Summer Break

After a buoyant recovery comes the adjustment as the UK economy slows and the office market comes up against the shortage of Grade A space. The question at the moment is whether the slowing of the momentum will last for a lengthy period or whether it merely reflects the current market and economic realities, particularly as worldwide confidence has dived.

Many of the fundamentals still signal growth, such as the fact that the economy in London is bucking the national trend and growing at a reasonable rate. Also there remains demand for offices in all sub markets. For example, Colliers reports that availability in central London has declined to a 30 year low and Grade A space is down 17%.

Another way of looking at it is that net absorption in the West End in the first quarter of the year was at the fastest rate since 2005. Mike McKeith of Colliers commented: “Competition for Grade A space will remain the key driver of rental uplift during 2011. Absorption appears to have peaked in the city and is close to doing so in the West End. We expect to see increased absorption of good quality second hand space as Grade A becomes scarcer.” Tony Joyce of GVA notes that the “market has been quiet for some months although there are lots of requirements.”

Even so, the serviced office market continues to perform strongly with officebroker.com reporting a 20% increase in deals in April-June compared with the same period a year ago. That can be evaluated against figures from Capita Symonds that take up in the second quarter in central London was below average, with the City down 36% on the same period of 2010 and the West End down 9%. Another shift in the balance of the market is the increased amount of prime residential development which cost consultant EC Harris calculates at £21 billion over the next nine years in a total of 9,000 units.

Smooth Ride for the OlympicsApart from the demands of growth in the City, there is also the looming Olympic Games next year which will put pressure on

Apart from the demands of growth in the City, there is also the looming Olympic Games next year which will put pressure on the transport system. This applies particularly to Upper and Lower Thames Streets which will be kept clear for the movement of Olympic dignitaries. The objective of the City of London “is to keep central London ticking over.”

While the major institutions feature so much in the performance of the Square Mile, there is also a need to support small businesses with 85% with City businesses employing less than 50 people. The City is looking to support these businesses through promoting new initiatives such as the Government backed Innovation Warehouse scheme and through introducing guidance packs for SMEs setting up in the City.

Shoppers Flock In

The City of London’s promotion of a broader economic base with increased leisure and retailing has been justified in spectacular fashion in the past year with the opening of the New Change retail complex. This is at the core of the move to a ‘seven days a week’ shopping offer which is gradually widening away from Cheapside to include peripheral areas. New Change, with its 58 shops, (30 of which have never been in the City before), has proved very popular with the 300,000 visitors in December, which despite the poor weather was a figure higher than anticipated. To add to the attractions of hopping, the City of London is seeking powers to allow trading as part of street events, which could prove attractive with the City’s easier parking for cars at the weekend. In time it is hoped that all the retail areas will link, from West (Cheapside) to East (Spitalfields) drawing in the historic Leadenhall Market which is 600 years old this year. The City of London has invested £6 million in the area around New Change to improve the environment, including widening the payments.

Maintaining the pace

All the pieces of the jigsaw are in place for the City to enhance its reputation as the top financial centre with plans for major new developments, the completion of the cluster of skyscrapers and the provision of a considerably broader range of retailing and leisure facilities.

The feedback from the Barbican Residents Association has underpinned Hammerson’s plans for the two building St Alphage House, London Wall which is being designed by MAKE. For Peter Bennett, City Surveyor, this is coming at the right time when there are sizeable requirements in the market which mean pre lets. St Alphage House is one of a number of schemes in a year which promises to be particularly active at a time when city employment is increasing again. Among other schemes in the pipeline are Helical Bar’s 26,012 metres (280,000 sq.ft.) Mitre Square and Exemplar’s 23,225 sq.metres (250,000 sq.ft.) at the London Fruit and Wool Exchange, Spitalfields.

The provision of improved education and leisure facilities is coming through with an international class Guildhall School of Music with a 600 seat concert hall as part of Heron’s residential scheme at the former Milton Court building. The past few months have seen a number of confidence boosting decisions for the Square Mile’s financial standing, such as:

• UBS is to move into a new 74,320 sq.metres (800,000 sq.ft.) complex at Broadgate;
• Bloomberg is to take 46,450 sq.metres (500,000 sq.ft.) in a development of the Bucklesbury Island site and another sizeable chunk will be built speculatively.
• Further funding to complete the Pinnacle skyscraper;

Other schemes at 6 Bevis Marks and 10 Moorgate. The City of London has been particularly supportive of these schemes. The encouraging factor is that there are other large requirements in the market from insurance, legal and banking organisations. Bennett said: “The sentiment is that there is money to be made in the markets and that businesses want to express themselves through new buildings.”

Demand from Banks

One encouraging factor for investors and developers is that demand for office space from financial groups in 2010 exceeded the period before the recession. Knight Frank believes that there will be continued demand from banks over the next three years. The firm’s William Beardmore-Gray said: “There are financial firms we talk to who want to acquire offices and expand in London and need to act ahead of approaching lease expiries in 2014 and 2015.” On the other hand there is some concern among banks that new government regulation may affect their business. But the picture is encouraging for developers and the deals are coming through, such as Axa Real Estate Investment Management (REIM) teaming up with Favermead for speculative development of 19,974 sq.metres (215,000 sq.ft.) at 60 Holborn Viaduct,
the site of the former Bath House. The new building, designed by Kohn Pedersen Fox Associates, will be completed
by 2013. As far as the rest of the Midtown market is concerned, Charles Killen of EA Shaw said: “There has been a bit of a buzz about the market since we came back after Christmas. Buildings that aroused little interest before then now have a
number of interested parties. It is a little volatile but we expect a steady year as the vacancy rate (now 5%) falls further.”

Middlesex Hospital Healthy Recovery

Further evidence of the return of a more confident market is that an agreement has been signed for the speculative development of the former Middlesex Hospital site in the West End. The scheme will include a mix of private and affordable apartments, two Grade A commercial buildings, retail and amenities for local occupiers including a health centre and an education facility. The intention is to submit a new planning application in mid 2011. Following the grant of planning permission, work will commence on site immediately. The agreement is for the Icelandic Bank Kauphing to put in the site at a value of around £150 million and Aviva Investors to provide finance while the scheme is developed by Exemplar. Clive Bush of Exemplar said “Two single lot sizes will be more appropriate for West End occupiers and more acceptable to the investment market. Hopefully we can take advantage of the shortage of stock.”

Selling Irish Stock

The impact of the sale of Irish owned properties is considerable and will continue for some time. A prime site on the corner of Whitcomb Street and Panton Street, Leicester Square, which was formerly owned by Irish Investors, has been sold to a joint venture of an overseas investor, Lemur, and a new development firm set up by former Balllymore director Tim Farrow for £6 million. The intention is to build a 245 bedroom hotel, 33 luxury flats and a 660 seater cinema. At the
nearby Swiss Centre site, Irish developer McAleer & Rushe is hoping to sell the W hotel scheme for £200 million. The decision to sell has come after a number of approaches by buyers for the project. In Pall Mall . Ballymore has sold a site
to Amazon Properties for £6.2 million, a yield of 4 %. At the moment 42-43 Pall Mall is let as offices but Amazon will seek
planning to convert the property to residential use.

A rosy picture of the market has been painted by DTZ in its predictions for 2011 in a resurgence of pre letting activity and investment. This will be driven by greater demand from occupiers so that DTZ reckons that monthly lettings
could reach 92,900 sq.metres (1 million sq.ft.) with rental increases to £645.60 a sq.metre (£60 a sq.ft.) in the City and £1022.20 a sq.m. (£95 per sq.ft.) in the West End. Colin Wilson of DTZ commented: “As we move into 2011, it seems increasingly likely that further stock will be brought to the market as banks and, in particular, Ireland plc accelerates the de-leveraging process.” Colliers’ view is that the West End retail and hotel businesses are in good shape with rents rising and a weak pound helping to pull in foreign visitors. Even the volume of retail
sales rose in 2010 from the level of the previous year. Colliers’ Mark Charlton said: “Currently an astonishing £1 billion of investment in the West End is
planned over the next two years, with a number of major developments well underway.”

New Cash Flows

If there is one figure that illustrates the fact that the world
is awash with money then it has to be Jones Lang LaSalle’s
estimate that there are 1,000 cash buyers for London property. As a result, JLL’s Damian Corbett believes that the London market will be flooded with international money in 2011 coming from 35 different countries.

These investors arenow prepared to spend £200 million each, a four fold rise in a short period. There has been a shift in the balance of cash flows with this year expected to see more dominance by Far East and German investors. In the case of the Middle East investors, the expectation is for a concentration on putting money into new developments as we have seen in the past few years, notably at the Shard of Glass.

One source of supply of properties will be Ireland’s National Asset Management Agency raising money to pay back bank debt. The British institutions should not be left out of the equation. For example the cash rich Legal & General is prepared to pay £300 million for Delancey and Invista Real Estate’s 110 Fetter Lane for a yield of 4.6%, the lowest in the City for four years. The 24,619 sq.metres (265,000 sq.ft.) property is fully let with the HM Courts Service occupying just over half of theoffices. There is a solid basis for the buying spree because figures from the IPD put the return on property in 2010 at 14.5%, the best for four years.

One of the more unusual deals is that Arab Investments is expected to sell GVA’s 3,855 sq.metres (41,500 sq.ft.) headquarters in Stratton Street, W1 to the Algerian Embassy for £60 million, a yield of under 4.47%. GVA’s lease has another four years to run and the property is expected to be redeveloped. But will it become an embassy for the Algerians? It comes at a time of growing confidence in the West End. Richard Scott of Mellersh & Harding said: “The market is more positive and the shortage of prime offices means we will see increases in rents. The bellwether for the current market is provided by 40 Bruton Street where rents have moved up to more than £1,022 a sq.metre (£95 a sq.ft.) rumoured to be well above that for the top floor.”

French at Kings Cross

Any doubts about the long term future of the Kings Cross
development have been eased with the decision of French bank BNP Paribas to buy a site for its first office development in the UK. The property arm of the bank has plans for a massive 79,968 sq.metres (860,800 sq.ft.) scheme. The bank intends to occupy some of the space and will start construction in 2012. Phillippe Zivkovic of BNP Paribas said: ”Work will begin in the autumn after the Olympic Games and be completed by 2015. The development means that all our six business lines will be established in the UK.”

The widening appeal of Greater London to developers and investors is shown by the variety of schemes outside the centre, notably in East London and the Southbank. At Waterloo investors, together with their architects, have lined up to buy three of the four buildings of the Shell Centre with bids of at least £150 million. The intention is to redevelop the buildings (the central tower remains) and lease them back to Shell in a scheme totalling 111,480 sq.metres (1.2 million sq.ft.).

Alastair Hilton of Farebrother said: “The Shell Centre is a long overdue opportunity for development to make a statement in the area. It is likely to be bought by an institutional player, either UK or backed by an overseas fund.” In Docklands, Asda plans to transform its supermarket site at Crossharbour in a £400 million scheme for 1,000 residential units, a supermarket and other shops and leisure. It has a relationship with Ashbourne Beech dating back to 2005 to develop the 12 acre site. Richard Frank of Town & Beach, parent company of Ashbourne Beech, believes a downturn is a good time to seek planning permission. He said: “We do not want to be in a lengthy planning process when the market returns, as experience tells us that once you are ready
to go, you may have already missed the boat.”

Beating the forecasts

Few analysts could have predicted the rapid turnaround in the central London office market when the recession kicked in
during early 2008. The forecasts were terrible; the collapse of the market, the decline in employment and the loss of the City’s status as the leading world financial centre. They were wrong and now the problem, particularly in the Square Mile, is the shortage of supply as financial institutions expand and increase their employment.

The problem is that there is a shortage and those with the prime space, such as Gerald Heron in Bishopsgate and Irvine Sellar at the Shard, London Bridge have reaped the benefit. Some property professionals are concerned about the period of shortage of supply whic could last two years, suggests Tony Joyce of GVA. Here, one of the problems noted by Joyce “are landlords whose funding package pushes them towards seeking 15 year leases at a time when occupiers mostly want 10 years”.

For City agents like Joyce the recovery in rents has been rapid with a majority of deals done for prime new space being above £538 a sq.metre (£50 a sq.ft.). In fact, the City saw the largest annual increase in rents for 22 years in 2010 with increases of 25% for prime space, said Drivers Jonas Deloitte. That was on the back of a letting total of near 557,400 sq.metres (6 million sq.ft.). Drivers Jonas Deloitte’s Anthony Duggan commented: “Although we are not expecting rents to continue at the pace seen last year, we do expect double digit growth again in the City.”

The firm makes the point that only two large buildings are completing this year. Naturally enough rent free periods have come back substantially, in both the City and West End. Investors, dominated by foreign nationals and organisations, have responded to the strong performance with purchases in central London in 2010 totalling £9.9 billion, a rise of a third on the previous year. Overseas buyers accounted for two thirds of the total. Cushman & Wakefield’s Clive Bull said: “With sterling still weak and an increase in stock likely with banks offloading assets, we are confident that 2011 will see volumes continue to rise.”

Renting Commercial Office Space in London - Top 10 mistakes

Moving your business into new office space in London sounds exciting but there are a number of pitfalls that many businesses have found which has proved expensive and resource-intensive to rectify. Here are a few key areas that you need to think long and hard about before you may the big move.

Office Size
If you’re unsure about the size of the office space you require then don’t rent somewhere based on looks and facilities alone. If find an office that is too small you will have to move again in the near future if your business begins to grow. If you office space is tool large you will end up paying for space that you are not using which is inefficient and could prove a costly mistake.

A basic rule of thumb is to use 7 square metres for each employee. If you have a call centre then you may be able to get away with less. Don’t take more space than you need to unless you are planning to expand or the space is offered at a fantastic rate.

If you are a small business you could try renting serviced offices until you find the right location and set up for your requirements. Serviced offices are slightly more expensive but tend to have shorter leasing agreements which means you have the flexibility to move should you need to. There are plenty of serviced office locations in and around London so finding a lease to suit you should be fairly easy.


Cost of Premises
Make sure you never rent offices that you do not think you can afford. Business can fluctuate rapidly throughout the year so don’t use your current trading as an indication of the future. Changes out of your control, such as the increase in VAT, can have a considerable impact on your business so be wary and only rent what you can afford. It is better to know you can afford to relocate to larger offices further down the line than having to see out an expensive leasing contract that you can’t afford. Don’t get carried away by the glamour of some London offices. There are plenty of opportunities to negotiate down on price.


Location of Premises
When moving into your new London office space you need to think carefully about the location. Ask yourself if this is a good location for your business, its future growth, customers and your employees. If you rent office space in a cheap location with limited transport links, below par facilities and with a poor crime record you will struggle to find staff who will want to work there. Finding the right location is very much a balancing act. Try to weigh up costs against what you need and what your employees expect.

If your new office space is outside Central London you may struggle to find a high calibre of staff and you may also lose your existing staff. London does act as a magnet for talent and the more central you are, the easier it is to find them. Obviously, this comes at a cost.

On the flip side, there are also benefits to being situated just out of town. Many young people cannot afford to live in the centre of London so basing your business on the outskirts can also be advantageous. Any further than 10 miles from the centre of town, however, can limit your appeal.


Poor Transport Links
Nobody likes spending 2-3 hours getting home from work each day. Therefore, make sure that you new offices suit you and your employees. If you already have people working for you, try to be as accommodating as possible to their needs and their family’s needs. You will never please everybody but if you can base your decision around your most valued employees then you give yourself the best chance of keeping them.
Regardless of common belief, London has very good transport links but due to the sheer number of people, some days feel like a complete ‘rat race’ and journeys can take far longer than expected. Think about transport back in the event of bad weather or disruption. Can your employees get into work via train, bus, tram, bike, car share, etc?
Also think about your customers. How often do they visit your business premises? Does a location with poor transport links hinder the perception of your business?


Poor I.T Infrastructure
So you have now found the office that you think is perfect for your business but have you investigated the I.T and telephony infrastructure? Before you move into your new office space you need to make sure you have the systems to support your business. If you have no or limited broadband access, limited phone connections or connection points, you business may suffer as a result. Installing new systems and terminals is not a 5 minute job so make sure your new offices have, at the very least, the same set up as your current location. If you overlook this factor you could frustrated your employees and lose your customers. Do not underestimate the potential damage caused by a poor I.T infrastructure. Try to negotiate this before moving in if the current systems are of a poor standard.


Limited Parking
If you are based in London it is highly probable that some of your employees will travel to work by car, unless you are in the congestion zone that is. Parking is a serious considering for those who live away from easy accessible transport links or for those who live further out of town. Make sure you ask your existing employees how they plan to travel to work and see if you can negotiate parking spaces into the price. If you have forecasted to grow your workforce then remember to do the same with your parking allocation. Expecting employees to pay to park on a daily basis is not viable. How your workforce travel into work is not necessarily down to you but making sure they are happy when they reach work is. Try to research other local parking facilities available and maybe try to share parking spaces with a neighbouring business.


Poor Natural Light
This sounds like an obvious one but nobody can function effectively in a poorly lit office with no windows or limited light. Basement offices can seem like a good idea but lack of natural light, especially in the winter months, can depress your workforce. Light is important if you are to maintain a good mood in the office and a positive environment. Make sure your new office space has plenty of natural light and also invest in artificial lighting to brighten up the place. Plants will also help to maintain a positive atmosphere.


Lack of Security
Your staff should be like your family and your belongings valued like your essentials at home. Therefore, high level security should not be underestimated. Make sure you back up everything all your systems information in another location and invest in an alarm system that will trigger an alert to the police within seconds should there be a break-in or fire.

Make sure your doors are reinforced; your fire doors are locked at night and your windows are securely fastened and can withstand a potential break-in. You should also check for rotten frames or corrosion that could lead to windows or doors being easily removed by burglars. Security cameras are also recommended so you can record evidence in the event of a break in.

A break-in can seriously damage or even ruin your business. Make sure you take the correct steps to protect it, especially on the day you move in. Some burglars will watch you move in and then strike before you are settled. Don’t be a victim!


Poor Disabled Access
Every business premises should have easy disabled access in and out of the building. Without these access points you may limit yourself with regards to attracting new talent so make sure you have ramps, toilets and lift access if applicable. The Disability Discrimination Act states that you must make sure you have facilities of the same standard for people with disabilities as you have for those without. If these facilities do not already exist then try to negotiate the installation with your prospective landlord.


Unsafe Location
If you want to attract strong talented staff then you need to make sure your office location is a safe environment for them to travel to and from. Therefore, research your preferred choice to ensure your staff will be safe when they leave at night. Remember, winter months can be dark, especially if people leave the office late so easy access to local London transport with strong street lighting should be sufficient.

The London Commercial Property Register

The London Commercial Property Register is a leading UK business property publication from Martin Austen Publishing. The aim of the publication is to offer a simple and effective means of finding Offices Space in London, Serviced Offices in London and commercial property in London. You can also find the latest commercial property news for the London region.

Attracting the Best Staff with the Right London Office Location

What should you be thinking about? What should I avoid? Where are the suggested best London office locations?

When choosing your next London Office location you should not only think about a convenient location for yourself but also your staff and your future staff. It is all far too easy to pick a location based on your own personal preferences as a boss and also based on the budget available at the time.

The important thing to remember when planning your next office move is that, if your business is growing and you are planning to expand in the near future then your office location can act as a magnet or a deterrent to new staff candidates. Everyone likes glamorous offices with all the luxuries and London is full of them but if they are difficult to reach then you will not attract or keep your staff for very long.

On the opposite side of the coin, if you have poorly lit, designed and decorated offices, then you staff will not be happy or productive working in that way. It is really a case of striking a balance and you need to take a number of factors into account when making this important decision. If you rush into it you may find that your business suffers because you are unable to attract the right calibre of employee to take your business forward.

London Transport Links



Transport is of major importance because if you staff are unable to get to work on time then you will lose productivity. If they take a long time to get home then their enthusiasm may suffers and they may become unhappy. London has great transport links but some routes can become overcrowded at times. You will never be able to satisfy everyone but you want to make sure your current employees are kept in the loop and your new ones have the easiest journey possible in to work. So, before you make your decision you need to ask yourself the following questions:

• Does my planned office location offer easy links in and out of town?
• Where will the majority of my staff be coming from?
• Are there any businesses nearby that have staff I could attract?
• Are there usually serious traffic issues around this location?
• Do the trains run frequently or do they break down?
• Is the walk to the office from the car park or station safe for my employees?

Environment and Social Setting

The surroundings of your new London offices can be a major plus or negative for your staff. The social side of any business can help bolster it and give you stronger foundations for productivity. Everyone needs time to unwind either at lunchtime or after work and enabling your employees to interact outside work can strengthen their relationships inside work. Convenient facilities and places to socialise nearby, whether it be cafes, sandwich shops, restaurants, pubs or bars, can have a massively positive impact on staff morale. What’s more, you can also use these facilities for meetings which, in itself, can be a positive mood enhancer.

The social side of work is especially important during the Winter months because the dark and cold weather can make it difficult for your employees to socialise if your offices are located away from an civilisation. If you are a small company then you have more flexibility to find the right location than if you are a larger business. London has a mass of areas to explore which means you will never be short options for your new office.


Surrounding Businesses

In many instances it can help the success of your business if you are located in an area where competitors also reside. In London, the core media, advertising, financial and I.T companies are located in their respective districts around the City. Being located at the hub or the centre of your industry can help you to keep your finger on the pulse of the latest developments, find partners with complimentary services or technologies and attract the best staff from your competitors. It is often a tough play-off because your competitors can approach your staff also but if your business is in a strong position with some fantastic offices then you give yourself the best chance of building a supreme workforce.


Good London Office Locations: Some locations in London are better than others depending on your requirements. Here are a few examples of good areas and their particular strengths.

Socialising – Covent Garden Offices, Soho Offices, Mayfair Offices, Marylebone Offices, Holborn Offices.

Car Transport Links – Chiswick Offices, Putney Offices, Hammersmith Offices.

Train Links – London Bridge Offices, Paddington Offices, Euston Offices, Charring Cross Offices, Kings Cross Offices.

More Affordable London Offices Acton Offices, Wembley Offices, Croydon Offices.

The London Commercial Property Register

The London Commercial Property Register is a leading UK business property publication from Martin Austen Publishing. The aim of the publication is to offer a simple and effective means of finding Offices Space in London, Serviced Offices in London and commercial property in London. You can also find the latest commercial property news for the London region.