December 19, 2017
City of London on track for record levels of office investment
The City of London is defying the doomsday Brexit scenario and on track to reach record levels of office investment in 2017, as Savills anticipates total turnover will hit £12.5 billion – subject to a number of deals currently under offer exchanging or completing before 31st December. This sees total transactions in 2017 doubling the 10-year average (£6.259 billion), in line with the all-time record volume seen in 2014 (£12.6 billion). The real estate advisor suggests the West End market will see £7.155 billion transacted in 2017 bringing total turnover in central London for the year £19.6 billion. Savills says that the weakness of sterling since the EU referendum has boosted the city’s attractions to overseas capital. This has happened in tandem with a return of UK buyers to the London market. Figures from the firm show office take-up in the City and West End are both above the long-term average while more than a third of the city’s developments are pre-let.
It appears to have been a challenging year for HR professionals, as a new survey suggests nearly three quarters (72 percent) of participants in a recent survey feel slightly or significantly more over-stretched in their role compared to last year. Forty four percent believe the workforce does not have enough support to thrive, and a further 23 percent don’t feel confident that their organisations are doing enough to address this issue. Research from a survey of HR people conducted by Cascade HR found that 32 percent of HR managers have found employment legislation harder to navigate. However, a reassuring 61 percent of HR professionals now feel ‘somewhat prepared’ for GDPR, which has understandably taken up a lot of preparatory time and resource as 2017 has unfolded. In fact, only 15 percent of HR professionals surveyed feel significantly or slightly underprepared, which seems to contradict national statistics on a business-wide level.
Office rents have begun to slip across Central London, and the chief reasons could be uncertainty around the outcome of the Brexit talks and the UK seemingly missing out on the rising level of global trade, suggests Cluttons’ London Office Market Bulletin Autumn 2017. While the report highlights that many locations in Central London have seen headline office rents hold steady for the better part of two years, rent free periods have been moving out in order to sustain this, but now appear to be at a critical tipping point, level, which is driving some landlords to consider alternative incentives, such as delayed completions. Freddie Pritchard-Smith, Head of commercial office agency at Cluttons said: “Many firms remain nervous about making a long-term commitment to more space, choosing either flexible overflow space or to reconfigure within their existing office. The exception to this of course remains the serviced office and TMT sectors, who have helped transactional levels in the West End to surpass 4 million sq ft already this year, which is paradoxical to the falling rental conditions.”
The London office market remains a buoyant market despite Brexit uncertainty, as many organisations see it as the most prestigious location for businesses of any size. In 
Take up of new commercial offices in London’s West End in September 2017 hit the highest quarterly total on record – with tech and media firms, along with serviced office schemes being the most active, according to figures from real estate advisor Savills. The take-up was 857,259 sq ft (79,639 sq m) – bringing total take-up by the third quarter to 1.62 million sq ft (150,498 sq m). Leasing activity in the third quarter of 2017 brings total take-up year to date, to 3.99 million sq ft (370,671 sq m), which already surpasses 2016’s total annual take-up (3.97 million sq ft) and places the West End in a strong position to exceed the record 4.3 million sq ft (399,470 sq m) amassed in 2015. Key deals that helped elevate the market included: Aegis pre-letting the entire 310,000 sq ft (28,799 sq m) at British Land’s 1 Triton Square; The Boston Consulting Group pre-letting 123,500 sq ft (11,473 sq m) at 80 Charlotte Street and Spotify acquiring 104,133 sq ft (9,674 sq m) at The Adelphi.
