Take up in Central London increased by nearly a quarter in 2013 compared to the previous year, standing at 12m sq ft, albeit a figure which remains below the 15 year average of 14.5m sq ft. Upcoming demand is very strong; we therefore expect a further uptick in leasing activity as we move into 2014.
Given that workplace based employment drives take up, it is encouraging that two thirds of respondents to the latest (December) London Business Survey by CBI/KPMS said they planned to expand into London or within the UK. In October, the London Chamber of Commerce and Industry also reported that over a third of the capital's employers were expecting their workforce to increase by early 2014.
The scale of transactions in fringe locations clearly demonstrates the core markets’ inability to satisfy demand from occupiers with large requirements. Four of 2013’s five largest deals involved the taking of space in non-core locations, with the emerging markets accounting for almost third of Central London satisfied demand in 2013.
Investment activity in Central London reached a record in Q4, totalling £9bn. This brings the 2013 total to £21.8bn, the highest recorded since DTZ started monitoring activity in 1997. Turnover in Q4 was boosted by two very large deals: the sale of the More London, SE1 office portfolio to St Martin’s for £1.7bn, and for a similar price, the exchange of Blackstone’s 50% share of Broadgate to GIC.
City, Mid Town and West End yields stayed the same in Q4, respectively 4.75% for City and Mid Town and 4% for the West End. Weight of money continues to apply downward pressure, leading to the possibility that yields may dip further during 2014.
Source : DTZ (Groupe UGL)