London Office Crane Survey Gearing up for the next phase of construction GO Summer 2014 London Office Crane Survey Gearing up for the next phase of construction Report overview Key findings WHAT? Submarket snapshots A report that measures the volume and impact of office development taking place across central London over the next five years Crane Survey results Market context Outlook WHERE? Central London, covering seven key office submarkets: City, Docklands, King’s Cross, Midtown, Paddington, Southbank and West End Development table WHO? Developers that are building new offices or undertaking significant refurbishments of 10,000 sq ft or more WHEN? This survey covers the six months to 31st March 2014. All data is correct as at 31st March 2014 HOW? A team of researchers have walked every street in central London to monitor office construction. Our field research is then verified with direct industry links and in-house property experts London Office Crane Survey Gearing up for the next phase of construction Key findings Key findings Submarket snapshots Crane Survey results Market context Outlook Development table London Office Crane Survey Gearing up for the next phase of construction Key findings CRANE SURVEY RESULTS Key findings Office construction is down This survey Submarket snapshots 5% over the past six months has recorded to 9.2 million sq ft 15 new starts; Crane Survey results lowest number 45% of the space since 2010 under construction is already let Market context The West End and 2014 will see a Outlook There was just Midtown are the spike in the delivery one new only markets to of new space Development table construction see a rise in but there is a very start in the construction limited pipeline City levels thereafter MARKET CONTEXT A rise in tenant Yields remain There has been demand has low as a return to applied demand for rental growth pressure on investment in most the existing stock sub markets supply of remains Currently the lowest level Grade A space high £ of available space in central £ London for six years OUTLOOK A rise in demolition Increase in pre-letting Rents expected to rise indicates a new wave activity expected over over the next of construction the next eighteen 2017 five years 2016 is imminent months 2015 LET 1 1 1 BY 2017 may see the next development peak London Office Crane Survey Gearing up for the next phase of construction Submarket snapshots Key findings Submarket snapshots Crane Survey results Market context Outlook Development table London Office Crane Survey Gearing up for the next phase of construction Submarket snapshots The City City office development pipeline Key findings Million sq ft 3.5 Submarket snapshots 3.0 2.5 2.0 Crane Survey results 1.5 1.0 Market context 0.5 0.0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Outlook Completed u/c available u/c let Development table Total amount under construction Number of new construction starts Which sector Today Highest is currently Highest taking the 8.2 million sq ft most space? Today (2008) Insurance 4.7 million sq ft 1 20 10 Year Average (2007) Lowest Lowest number of Average size of a scheme 4.2 million sq ft 1.3 million sq ft new starts since 2010. (2010) 10 Year Average Lowest 205,000 sq ft ft Construction is down 8% from 6 months ago and is the first fall in construction for three and 0 (2010) Average size of a floor a half years. 6 Total amount completed since last survey Total amount of space under construction 17,000 sq ft 380,000 sq ft which has been let or remains available Highest 54% level for 46% Number of cycle spaces let nine years available being built 3,186 across 5 buildings London Office Crane Survey Gearing up for the next phase of construction Submarket snapshots West End West End office development pipeline Key findings Million sq ft 2.5 Submarket snapshots 2.0 1.5 Crane Survey results 1.0 Market context 0.5 0.0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Outlook Completed u/c available u/c let Development table Total amount under construction Number of new construction starts Which sector Highest Today Highest is currently 3.4 million sq ft taking the Today (2007) most space? 1.6 million sq ft Corporate 13 10 (2011) The ten new starts total Average size of a scheme 10 Year Average 777,000 sq ft - the highest 2.2 million sq ft Lowest 0.7 million sq ft volume of new starts for (2010) three and a half years Lowest 62,000 sq ft 10 Year Average Construction is up 11% from 6 months ago and is one of the only two submarkets to see a rise in 2 Average size of a floor construction levels. (2009) 8 Total amount completed since last survey Total amount of space under construction 44% of which has been let or remains available 9,500 sq ft 0.5 million sq ft completed space has been let Number of cycle spaces 96% available being built 4% 2,189 let across 11 buildings London Office Crane Survey Gearing up for the next phase of construction Submarket snapshots Docklands Docklands office development pipeline Key findings Million sq ft 3.5 Submarket snapshots 3.0 2.5 2.0 Crane Survey results 1.5 1.0 Market context 0.5 0.0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Outlook Completed u/c available u/c let Development table Total amount under construction Number of new construction starts Which sector Today Highest is currently Highest taking the most space? Today 7.4 million sq ft Other 0.5 million sq ft (2002) (Medical) 0 10 Year Average Lowest 1 Average size of a scheme 0 million sq ft 0.5 million sq ft (2012) (2011) 10 Year Average 540,000 sq ft Lowest This is the fifth consecutive survey with the same 0 one building under construction. 1 Average size of a floor (2014) Total amount completed since last survey Total amount of space under construction which has been let or remains available 30,000 sq ft 0 sq ft across 0 buildings Number of cycle spaces 89% let being built 138 11% available London Office Crane Survey Gearing up for the next phase of construction Submarket snapshots Midtown Midtown office development pipeline Key findings Million sq ft 1.2 Submarket snapshots 1.0 0.8 Crane Survey results 0.6 0.4 Market context 0.2 0.0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Outlook Completed u/c available u/c let Development table Total amount under construction Number of new construction starts Which sector Today Highest is currently taking the Highest Today 1.3 million sq ft most space? TMT 1.3 million sq ft (2014) 68% of space let 8 3 (2013) 10 Year Average Lowest Average size of a scheme 0.7 million sq ft 0.2 million sq ft (2010) 10 Year Average 87,000 sq ft Lowest Construction is up 25% from 6 months ago and 0 is at its highest level recorded in a crane survey. 3 Average size of a floor (2010) Total amount completed since last survey Total amount of space under construction which has been let or remains available 10,000 sq ft 0.16 million sq ft across 3 buildings Number of cycle spaces 31% Highest 69% let for five available being built years. 1,047 London Office Crane Survey Gearing up for the next phase of construction Submarket snapshots Southbank Southbank office development pipeline Key findings Million sq ft 1.4 Submarket snapshots 1.2 1.0 0.8 Crane Survey results 0.6 0.4 Market context 0.2 0.0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Outlook Completed u/c available u/c let Development table Total amount under construction Number of new construction starts Which sector Today Highest is currently Highest taking the 1.6 million sq ft most space? Today (2014) TMT 0.3 million sq ft 94% of space let 1 10 Year Average Statistics show that we 2 Average size of a scheme 0.9 million sq ft Lowest 0.05 million sq ft have never recorded more (2012) (2010) than 2 starts per survey for this market. Lowest 196,000 sq ft 10 Year Average Volume of construction is at its lowest for more 0 than 10 years. Average size of a floor (2013) 1 Total amount completed since last survey Total amount of space under construction which has been let or remains available 19,000 sq ft 0.5 million sq ft across 2 buildings Number of cycle spaces 0% 100% being built 77% of the space let available which has completed 430 has been let London Office Crane Survey Gearing up for the next phase of construction Submarket snapshots King’s Cross King’s Cross office development pipeline Key findings Million sq ft 0.9 0.8 Submarket snapshots 0.7 0.6 0.5 Crane Survey results 0.4 0.3 0.2 Market context 0.1 0.0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Outlook Completed u/c available u/c let Development table Total amount under construction Number of new construction starts Which sector Today Highest is currently taking the Highest Today 0.8 million sq ft most space? TMT 0.7 million sq ft (2013) 0 10 Year Average Lowest This is the second 4 Average size of a scheme 0.1 million sq ft 0 million sq ft consecutive survey with (2012) (2011) no new construction starts Lowest 112,000 sq ft 10 Year Average Construction is down 8% on six months ago, but remains significantly above the ten year average 0 Average size of a floor of 0.1 million sq ft.