The Midtown Market
The main thrust of the TMT sector, which averages floorplate sizes of approx. 7,000 sq ft, has been from Central St Giles across Midtown to Angel (Derwent’s Angel Building) in the north. Cost has been a significant driver in this strong and growing sector that favours a relaxed working environment over condensed office arrangements. Whilst Soho and Covent Garden were the locations of choice, cost and availability has clearly moved this sector through need. A clear “cause and effect” scenario worthy of closer scrutiny by property industries’ researchers. Is it significant for instance that Canary Wharf does not seem to be a viable option and why?
One major agency predicts that TMT will provide over 35% of office demand across London in 2012 with names like Linkedin and Skype on the trawl and likely to secure space over the next 12 months. There is no doubt that Midtown provides the assets needed to cater for this demand in all respects except for the important one — supply. And a great irony of the financial crisis so far is that by putting a lot of development activity on ice through financial constraints it has led to a spiral of rental growth as occupiers compete to acquire what little stock is available.
Midtown currently offers approx. 8% availability. This comprises approx 4m sq ft predominantly made up of secondhand space. Recently completed new schemes such as 1 Kingsway are achieving strong returns as discussed above but are lacking in number. The development pipeline needs bolstering if this market is to compete and continue to establish itself as the main market that it deserves to be. Take up is down, but not due to lack of interest but simply the lack of options to consider.
The home grown sectors of Midtown are showing strong signs of thriving with Hult International Business School securing the 23,500 sq ft Conquest House on John Street and the legal world seeing strong activity also.
There is of course an undertone of nervousness across London and rental growth can be considered an irony rather than a signal of organic growth. The headline “waking up to uncertainty” is not without firm foundation and as we all know in the property world nothing beats uncertainty to “put a few things off” for a while.
As Q1 moves comfortably on to Q2, I wonder whether the steady flow in Midtown will be for stronger activity or a steady downward descent in activity? As an agency active in this location we are currently stretched to the limit with ongoing projects and long may this last.
I hear no uncertainty in my client base or the occupiers that I talk with, despite it all.
Q1 always kicks off on a singularly awkward note due to its distinct dissociation from Q4. Q1 hops nicely to Q2 and on, until Q4 drops off the cliff, returning uncomfortably to Q1. This is a feeling exacerbated by the addition of the year. That last digit seemingly distorting the world of statistics irrevocably. If it’s going to happen, it will be between Q4 and Q1.
And the shift from Q4/11 to Q1/12 is no rulebreaker. Recent property reports bear uncomfortable promise with headlines such as “Waking up to uncertainty” and “the summer is over (well, I never) but…”. Indeed Barclays Capital recently provided commentary, after much research, on the statistical correlation between the erection of towers and the depression of economies. Skyscraper construction having an “unhealthy correlation” with financial crashes. The Shard being noted as the ultimate harbinger of downturn (bearing a beautifully Tolkien image with it) and spawning a headline “Shard could signal crisis, says BarCap”. Are we in for a storm?
On the ground though, things are different. Midtown has few “skyscrapers” and activity has been strong with continued rental growth, albeit created through a worrying lack of supply rather than overwrought demand for new space. Indeed the location is losing high rise office space as landmark office towers such as Centrepoint seem destined for residential conversion. What will local agents do when robbed of the opportunity to break the ice with that little fact that Centrepoint famously stood empty for almost a decade after development back in 1966?
The last quarter has seen a busy time in Midtown with significant lettings such as 25,000 sq ft to John Laing Plc at UK and European Investments Ltd’s, 1 Kingsway, London WC2 at a staggering £65.00 per sq ft and Farrer and Co LLP leasing of 21,000 sq ft at 20 Lincoln’s Inn Fields WC2 at a rent reflecting almost £37.00 per sq ft. The former reflecting the rent that can now be dictated in the area due to the lack of supply of new office accommodation generally across London and the high levels being achieved in the West End of over £95.00 per sq ft.
Midtown has been a main benefactor of the rise of the so called TMT, or Telecommunications, Media and Technology, sector and in particular Google taking approx. 160,000 sq ft in Central St Giles amongst others. Lack of supply in the area has caused a great opportunity to be THE London TMT centre, which Midtown could be, to be lost as Microsoft and Experian were finally drawn to Victoria as a base due to the availability of large floor plates.
The London Office Guide is useful to help tenants find London office space to rent, London offices to let, central London offices to rent and both serviced offices and commercial property space. In addition to helping find London offices to rent and central London office space to let, it is useful for finding London serviced office space and business centres, London agent surveyors and information on the London office markets. Finding office space to let in London can be daunting. The right office space to rent in London is critical for many companies and if they don't find the right London office space to let their business and staff may be affected. Office space in London and London office property to rent can be expensive so companies need to shop around as much as possible. Overall, the London Office Guide is the most useful website and publication to help tenants find London office properties to let and central London commercial space. Especially office space in central London which includes City office space, Midtown offices and West End office space.
Included in the City of London are the postcodes EC1, EC2, EC3, and EC4. On the City fringe are London E1, London N1, London SE1, the southeastern part of London E2 and the southern part of London N7. London E14 includes office space to let in Canary Wharf and offices to rent in London Docklands. It is a separate office market but it competes for many of the same type of tenants the City does. Office space to let in London EC1 includes the areas of Clerkenwell, Smithfield and Farringdon which are east of Farringdon Road. Many media and hi-tech companies find these areas appealing. Offices to let in London EC2 include the areas around the Bank of England and Stock Exchange. Banks and financial companies of course prefer London office space in this postcode. Offices to rent in London EC3 include the area around Fenchurch Street and Eastcheap. Traditional home of insurance companies. Office space to let in London EC4 east of New Bridge Street include the areas around St. Paul's, Cannon Street and Blackfriars stations. London office space to rent is less expensive in the fringe postcodes. However, there is high quality London office space to let in London E1 around Spitalfields, Shoreditch and St. Katharine's. There is also new high quality offices to rent in London SE1 along the southbank and new office space to let in London N1 around King's Cross. There is also a range of inexpensive offices to rent around Angel and Old Street in London N1. Offices to let in London Docklands are mostly modern and the Canary Wharf office space to let is some of the best in all of Europe.
London Midtown is the area between the City and the West End. It is all of London WC1 and London WC2. It also contains London EC1 west of Farringdon Road and London EC4 west of New Bridge Street. Office space to let in London WC1 include offices to rent around Holborn and office space to let in Bloomsbury and also king's Cross. Offices to rent in London WC2 include Covent Garden office space to let and offices to rent around Leicester Square and the Strand. The Midtown office market is divided by Kingsway. Midtown office space to let east of Kingsway competes more with the City. Midtown offices to rent west of Kingsway tend to compete with the West End. Covent Garden offices to rent compete mostly with Soho office space while Bloomsbury offices for rent compete with office space in the West End north of Oxford Street.
The central or core West End of London office market comprises mainly London W1 office space to let. It also contains St James's offices to rent which is London SW1. London W1 offices to rent are in three geographical parts of the postcode. Mayfair, Soho and north of Oxford Street. Mayfair is the south west part of the London W1. Mayfair office space to let is some of the most expensive in the world. Soho is the south east part of London W1. Soho offices to rent have traditionally appealed to advertising and media companies. London W1 north of Oxford Street is divided into several office markets. There is office space to let in Noho which is immediately north of Soho. Soho office space to let is more expensive though. North of Noho are offices to rent in Fitzrovia which is the north east part of London W1. London W1 west of Portland Place is the remaining office market north of Oxford Street. It comprises mostly period office properties converted from residential.
The Greater West End of London includes offices to let in all of London NW1 and part of London NW8 to the north. To the south it includes almost all of London SW1, part of London SW8 and part of London SE11. To the south west all of London SW5, London SW6, London SW7, London SW10 and parts of London SW11, London SW15 and London SW18. To the west all of London W2, London W6, London W8, London W9, London W10, London W11, London W12 and London W14. Office space to let in London NW1 and London NW8 are offices to rent in Camden, Euston and Marylebone. Office space to let in London SW1 includes offices to rent in London Victoria, Belgravia, Millbank, Westminster, and Whitehall. In London SW8 and London SE11 are offices to let in Battersea and office space to rent in Vauxhall. In the south west there is office space to let in Chelsea, Fulham, Earls Court, Knightsbridge, South Kensington, Putney and Wandsworth. The office space to let in London SW11 also includes parts of Battersea. The Knightsbridge office space to let is expensive. Knightsbridge offices to rent compete with Mayfair. To the west there is office space to let in Paddington, Hammersmith, Bayswater, Kensington and West Kensington. There is Hammersmith office space to let in London W6 and Hammersmith offices to rent in London W12. London W14 office space to rent comprises mostly West Kensington.
In some cases serviced offices in central London or business centres in London might be more appropriate for some companies. London serviced office space is ideal for smaller companies. Serviced offices in London are usually available month to month and include furniture and services as well as the space. There is a range of London serviced office space available. From expensive prestige buildings to basic economical space. Before trying to find office space in London and especially central London office property to rent, tenants should refer to the London Office Guide.
