Commercial Blog April 2017 - Colliers International | London

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  1. March 2017

  2. The ‘Facebook effect’

    30 March 2017
    We are delighted that the phenomenal office letting in which Great Portland Estates (GPE) agreed with Facebook to take all 243,500 sq ft of offices at One Rathbone Square has now completed and GPE has sold the freehold to Rathbone Place Jersey Limited, an entity owned by WestInvest Gesellschaft Für Investmentfonds mbH and Deka Immobilien Investment GmbH for a headline price of £435m, reflecting a net initial yield of 4.25%.

    Acting jointly with Knight Frank on behalf of GPE, the Colliers London Offices team secured the pre-let for the entire 243,500 sq ft office building at One Rathbone Square to Facebook in one of the largest private sector leasing deals seen in London.
     
    The high volume of high profile occupiers from a number of business sectors that have been attracted to the area on the back of a steadily improving quality of building stock demonstrates just how far London’s Fitzrovia has evolved in recent years.

    The completion of Rathbone Square and Facebook’s agreement to lease the entire office offering at the scheme, is likely to have a twofold impact. Foremost, as at King’s Cross, following Google’s decision to locate its new UK office hub at the scheme, the impact of major blue chip occupier relocations to any submarket can be substantial. Google has acted as a magnet for not only ‘like-minded’ companies, but also occupiers from other diverse business sectors, keen to tap into the ‘Google effect’. Fitzrovia is set to see a similar phenomenon with Facebook, establishing Rathbone Square as a key commercial destination, but also demonstrating the submarket’s attraction to globally recognised brands.
     
    Healthy absorption of pipeline product has shifted occupier focus to other potential schemes, likely triggering further absorption of brand new space, as at 80 Charlotte Street. Such activity is only likely to contribute to continued improvement in local amenities, variety and quantity of leisure offering and general increased footfall which in tandem with the infrastructure upgrades related to Crossrail will transform the eastern end of Oxford Street. Other schemes are being readied to take advantage of supply shortages around the key Tottenham Court Road rail hub.
     
    It goes without saying that Great Portland Estates has been a pioneer in the area and its commitment to the redevelopment of the old Royal Mail sorting office has been rewarded by the Facebook letting. The challenge for developers in the area will be to create an environment that captures the special ambience of Fitzrovia whilst providing the space that contemporary occupiers want and we look forward to observing the fit-out at One Rathbone Square as it unfolds. 

    The Author

    Paul Smith
    02074871767
    07711468891
    paul.smith@colliers.com
  3. Capital to Capital

    28 March 2017
    With overseas investors increasing market share in London offices to unprecedented levels (accounting for over 80% of total transactions in 2017 to date) we are delighted to announce the timely appointment of Andrew Thomas, our new Head of International Capital Markets, who has joined our London Offices team to assist our clients in securing cross-border investment opportunities in London.
    Overseas money, taking advantage of continuing currency weakness in sterling, has dominated investment activity in London’s West End. 75% of transactions derived from overseas money with the Far East driving over 60% of that figure (£821m). Likelihood of further increase in sterling/dollar disparity should ensure that London property continues to look comparatively cheap to many non-domestic investors. Longer-term income streams remain the key targets and with the weight of global capital and increasingly encouraging economic data, London’s safe haven status should continue to act as a magnet in the search for yield. 

    Acting in the Central London market for over 25 years, undertaking  sales, acquisitions, joint ventures, forward funding, debt financing, lease restructuring and valuation work for investors from North America, Europe and the Asia Pacific Region, Andrew is perfectly-placed to support our local and international clients with their next real estate move into the Capital. 

    The Author

    Rob Hayes
    020 7487 1766
    Rob.Hayes@colliers.com
  4. Self-contained on Park Street

    17 March 2017
    Mayfair may provide 12 million sq ft of office space, however opportunities to acquire self-contained buildings in the beautiful period streets are few and far between, but that is exactly what we have at 111-113 Park Street.

    Located within the well-known and revered Grosvenor Estate, the property benefits from a prestigious address and all of the trappings of an exclusive neighbourhood. High-end retailers, exclusive hotels and world famous restaurants all lie on the door step – think Lanvin, Claridge’s, Scotts, and Le Gavroche, all of which are nearby in the village.

     

    Originally two buildings, the property has been comprehensively refurbished behind a retained façade to provide 10,736 sq ft of Grade A space arranged over lower ground, ground and four upper floors. The attention to detail is evident throughout the building from the boutique style reception with feature lighting and bespoke concrete desk to the new showers, lockers and changing room on the lower ground floor. A terrace to the rear of the property provides the sought after outside space most occupiers have on their wish list. Another unusual feature of 111-113 Park Street is the dual use provision of the fourth floor, allowing a single occupier to convert the top floor of the building into a residential suite.

     

    With Marble Arch and Bond Street Underground stations within walking distance and several bus routes along nearby Oxford Street, transport links in the immediate area are excellent. The addition of the Elizabeth Line at nearby Bond Street will further enhance this when it opens in 2018.

     

    If you are interested in finding out more about this property, please contact Katrina Love.

    The Author

    Katrina Love
    02074871722
    07826551918
    katrina.love@colliers.com
  5. Central perks: smart refurbished office in the middle of Shoreditch

    16 March 2017
    With a view of the bustling street scene below - where Kingsland Road, Hackney Road and Old Street converge - this newly refurbished 960ft2 office on Shoreditch High Street is just the ticket for businesses wanting to be at the heart of all the action.
    Here is one of the most encountered spots of Shoreditch: as a crossing between the heave of Brick Lane and Redchurch Street and the Shoreditch Triangle; the gateway to/from Dalston, Columbia Road, Hackney and the City; or the arrival/departure point at Shoreditch High Street Overground station. As such, there's a lot of life here.

    The office is part of a five-storey stone-fronted building with geometric reliefs, a tall and elegant inclusion in an interesting parade that also includes the old showrooms of Wells& Co whose original locally iconic facade adorns the building next door.

    Up on the third floor, the interior has been completely refurbished to provide a smart, modern, high-quality workspace as the perfect backdrop for a creative enterprise to step into. 

    The ceilings are high and include exposed concrete soffits and integrated blades of LED lighting. Big windows at either end ensure plenty of natural daylight enhanced by bright white décor and a newly laid light-toned wood floor with integral power sockets.

    The office has its own bespoke designed contemporary kitchen in sleek grey with built in appliances and a breakfast bar, plus male and female WCs and showers. There’s plenty of storage space too, with built in shelves and cupboards along almost the entire length of the unit. The building has 24-hour access and a passenger lift serving all floors.

    Easy to get to and surrounded by the very best of Shoreditch, the location is one for drawing the best talent to your business and an easy place for clients to visit with countless bus routes stopping nearby and a huge Santander Cycles docking station right outside the building.

    Shoreditch High Street station (Overground) is 7 minutes walk; Old Street station (Northern Line, National Rail) 9 minutes; and Liverpool Street (National Rail, Central, Circle, Hammersmith & City Lines and soon a stop on Crossrail), 12 minutes. 

    We are quoting a rent of £62.50per ft2 with immediate occupation available.

    The Author

    Emma Higgins
    0207 101 2020
    07769 605 295
    emma.higgins@colliers.com
  6. Office personality: a smart and singular take on factory-style workspace

    15 March 2017
    There is a certain winning formula to contemporary workspaces that has become a successful blueprint to offer style-conscious creative enterprises. The City Fringe led the way (of course!) pioneering a clean, industrial aesthetic with contemporary interventions to such success that, today, nothing less will do for most modern firms.
    We could cite numerous cases of landlords delivering excellent examples of giving the people exactly what they want – spaces that manage to be beautiful and striking while allowing the personality of the ingoing business to shine through. 

    And yet, sometimes, you get a developer who wants to go even further, often driven by a personal background or strong interest in interior design. Their desire is to reflect something of their self in the project with a vision of delivering distinctive and memorable working environments.

    Glasshouse Yard is one of those instances, a collection of high quality, funky, factory-inspired spaces in Clerkenwell that are resolutely City Fringe in their offering, but with a series of twists in their makeup to give them a palpable standout quality.

    The differences run top to bottom, from limed oak floors laid in chunky chevrons to futuristic tubular sabres of LED lighting suspended from above, alongside oversized yellow pendants. These sit alongside those City Fringe staples of exposed air conditioning ducts, exposed concrete ceilings galvanised perimeter trunking.

    The spaces themselves come in a range of sizes to suit a variety of workspace requirements, from a duplex of 2925ft2 on the ground and lower ground floors (connected by a sleek internal staircase) with its own separate entrance, to an almost identical pair of 16025ft2 units on each of the first and second floors, to a striking top floor office of 1206ft2 with a 100ft2 private terrace.

    Within the building are refurbished WCs and showers, while even the lift has been revamped with considerable flair.

    The location is great, too. Tucked away in a quiet pocket of Clerkenwell just off Aldersgate Street and within a couple of minutes walk of Barbican station and surrounded by a now legendary scene of cafes, bars, restaurants, shops and creative companies that make this unique part of London so magnetic.

    Rents are £59.50 per ft2 for the ground and lower ground floors, and £65 per ft2 for the upper units. 

    The Author

    Joshua Miller
    0207 101 2020
    07917 725 365
    Joshua.Miller@colliers.com
  7. City of London Offices – a re-balancing act?

    13 March 2017
    With concerted announcements from major investment banks over the likely ‘repositioning’ of trading jobs from London to EU inclusive locations such as Dublin, Frankfurt and Amsterdam, what does this presage for financial services employment in the City of London?
    The employment profile of the City of London has been changing over the past decade. While financial services still remain the key driver of City of London output, disruption in office occupation is being influenced by tech and other service sector occupiers, embracing commercial property within the square mile itself.
    Even in the wake of the credit crisis in 2010, financial services in the City still accounted for 42% of employee jobs. That ratio has been diminishing steadily since then with forecasts for financial employment suggesting that city based ‘financial’ jobs will only represent 32% of total City of London employment.  In real terms, Financial employment has actually increased since 2010, rising by 20,000 or 8%. However, City jobs growth of over 100,000 new jobs since 2010 demonstrates that the balance of City of London employment is showing a strategic shift. 

    Regardless of the ‘vote to leave’ result, this strategic shift in ‘tenant profile’ was a force majeure. It has come about due to margin squeezes for major banks in the prolonged low interest rate environment, necessitating reductions in overheads (property commitments, headcount etc.), coupled with the rise of ‘tech and media’ and the footloose nature of that sector’s occupational needs.

    Certainly, financial services headcount is set to fall in the next five years and beyond, but demand from other emerging sectors looks likely to more than compensate for any shortfall in demand from or divesting of by major banks.  Over the next decade London, as across the wider UK, will experience a shift towards a more knowledge-based economy and subsequent demand from media, tech and professional services sectors. The gap between these sectors and pure finance is set to close markedly in the City over the next five years with media, tech and professional services combined accounting for 38% of City jobs by 2030, compared to 31% in financial services. 

    Mobile Banking
    Current anecdotal estimates of staff relocations for JP Morgan, Barclays Morgan Stanley, Goldman Sachs, UBS and HSBC are running at 8,650 jobs or the equivalent of close to 700,000 sq ft. While these are set to be at higher levels than forecasts currently suggest, these losses should be more than compensated for by acceleration in demand from tech and professional services. Info/comms and professional/technical (which includes management consultants, lawyers, advertising/PR and engineering) will need up to 2.5 million sq ft of additional space up to 2030 in order to satisfy the levels of forecast employee growth. 

    Repositioning of existing office stock will come increasingly to the fore, with a prime example being Aermont Capital’s One Poultry, EC2. This is set to undergo a renewal program with increased ceiling heights, cycle parking and new leisure offering. The scheme will be specifically aimed at tech and media occupiers. The building is in prime location facing as it does Bloomberg’s new HQ, a prime example of the strategic shift taking place within the square mile.

    The London office market continues to evolve, in terms of occupier perceptions of geography, amenity and property fundamentals. The footloose nature of tenants has largely broken down the invisible boundaries between submarkets. The advent of Crossrail is set to accentuate the ‘mobility’ of ‘new’ industries as well as more established service sector occupiers. 

    The Author

    Guy Grantham
    +44 20 7344 6793
    +44 779 596 3710
    Guy.Grantham@colliers.com
  8. Turning around on Oxford Street

    9 March 2017
    We are delighted that the sale of 190 Oxford Street, W1 has completed, a journey which began back in 2012 when CBRE GI, on behalf of the Pan European Core Fund, acquired the leasehold interest of the 34,000 sq ft mixed-use building for £38.5 million from Great Portland Estates in an off market transaction. Whilst the retail element was well let offering a highly reversionary income stream, the upper parts required a significant transformation.
    Working alongside the client, a highly contemporary office refurbishment scheme was delivered with the leasing team quickly securing some initial lettings well ahead of pre-purchase assumptions.

    Following this Colliers were instructed to offer the leasehold interest for sale. This process began in February this year which certainly had its challenges in view of the unexpired leasehold having only 92 years unexpired. Nevertheless the client’s objectives were met with a sale to The Langham Estate for £88 million, reflecting a net initial yield of 3.9%  some £3m above the asking price. 

    The Author

    Rob Hayes
    020 7487 1766
    Rob.Hayes@colliers.com
  9. Up in the air: three penthouse office floors in a top Tech City location

    1 March 2017
    The final phase in the transformation of Bentima House, a once ordinary 1950s office block, is now complete with the release of three spectacular floors of penthouse office space in the heart of the City Fringe. The three floors total 14,766 Sq Ft of available space.
    Colliers has a long history with the building, dating back to 2012 when we advised Maurice Investments Limited in their acquisition of the site. Next we worked alongside the interior design and architectural practice Gpad and marketing agency Everything in Between to create 21st century workspaces and a new brand identity in readiness for a promotional campaign on the lower five floors.
    Before even going to market with that earlier release, we pre-let two enormous spaces in the building to two large tech companies from the USA: EMC² and Stack Exchange. 

    Now our clients have gone one step further – and taken the building to a whole new level – by adding a two-storey glass extension and remodelling the original top floor to create three floors of penthouse office accommodation with incredible views over the city.

    The former top floor takes the building’s original fabric as its cue, exposing the concrete ceiling and suspending light boxes, air conditioning units and ducting. New raised metal floors have room for cabling beneath. The space trumps its lower siblings with more light and fine views across the local rooftops.

    But it’s the two new floors where things really take off, and from where the City unfolds at your feet. Entire walls of floor-to-ceiling glass lift the interiors to entirely new heights with a panorama of historic and modern London landmarks.

    Services include self-contained male and female WCs on every floor; shower facilities; secure bicycle storage; separate passenger and goods lifts; CCTV and an on-site commissionaire. Car parking is also available by separate arrangement. 

    The building is at the heart of an ever evolving streetscape where the retail, restaurant and relaxation offering is continually expanding, most notably the new restaurant boulevard at The Bower and the Wi-Fi enabled public courtyard at White Collar Factory, alongside firm City Fringe favourite Whitecross Street Market.

    Moments from Old Street station, where the roundabout itself is set for a bold new future as a landscaped public square, and with numerous buses passing the door, the new penthouse floors at Bentima House are the perfect workspaces for businesses with seriously high hopes.

    The Author

    Richard Silver
    020 7101 2020
    07980 205 293
    Richard.Silver@colliers.com
  10. February 2017

  11. Position Filled: Recruitment Firm Stott & May Relocates To New City Offices

    28 February 2017
    Executive recruitment and search company Stott & May has signed for 4,000ft2 at the new Cannon Green development opposite Cannon Street station. The move will see the company relocate from their existing offices in nearby Aldermanbury Square to make Cannon Green their new home in the capital.
    Alongside its London office, Stott & May has other UK locations in Brighton and the Thames Valley as well as a New York operation. The firm was established in December 2009 and has since grown to over £30m in revenue.

    The Cannon Green development was conceived as a stark alternative to what is seen as the City’s rather old-fashioned options for office space. While the City Fringe consistently delivers exciting, vibrant and architecturally forward places to work with social spaces for tenants to enjoy, the City has remained fairly constant in providing workspaces that are pretty much only about work.

    Noticing the early rumblings of dissatisfied businesses and the beginnings of a mini migration, Cannon Green’s developers took up the mantel of delivering a workplace that is every bit as much fun as anything in Clerkenwell or Shoreditch, but with a prime City location in the heart of London’s business district.

    The result is a sensational redevelopment of an existing office building that is unrecognisable from its former self, inside and out. The exterior cladding has been upgraded and re-glazed to create a beautiful bronze façade, while the remodelled reception podium is a striking point of entry.

    The offices offer unique, expertly designed and thoroughly inspiring space that features floor-to-ceiling windows with generous ceiling heights and an abundance of natural daylight and volume. Designed to support occupancy levels of 1 person per 8m², Cannon Green also delivers an efficient financial performance and lower operating costs for ingoing tenants.

    But it’s the amenities at Cannon Green that give it the edge, with a vibrant restaurant, business lounge, fitness facilities and two large terraces that enrich the working day. The 8th floor terrace overlooks the City and beyond, while the 7th floor terrace boasts stunning east-facing views.

    The Author

    Richard Silver
    020 7101 2020
    07980 205 293
    Richard.Silver@colliers.com
  12. Taking Stock: Reflections On The Post-Brexit City Fringe Office Market

    28 February 2017
    It is little secret that, in February 2016, rivers of panic were sent through the commercial property market with the setting of the date for the EU Referendum. And the subsequent 10-week campaign and eventual vote for Brexit only served to heighten anxiety.
    Where we’d become accustomed to an environment of deals agreed on more space than was becoming available, stock levels in perpetual decline, rents going up on a daily basis and tenants having serious trouble securing an office, suddenly it was as though someone had pressed the pause button: space stuck; rents stagnated and new enquiries dried up. As stock levels increased, landlords and agents became justifiably concerned about how long the hiatus would last.

    In times of uncertainly, waiting things out is an established behaviour – the run up to a general election being predictably subdued in the property industry. But the vote for Brexit differs in that the result isn’t the end of it, merely the beginning. And given that the final terms of Britain’s exit from the EU are very likely 2 years away, there must be a question for businesses around just how long they are going to sit around and put their plans on hold.

    Perhaps it was that thinking that drove the October turnaround. For reasons we are still not entirely sure of, businesses came back in droves and the level of take up has since returned to the highs of late 2015/early 2016. The sheer amount of digital and creative enterprises choosing to start-up in the City Fringe; the continued – and ever-increasing – eastward migration of West End businesses; and the interest from curious City occupiers, is a sign that the City Fringe is where they see their future, and where they are prepared to invest right now.

    And so today we have a market that is most accurately described as cautiously competitive. The best space is still hotly contested, but rents are stable; while there is no growth, for the vast majority of stock there has been little reduction either.  Landlords with office space in prime locations – or with an enticing design and specification – are having little trouble in securing tenants. Similarly, the cheapest space is finding a ready market.

    So while the future remains uncertain, and is likely to do so for some time, it’s clear that business isn’t letting Brexit get in its way. And if the City Fringe is about anything, surely it’s about embracing change and looking to the future with confidence. 

    The Author

    Shaun Simons
    020 7101 2020
    07788 423 131
    Shaun.Simons@colliers.com
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