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The Midtown Office & Retail Markets Q4 2013

Garden Bridge

In the 4th Quarter 2013 Thomas Heatherwick’s proposed ‘Garden Bridge’ received Treasury backing, pushing this visionary idea a step closer to becoming a reality and providing further impetus to both the Midtown and South Bank Office and Retail markets

A member of Discover Midtown... WC1 Kingsway EC1 St Giles Strand WC2 EC4

Inside this edition... Farebrother is an established Practice of Real Estate consultants and Chartered Surveyors. The Practice’s services include Commentary 1 Corporate Real Estate, Leasing, Sales, Development, Management, Lease Advisory, Business Rates, Valuation and Investment advice. Take-up 4 Farebrother’s core market is , specialising in Availability 6 Midtown and South Bank office and retail markets. Future Supply 7 Farebrother’s extensive research is aimed at providing a short, sharp insight into what are two of the most dynamic commercial property markets in the Investment 8 World. This quarterly report reviews the overall performance of the Leasing, Retail 10 Investment and Retail markets and is published alongside Farebrother’s Investment Reports, produced in partnership with IPD, together providing The Knowledge - St Giles 12 a comprehensive analysis of Midtown and South Bank markets.

Definitions

Midtown - WC1, WC2, EC1 (West of Farringdon Take-up - completed transactions where offices Construction start - development where the Road), EC4 (West of Farringdon Street, New are let or sold to an occupier main contract has commenced, normally Bridge Street) excluding demolition or stripping out New - brand new buildings or buildings

Stock - office accommodation, excluding offices developed behind a retained façade Construction completion - development where under construction the main contract has reached practical Refurbished - buildings which have undergone completion Floorspace - net internal area, unless otherwise a major refurbishment stated Hidden Supply - space which is not currently Secondhand Grade A - previously occupied on the open market, but likely to come available

Available - office space available for immediate higher quality space with features such in the near future occupation air-conditioning or raised floors Long-Term - average calculated since the Availability Rate - available offices as a Secondhand Grade B - previously occupied 1st Quarter 2005 proportion of total stock lower quality space with features such as central heating or perimeter trunking

The London Midtown Office & Retail Markets Q4 2013

Commentary

Leasing activity reached 612,169 sq ft in the 4th Quarter 2013, 37% higher than the 3rd Quarter and comfortably ahead of the long-term quarterly average of 500,000 sq ft, rounding off a strong year of Take-up totalling 1.94m sq ft.

The rise in Take-up was the direct result of further standout deals, which included the letting during construction of the entire 133,978 sq ft at Carmelite Riverside, 50 , EC4, to publishing firm Hachette and the Pre-let of 45,167 sq ft at 98 Fetter Lane, EC4, to law firm Macfarlanes. These are the latest in a series of pre-commitment transactions signed in 2013.

In addition to a number of large Pre-lets, Midtown has been characterised by a high volume of small transactions, with that trend continuing in the 4th Quarter when 66% of the 96 deals were in the 1,000-5,000 sq ft bracket.

Annual Take-up in 2013 reached 1.94m sq ft, an increase of 19% on 2012

Julian Hind Head of Leasing, Sales & Development The London Midtown Office & Retail Markets Q4 2013

Midtown’s diverse Occupier-base and low Availability have combined to make it London’s most compelling Investment proposition

Midtown became a two-tier market in 2013, with a high volume of small lettings alongside a small number of large Pre-lets and lettings during construction to corporate Occupiers. We anticipate the Midtown market to be buoyed by further Pre-let activity in 2014 due to a number of large requirements still active in the market, combined with the continued shortage of good quality supply and few buildings which can offer large floor plates, leaving Occupiers with little choice.

Midtown has a strong underlying market, which accounts for the majority of Take-up churn, however, it continues to benefit from West End Occupiers moving East, with the likes of Hachette and Publicis moving from the West End and taking large amounts of space.

In the 4th Quarter there were eight reported transactions that achieved rents in excess of £60.00 psf, two of which were above £70.00 psf. These were the 5,834 sq ft letting at Orion House, 5 Upper St Martin’s Lane, WC2, where Farallon Capital agreed to pay £75.00 psf, the highest reported rent achieved in the 4th Quarter. The second was the 4,200 sq ft letting at Tower House, 10 Southampton Street, WC2, to Global Personals who paid £70.00 psf. This confirms our view that the perception of Midtown has changed and that there is an increasing shift in Occupier perception of what they need to pay to secure good quality Midtown buildings.

The Availability Rate in Midtown is currently 4.6%, the lowest in Central London. However, we anticipate the Availability Rate will increase to around 6% by mid-2014 with 445,420 sq ft of development schemes due to complete in the first half of 2014. This includes 210,000 sq ft of Kato Kagaku’s Quarter, WC2, 295,000 sq ft development due to complete by the summer 2014.

Investment turnover in the 4th Quarter 2013 reached £596m in fifteen transactions, 30% higher than the five-year quarterly average (£459m). Annual Midtown Investment turnover for 2013 reached £2.74bn, the highest Annual total since 2007. Despite the continuing trend for Overseas Investment into prime London real estate, 59% of transactions in Midtown were undertaken by UK Investors in the 4th Quarter. This reflects its potential for performance.

2 farebrother.com The London Midtown Office & Retail Markets Q4 2013

Q4 13 Overview % change on Q3 13

Total Availability 1.49m sq ft 0% Availability Rate 4.6% -0.1 pt Availability - 463,696 sq ft -9% New & Refurbished Availability - 1.03m sq ft +5% Secondhand Speculative 957,709 sq ft -14% Construction Take-up 612,169 sq ft +37% Investment £596m -37%

2013 % change on 2012

Annual Take-up 1.94m sq ft +19% Annual Investment £2.7bn +7%

Source: Farebrother

These are exciting times for the Midtown market, with Crossrail continuing to trigger a boom in office development. There is already considerable development activity taking place in Midtown and the surrounding areas, particularly around the Farringdon Station redevelopment where Crossrail and partners Cardinal Lysander achieved planning in the 4th Quarter 2013 for an 80,000 sq ft over station development named Cardinal Tower, 2a-12 , EC1. The approval of Almacantar’s residential redevelopment of , 103 New , WC1, also adds to the momentum with Midtown positioned in the centre of activity. These catalysts, coupled with an improving economy, mean we are optimistic about the market’s prospects in 2014.

Orion Capital Partners and Quadrant Estate’s Refurbished Carmelite Riverside, 50 Victoria Embankment, EC4, was let during construction in the 4th Quarter 2013 to Hachette UK who will occupy the majority of the 135,000 sq ft building and will release the 1st – 2nd floors totalling 39,084 sq ft for sub-letting

farebrother.com 3 The London Midtown Office & Retail Markets Q4 2013 Overall Take-up was up 37% on the previous quarter Take-up boosting Annual Take-up in 2013 to 1.94m sq ft

Take-up in the 4th Quarter 2013 reached 612,169 sq ft, an Midtown still has an underlying, existing market where we see increase of 37% on the 3rd Quarter and 22% higher than the the majority of Take-up, however, a number of standout deals in long-term quarterly average of 500,000 sq ft. It was the highest 2013 demonstrate how Midtown continues to benefit from the quarterly Take-up since the 1st Quarter 2011. strong West End market with a number of Occupiers moving east due to the shortage of good quality supply and a limited Midtown became a two-tier market in 2013, with a high volume number of buildings that can provide large floor plates. of small lettings alongside a small number of large Pre-lets or With large schemes currently Under Construction in Midtown, lettings during construction, with that trend continuing in the we would expect to see more large scale pre-commitments 4th Quarter when 66% of the 96 deals were in the in 2014. 1,000-5,000 sq ft bracket Media Occupiers represented 40% of Take-up in the A total of 67,194 sq ft of New space was let in four transactions 4th Quarter 2013. When looking at 2013 overall, Media including, Macfarlanes Pre-let of 45,167 sq ft at GE Capital Real Occupiers accounted for 30% of total Take-up, followed Estate’s 57,000 sq ft development at 98 Fetter Lane, EC4. by Legal (18%) and IT, Technology & Telecoms (10%) - a trend that mirrors current levels of Occupier demand. Take-up of Refurbished space in the 4th Quarter 2013 totalled 208,800 sq ft, an increase of 22% on the 3rd Quarter which was boosted predominantly by Hachette UK’s letting during construction at Carmelite Riverside, where they took a fifteen- year lease with twenty-one months’ rent free, paying rents ranging from £52.50 psf on the 1st floor, up to £65.00 psf on the top floor.

William Morris Entertainment’s letting of the part 4th and 5th floors totalling 21,639 sq ft at Hermes Real Estates’ Refurbished 100 New Oxford Street, WC1, was the third largest transaction of the 4th Quarter. They took a fifteen-year lease subject to a tenant only break in the fifth and tenth years with eighteen months’ rent free at a rent of £57.50 psf.

Secondhand Take-up in the 4th Quarter increased 40% on the 3rd Quarter to 336,175 sq ft, representing 55% of total Take-up.

Secondhand Grade A Take-up totalled 141,221 sq ft, an increase of 25% on the 3rd Quarter in 20 transactions. Notable Secondhand Grade A transactions included, 19,507 sq ft at Centrium, 61 Aldwych, WC2, to Michael Page International who took an assignment expiring in October 2019 at a passing rent of £59.50 psf and 5,834 sq ft at Orion House, 5 Upper St Martin’s Lane, WC2, to Farallon Capital who took a ten-year term with a break in the fifth year and twenty-four months’ rent free. They agreed a rent of £75.00 psf which was the highest reported rent in Midtown in 2013.

Secondhand Grade B lettings reached 194,954 sq ft in 4th Quarter, an increase of 54% on the 3rd Quarter in 60 transactions, none of which were larger than 13,000 sq ft.

Right The 45,167 sq ft Pre-let to Macfarlanes at GE Capital Real Estate’s proposed 57,000 sq ft redevelopment of 98 Fetter Lane, EC4, was the second largest transaction in the 4th Quarter

4 farebrother.com The London Midtown Office & Retail Markets Q4 2013

Fig.1 Quarterly Office Take-up 2007-2013

000s sq ft 800

600

400

200

0 2007 2008 2009 2010 2011 2012 2013

Pre-lets New Refurbished Secondhand Grade A Secondhand Grade B

Source: Farebrother

Selected office lettings in Midtown

Occupier Address Sq ft Grade Reported Rent £psf

Hachette UK Carmelite Riverside, 50 Victoria Embankment, EC4 133,978 Refurbished 57.50

Macfarlanes LLP 98 Fetter Lane, EC4 45,167 Pre-let Conf.

William Morris Entertainment (MWE) 100 New Oxford Street, WC1 21,639 Refurbished 60.00

Michael Page International Ltd Centrium, 61 Aldwych, WC2 19,507 Secondhand Grade A 59.50

Macfarlanes LLP 1 New Fetter Lane, EC4 13,331 Secondhand Grade A 42.50

Regus 16 Upper Woburn Place, WC1 12,361 Secondhand Grade A 40.00

Institute of Chartered Secretaries Saffron House, 6-10 Kirby Street, EC1 11,682 Secondhand Grade A 35.00 and Administrators (ICSA)

Prophet Brand Strategy 10 Bedford Street, WC2 10,823 Refurbished 62.50

National Basketball Association (NBA) Endeavour House, 189 , WC2 9,416 Secondhand Grade A 59.50

Adidas Prince Consort House, 109-111 Farringdon Road, EC1 9,294 Secondhand Grade B 30.13

Metapack Ltd 200 Gray's Inn Road, WC1 8,878 Secondhand Grade A Conf.

Bulletproof Design 10 Bedford Street, WC2 7,277 Refurbished 66.50

Tate & Lyle Sugars 10 Bedford Street, WC2 6,437 Refurbished 65.00

Berkeley Research Group Ltd 6 New Street Square, EC4 5,900 Secondhand Grade A 62.50

Farallon Capital | Noonday Orion House, 5 Upper St Martin’s Lane, WC2 5,834 Secondhand Grade A 75.00 Asset Management LLP

Stage Entertainment UK Ltd Wellington House, 125-130 Strand, WC2 5,677 Refurbished 50.60

Source: Farebrother

farebrother.com 5 The London Midtown Office & Retail Markets Q4 2013

Availability Availability remains stable at 1.49m sq ft, however, Overall Availability at the end of the 4th Quarter 2013 remained the current squeeze on stable at 1.49m sq ft, an Availability Rate of 4.6%. Despite a number of development completions during the 3rd Quarter supply remains totalling 195,048 sq ft and a further 31,980 sq ft in the 4th Quarter, the squeeze on supply remains. Secondhand supply increased 5% in the 4th Quarter. This is expected to ease slightly in the first half of 2014, however, Secondhand Grade A space increased 18% due to new with 445,420 sq ft of additions due including, 91,031 sq ft at Availability at The Adelphi, 1-11 John Adam Street, WC2, Kirkbi’s Refurbished New Fetter Place, 8-10 New Fetter Lane, totalling 75,871 sq ft and tenant space at Seven Dials EC4, in the 1st Quarter 2014 and 210,000 sq ft at Bush, King Warehouse, 42-44 Earlham Street, WC2 totalling 35,758 sq ft. and Melbourne House, three of Kato Kagaku’s four buildings under refurbishment at Aldwych Quarter, WC2, in the 2nd The supply of Secondhand Grade B space fell by 11%. This fall Quarter 2014. The remaining 85,000 sq ft of this development at is predominantly due a particularly strong quarter of Take-up Strand House will complete in the 3rd Quarter 2014. totalling 194,954 sq ft with only 59,006 sq ft of new space becoming available. New Availability fell 25% as a result of 19,124 sq ft of lettings and no New schemes delivering in the 4th Quarter. This The Availability Rates across the Midtown postcodes continue to downward trend will continue as there are no New fall, with the only exception being WC2 where a large proportion developments due to deliver until 2016. of tenant space became available, resulting in a small increase from 6.2% to 6.7%. The Availability Rate in WC1 fell the furthest Refurbished Availability fell 6% during the same period despite from 3.7% to 3.3% which is exceptionally low. In EC4, the 31,980 sq ft of development completions at, ISIS, 64-76 New Availability Rate fell from 2.9% to 2.6% which is the lowest level Oxford Street, WC1 (17,330 sq ft) and the remaining floor in the we have recorded since 2005. The EC1 postcode Availability New Wing, , WC2 (14,650 sq ft). Rate fell the least from 6.0% to 5.8%.

Fig.2 Quarterly Office Availability 2007-2013

million sq ft % 3.5 9.4% 11 10 3.0 9 4.6% 8 2.5 3.8% 7 2.0 6 5 1.5 4 1.0 3 2 0.5 1 0.0 0 2007 2008 2009 2010 2011 2012 2013

New Refurbished Secondhand Grade A Secondhand Grade B Availability Rate %

Source: Farebrother

6 farebrother.com The London Midtown Office & Retail Markets Q4 2013

Future Supply

2nd Quarter 2014 3rd Quarter 2014 4th Quarter 2014

Max Property’s 14,176 sq ft refurbishment of CLS Holding’s 28,686 sq ft refurbishment of Deerbrook’s 49,162 sq ft refurbishment Caroline House, 55-57 High Holborn, WC1, 138 Fetter Lane, EC4, is due for completion in of 81 Chancery Lane, WC2, is due for is due for completion in the 2nd Quarter 2014 the 3rd Quarter 2014 completion in the 4th Quarter 2014

In the 4th Quarter 2013 Scottish Widows Investment There is currently Partnership and Endurance Land submitted plans for a 957,709 sq ft of mixed-use refurbishment and extension at 35 Chancery Lane, WC2, increasing the office size from 85,583 sq ft to 93,398 sq ft speculative space and retail from 1,000 sq ft to 3,289 sq ft. Under Construction

A total of 403,136 sq ft of speculative space was delivered in 2013, however, had the additional 157,160 sq ft due in the 4th Fig.3 Future Supply in Midtown Quarter 2013 not slipped into the 1st Quarter 2014, total annual 2013 - 2015 completions would have been 560,296 sq ft (6% above the five- year average). The three delayed schemes, included New Fetter Place, 8-10 New Fetter Lane, EC4 (91,031 sq ft), 6-8 Bouverie 000s sq ft Street, EC4 (47,328 sq ft) and Marlborough Court, 14-18 500 Holborn, EC1 (18,801 sq ft). 400 Midtown had record quarters of development starts in 2013, including 302,000 sq ft in the 1st Quarter and 423,000 sq ft in the 2nd Quarter. A further 202,000 sq ft commenced in the 3rd 300 Quarter, however, a mere 14,176 sq ft commenced in the 4th Quarter resulting in an Annual total of 940,766 sq ft. 200

The only new start of the 4th Quarter was Max Property’s 100 14,176 sq ft refurbishment of Caroline House, 55-57 High Holborn, WC1. 0 We have identified twenty-six buildings as potential future supply Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 but works have not yet started on site. These form the Hidden 2013 2014 2015 Supply of Office Stock that is neither immediately available nor Delivered Scheduled Hidden currently Under Construction. It includes the imminent Space Completions Supply construction of Land Securities’ New build, 1 New Street Square, EC4, with office space totalling circa 260,000 sq ft. Source: Farebrother

farebrother.com 7 The London Midtown Office & Retail Markets Q4 2013

Investment

Alastair Hilton

Investment turnover in the 4th Quarter 2013 reached £596m in Unlike the 2nd and 3rd Quarters where Overseas Investors were fifteen transactions, 30% higher than the five-year quarterly the dominant Investor, UK Investors were the dominant in the average (£459m) which is an encouraging result following the 4th Quarter representing 59% of transactions, in particular UK 3rd Quarter where Investment totalled an impressive £937m. Property Companies. This tends to reflect strategies that are more orientated towards performance, and certainly if you look As the 4th Quarter brings the year to a conclusion, it is at the status of the occupational markets as set out in this important to note that Central London Investment markets have report, this supports this type of Investment criteria. seen turnover figures that now exceed pre-recessionary levels. It has been well documented that the markets have been enjoying Is this level of Investment sustainable? We believe it is, due to considerable capital inflows which are characterised by the Midtown still having the lowest Availability Rate in Central dominance of Overseas capital, within the background of a London, a restricted development pipeline and an increasingly restricted lending environment. Whilst the latter is improving, the diverse Occupier base. market has not been constrained by the challenges this presents and this more than anything, demonstrates London’s Looking ahead we are entering a year that will provide some position globally as a platform for Investment. considerable Economic contrast to the preceding years. The Economic outlook at present is positive and it will be interesting to see Within the context of the above, Midtown has performed, as how this filters through into the occupational market. Whilst we don’t anticipated, in parallel with the other Central London markets. expect material changes in the Investment market, it may generate The year closed at circa £2.74bn which is the highest annual further capital inflows and in particular from institutional Investors. turnover in Midtown since 2007. We had good early indications, with the 2nd and 3rd Quarters both being very strong. The latter This will have a positive influence on pricing and therefore value. was dominated by the sale of Shell Mex House, 80 Strand, WC2 }We also expect Investors to move up the risk curve which may at a reported £610m. embrace development as an option in respect to both, buying and asset managing existing assets. Liquidity is key. There will be some profit taking, however, the rationale for selling, will not be clear to all.

Selected Investment Transactions in Midtown

Address Sq ft Vendor Purchaser Reported Price £m

Centrium, 61 Aldwych, WC2 182,048 GLL Real Estates China Overseas Land and Investments 170.0

440 Strand, WC2 180,480 Telereal Trillium Legal & General Property 142.7

44 Lincoln's Inn Fields, WC2 109,746 Cancer Research UK London School of Economics 75.0

22 Kingsway, WC2 91,385 Harel Insurance & Finance Derwent London 59.0 Group and Clal Insurance Group

19 Charterhouse Street, EC1 63,700 De Beers Diamonds Derwent London 39.3

116-118 and 122-126 Chancery Lane, WC2 53,405 Armstrong International RER 35.5

Verulam House, 60 Gray's Inn Road, WC1 41,807 Private Investor Workspace Plc 18.1

406-408 Strand, WC2 9,618 Legal & General English Rose Estates Ltd and Topland Group 11.6

25 - 26 Furnival Street, EC4 15,374 The Jewish Chronicle Supercity 8.5

43 Eagle Street, WC1 10,566 Aberdeen Asset Management St Anslem Property Company 5.4

Chancery Court, 40-41 Furnival Street, EC4 9,142 Private Irish Investor Threadneedle 5.0

Source: Farebrother The London Midtown Office & Retail Markets Q4 2013

GLL Real Estates’ Investment transaction of Centrium, 61 Aldwych, WC2, to China Overseas Land and Investments was the largest sale of the 4th Quarter at £170m

Midtown achieves £2.74bn Annual Investment turnover in 2013, 6% higher than 2012 and the highest turnover since 2007

farebrother.com 9 The London Midtown Office & Retail Markets Q4 2013 Retail

Josephine de Castro

The retail tenant mix has been carefully tailored in and around Lamb’s Conduit Street, WC1, for almost 20 years resulting in a cluster of exclusive independent retailers forming a close-knit community

In the 4th Quarter 2013, Lamb’s Conduit Street was awarded style, perpetuated not just by the brands themselves but by the Academy of Urbanism’s prestigious ‘The Great Street the people that live and work in the immediate vicinity. Award 2014’. The award is voted by the Academy’s five hundred members including property The right tenant-mix is essential in retaining developers, leading architects and planners, who The this essence. select a winner based on the best, most enduring ISM BAN or most improved urban environments. UR RDS By avoiding blue chip multiple retailers, a cluster of WA A 014 very exclusive and creative mix of retailers has The key to Lamb’s Conduit Street’s success is its 2 flourished, making Lamb’s Conduit Street, one of the retail tenant mix and profile giving the street its unique rarest retail streets in Central London. The Street’s appeal. There is a real sense of community and neighborly success today has lifted the area as a whole, including the spirit amongst the independent retailers and family-owned residential and office values. The Estate includes 180 Office, restaurants and eateries which creates a relaxed, friendly Retail and Residential units in the heart of Bloomsbury. It is an atmosphere. Moreover, there is a definite sense of understated interesting model of sustainable high street regeneration.

10 farebrother.com , EC1, is strategically positioned, surrounded by increasingly retail-savvy office Occupiers. It currently benefits from a busy five-day lunchtime trade and with the area rapidly changing, there is certainly potential for it to become one of London’s most attractive Market Streets

Leather Lane links Holborn to Clerkenwell Road and holds one Ownership along the street is quite fragmented which makes it of London’s oldest street markets. The street is usually packed more challenging to have a ‘joined up’ tenant-mix strategy, during lunchtimes with the large work population in the area nevertheless, we are already seeing a good mix of independent looking for an alternative option for lunch instead of one of the retailers populate the street, capitalising off the lunchtime trade. usual sandwich chains. The street has quite an edgy feel with many clothes, fruit and vegetable stalls. M&G’s recently refurbished Waterhouse Square, EC1, is located at the southern end of Leather Lane and home to Occupiers, Camden Council plans to improve the main paved square on Skype, Weber Shandwick and Austin Reed who have helped to Leather Lane, adjacent to M&G’s Waterhouse Square, EC1, by raise the profile of the area. Adjacent to this building is clearing out the existing clothes stalls and replacing them with a Wainbridge’s development scheme, 120 Holborn, EC1, which is mix of high-quality food stalls, similar to those found in Exmouth already seeing substantial rental increases on the retail element, and Borough Markets, therefore catering for the growing with the most recent deal showing a rental uplift of 61%. number of blue chip Occupiers in the area. Additionally, seating areas will be added and the immediate public realm improved, allowing customers to eat, relax and enjoy in the area.

Selected retail lettings in Midtown

Tenant Address Sq ft Rent £ pa

Barrafina 10 Adelaide Street, WC2 3,245 145,000

Vital Ingredient 176 Fleet Street, EC4 2,192 112,000

Grenson Shoes 40 Lamb’s Conduit Street, WC1 1,286 42,500

Cards Galore 38 Gray’s Inn Road, WC1 765 42,000

Cards Galore 73 Kingsway, WC2 734 75,000

Scribbler 119 Kingsway, WC2 436 50,000

Source: Farebrother

farebrother.com 11 THE KNOWLEDGE

The name ‘MidtowSn’ is nowT part of ThGe KnowledIge, LondonE cabbieS s’ training, however, Midtown is a ‘brand of brands’, a diverse yet inter-dependent group of Internationally recognised business areas set within some great communities. Each quarter we’ll be taking a blind-spot mirror look at one, setting-out some key points of interest not only to Investors, Developers and Occupiers but also to the curious taxi passenger who maybe passing through.

Jack S heppard Present day St Giles is in a pivotal position linking four St Giles of Central London’s busiest destinations: Bloomsbury, Covent Garden, and . Throughout its history, The St Giles Roundhouse was a small St Giles has been, a place of entrance and exit, whether prison used to temporarily hold for those arriving in the capital for the great medieval fairs suspected criminals during the period of the , for the condemned making their when the area was a notorious rookery way west to their executions at or for the and home to thieves and other thousands of tourists who will soon pour into London from criminals. One of its most notable the new Crossrail station beneath . Since prisoners was Jack Sheppard, a the 1950’s the area has changed enormously, with the loss notorious thief who escaped in 1724. of small shops and houses along St Giles High Street and the construction of Central Saint Giles and Centre Point. St Giles in the Fields

Slums of St Giles St Giles-in-the-Fields, also commonly known as the Poets' Church, is a Palladian style church which was built between During the 17th and 18th centuries the area St Giles was 1731 and 1733 and located on St Giles High Street, WC1. bounded by two neighbourhoods notorious for being one The church is part of the Diocese of London within the of the worst slums in Britain and known more commonly Church of . The church was designated a as the ‘Rookery’ – a maze of ramshackle houses, alleys Grade I listed building in 1951. and courtyards inhabited by thousands of destitute people, poverty and squalor resulting in the name St Giles being associated with the underworld.

The Rookery in present day terms would lie between the parish church St Giles-in-the-Fields and Great Russell Street, WC1, and Seven Dials, WC2.

From the mid 19th century, plans were developed to demolish the slums as part of London wide clearances for improved transport routes, sanitation and the expansion of the railways. New Oxford Street was driven through the area to join the areas of Oxford Street and Holborn – it is still an important link through the Western part of Midtown to the West End.

Artist William Hogarth famously depicted the area in a number of his prints – ‘Gin Lane’, ‘Four Times of Day’ and ‘First Stage of Cruelty’ are all set in St Giles illustrating the squalor and despair of the local community.

William Hogarth’s Gin Lane

12 farebrother.com St Giles Circus

St Giles Circus is the junction of Oxford Street, New Oxford Street, and Court Road. Koreatown During the Middle Ages gallows were located at St Giles The top of St Giles High Street has developed a cluster of Circus alongside a cage for prisoners, however, today the independently owned restaurants, offering authentic and area is dominated by Centre Point Tower which has recently affordable Korean cuisine in a ‘no-frills’ canteen style of received planning approval for change of use from office to dining. From the outside, they may not look the most inviting residential. Located on the south east corner on New Oxford with their gritty appearance, however, these incredibly small Street and Charing Cross Road, the tower is in the heart of St but quirky restaurants are very popular with the Korean Giles Circus is currently the site of construction for Crossrail. community and are frequently busy. The extensive menus offer a wide range of traditional Korean dishes including, Central St Giles Bibimbap, kimchi pancakes and HotPot which is a soup dish kept simmering in the centre of the table with your own Is one of Central London’s landmark buildings owned by cooker to which raw ingredients are added and cooked in the duration of the meal. Legal & General and Mitsubishi Estate. Designed by Italian architect Renzo Piano, this striking 500,000 sq ft mixed-used development was his first work in the UK. He has since gone on to design Eastern Europe’s tallest skyscraper, on London’s South Bank. The building, which is famously Denmark Street is a short narrow road just off St Giles notable for its multi-coloured facades covered with 134,000 High Street notable for its connections with British popular tiles in vivid shades of red, orange, lime and yellow, was fully music and without a doubt, the best place in London for let within one year of completion in 2010 and now home to independent music shops, particularly when it comes to high-profile international Occupiers including, Google, NBC guitars. recorded their first album at Universal, Mindshare and Burston-Marsteller. The scheme Regent Sounds Studios on Denmark Street in 1964. With brought with it ten new restaurants and retail units, one a heritage so rich it is great to see so many independent hundred and nine apartments and 408,000 sq ft of office shops, resisting any takeover by big chains in space all centered around a landscaped piazza. the heart of Central London.

Central St Giles

Regent So unds Studios

St Giles in the Fields ’S ETER PARKER P CLUB ROCK N ROLL Farebrother Key Contacts

Farebrother 27 Bream’s Buildings London EC4A 1DZ For further information please call +44 20 7405 4545 farebrother.com Alistair Subba Row Alastair Hilton Senior Partner, Investment Investment +44 20 7855 3555 +44 20 7855 3535 Follow us on [email protected] [email protected]

Working in Partnership

Julian Hind Charlie Thompson Office & Residential Leasing Office Leasing, Sales & Development +44 20 7855 3558 +44 20 7855 3554 [email protected] [email protected]

Other Research available

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Malcolm Brackley Jeff Norris The The Farebrother IPD London South Bank London Midtown Lease Advisory, Valuation Business Rates Office & Retail Markets Q4 2013 Investment Half Year Report H1 2013

Alastair Hilton A different view of South Bank Introduction Head of Investment In our previous market reports we have reviewed and commented More Depth, More Insight on a number of the key components that need to be in place in +44 20 7855 3566 +44 20 7855 3593 order to drive Investment Performance. These are, a diverse and active Occupier base, low Availability Rate and limited Development Pipeline. There are other factors, such as sector specialisation and clustering, however, the former components neatly define where the Midtown market currently sits. Behind all this, the Midtown market is geographically best placed to take the [email protected] [email protected] full benefit of Crossrail. You will see from the contents of this report that these market components are combining strongly to produce very positive Capital Growth and also strong Total Returns. IPD Headlines Looking at the Investment market in isolation during the 1st Half of • London Midtown offices posted a Total Return of 5.9% 2013, London has continued to achieve significant capital inflows h/h in the 1st Half of 2013 up from 3.9% h/h since this from the Overseas Investors. The reasons are well rehearsed. The time in 2012. This places the market as the top performing market shows no sign of any weakening and as a result, Overseas UK and London office market, ahead of the West End and Investors now account for the majority of Midtown transaction comfortably ahead of underperforming City offices activity. In the 1st Quarter 2013, however, the UK Investor was the • Capital Value Growth remained strong for Midtown at dominant force but more recently in the 2nd Quarter, we have 3.6% h/h, well ahead of the Central London average seen this switch back to the Overseas Investor, in part due to large of 3.0% h/h. Overall, UK Offices struggled with a more transactions such as The Adelphi, 1-11 John Adam Street, WC2, subdued increase of 1.0% h/h which was sold by Istithmar to Blackstone for £265 million and 90 Long Acre, WC2, which was sold by The Witkoff Group to • Rental Value Growth has slowed significantly across all Northwood Investors for £162.5 million. Total turnover in Midtown Central London markets since 2011 but Midtown still for the 1st Half of 2013 was £1.187 billion, similar to levels posted a modest increase of 2.5% h/h achieved in the 1st Half of 2012 which reached £1.404 billion.

H1 12 Investment Source by Value (%) H1 13 Investment Source by Value (%) UK Fund UK INV U ES K 1 T UK Private / Other I O 2 N 13 R 13 V 4 S 12 E UK Property Company S 4 T S O S Overseas European R R R 11

O S O

T 15 T 29 Overseas Middle Eastern

S

38 S E

19 E V

62 V Overseas Far Eastern

N

N

I

I

71

S S 17

A A Overseas Other

E

E 54

S S

R

22 13 R E E Owner Occupier

V V O

O Undisclosed

£1.403bn £1.187bn Total H1 2012 Investment Total H1 2013 Investment Source: Farebrother A member of A member of

London South Bank Farebrother IPD London Office & Retail Market Midtown & South Bank Quarterly Reports Investment Reports

Andrew Glover Josephine de Castro This research is available in PDF format. Please email [email protected] to receive a copy. Property Management Retail Leasing, Sales & Development +44 20 7855 3580 +44 20 7855 3595 [email protected] [email protected] This publication has been carefully prepared and it is intended for general guidance only. No responsibility is accepted by Farebrother for any errors or omissions. The information contained herein should not be relied upon to replace professional advice on specific matters and is not, in whole or in part, to be published, reproduced or referred to without prior approval. Information may be subject to revisions in subsequent editions. ©2014 Farebrother. All rights reserved.

Julian Chappell Victoria Shreeves Corporate Real Estate Research +44 20 7855 3533 +44 20 7855 3532 [email protected] [email protected]

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