.00 Total Occupancy Cost £100.75 Total Occupancy Cost £102.50 Total Occupancy Cost £93.00

Service Charge £11.00 Service Charge £11.00 Service Charge £11.00 Typical Rent Free Periods Typical Rent Free Periods Typical Rent Free Periods Typical Rent Free Periods Typical Rent Free Periods Total Occupancy Cost £130.50 Total Occupancy Cost £111.00 Total Occupancy Cost £142.50 5 year lease 9-12 5 year lease 11-13 5 year lease 11-13 5 year lease 12-14 5 year lease 12-14

10 year lease 24-27 10 year lease GREENWICH 24-27 Typical Rent Free Periods Typical Rent Free Periods Typical Rent Free Periods 10 year lease 21-24 10 year lease 23-26 10 year lease 23-26 Rent (refurbished) £52.50 - £66.50 Rent (refurbished) £50.00 - £60.00 Rent (refurbished) £45.00 - £55.00 Rent (refurbished) £37.50 - £42.50 Rent (refurbished) £27.50 - £33.50 5 year lease 9-12 5 year lease 9-12 5 year lease 8-12 10 year lease 20-24 10 year lease 20-24 10 year lease 20-24 Rent (refurbished) £62.50 - £75.00 Rent (refurbished) £55.00 - £65.00 Rent (refurbished) £69.50 - £82.50

GRADES OF OFFICE ACCOMMODATION For marketing purposes office accommodation is generally categorised into Grades which are defined as follows: WEST LONDON GRADE A New or newly refurbished office space where the building specification includes suspended ceilings and fully accessible raised floors for data/telecoms cable HAMMERSMITH management, passenger lift and air conditioning facilities. SUBMARKETS ELIZABETH LINE ROUTE GRADE B West End FULHAM £88.50 Office space that may only incorporate under floor or perimeter trunking for data/telecoms cable management, rather than fully accessible raised floors, and/or air cooling facilities, instead of an air conditioning system that dehumidifies, filters and draws fresh air into the building. Grade B space also tends to be of a generally Rent £57.50 Midtown lower quality building specification. Business Rates £21.50 City “REFITTED” Service Charge £9.50 Office space that is ‘as new’, having been completely refitted throughout, to include new fixtures and fittings to the common parts and reception area, new building City Fringe North Total Occupancy Cost £88.50 services – including air conditioning and passenger lift facilities, electrical, plumbing and lighting systems, and new raised floors, suspended ceilings and sanitary READING ware. The specification of works will comply with the latest health and safety legislation and may also include re-cladding the exterior of the building. HEATHROW City Fringe East Typical Rent Free Periods “REFURBISHED” 5 year lease 10-13 Space is defined as office accommodation where the landlord has redecorated and recarpeted the available office space (but not necessarily the common parts) South Bank and overhauled, but not renewed, the building services, such as the air conditioning and passenger lift facilities. 10 year lease 22-25 Docklands & Stratford Rent (refurbished) £42.50 - £52.50 PUTNEY