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TABLE 1

Key September Stats

West End OfficeMarket Watch October 2018

Supply and demand snapshot

g September take-up reached 148,723 sq ft, bringing year-to-date take-up to 3.75m sq ft. Over Q3, 98 transactions completed and take-up at the end of quarter was up 32% on the long term average.

g The most notable transaction this month was Vodafone's acquisition of two leases at 1 Kingdom Street, taking an assignment of the 3rd floor (26,792 sq ft), at £55.21 per sq ft, and a new lease on part of the 1st floor, (10,055 sq ft), both on a 5 year lease. This boosted Tech & Media sector take-up for the month to 41%.

g So far this year the Tech & Media sector has accounted for 45% of take-up across 72 transactions. Almost three quarters of these transactions have been 10,000 sq ft or less. Although, it is worth noting Facebook's pre-let of 615,000 sq ft at King's Cross single-handedly accounts for 40% of overall sq ft let to the Tech & Media sector.

g Despite monthly take-up being at its lowest in over 5 years, space under offer hit a new record high of 1.9m sq ft at the end of September, further underpinning that Central London remains a crucial centre for business. Notable spaces currently under offer include 159,110 sq ft at 5 Merchant Square, W2, believed to be to WeWork and 52,725 sq ft at WestWorks, W12 to Novartis.

Space under offer across West End at record high

Source: Exsisting supply - space under offer end of September

Source: Savills Research

GRAPH 1

Supply - space under offer

Source: Savills Research September 2018

Savills Research UK Commercial

September Stats

Take-up 148,723 sq ft

Take-up (YTD) 3,750,002 sq ft

Supply 5,147,690 sq ft

Vacancy Rate 4.2%

Top Rent (psf) £103.30/sq ft

Avg Grade A Rent (psf) £74.69/sq ft

g Sub 5,000 sq ft floorplates account for 30% of current space under offer with just shy of a quarter of space under offer is to Serviced Office Providers. At 370,000 sq ft this was the largest monthly increase in space under offer in almost over 18 months.

g With space under offer at a record high level and up 109% on the long term average, we are expecting the final quarter of this year to be very active.

g The Serviced Office Provider sector take-up has accounted for 528,363 sq ft (16%) of YTD take-up, down 200,000 sq ft on the same point in 2017. If all of the space currently known to be under offer to Serviced Office Providers completes over the remainder of the year, this will increase take-up to the sector to just below the record level we saw last year.

g The Insurance and Financial Services sector followed with 14% market share of the YTD take-up, with deal volumes at 72, continuing to remain at the same number as to the Tech & Media sector.

g At the end of September supply stood at 5.15m sq ft, equating to a vacancy rate of 4.2%. The 30 BPS increase since last month is largely due to the inclusion of White City to West End supply generating an addition 328,000 sq ft of space producing the largest upward movement in almost 2 years. When White City is excluded, supply totals 4.82m sq ft, equating to a vacancy rate of 4%, up 10 BPS.

GRAPH 2

2018 YTD top 5 - sector take-up (sq ft)

02

Market Watch | West End offices

TABLE 5

Demand & Under Offers

TABLE 6

Development pipeline

Analysis close upTABLE 2

Take-up

Sq ft % Grade A 12 month rolling take-up Total % Grade A % chg on

prev monthVacancy Rate (%)

Sep-17 908,895 78% 4,897,096 4,669,142 72% -3.7% 3.9%

Oct-17 372,015 75% 5,058,111 4,608,183 72% -1.3% 3.8%

Nov-17 345,198 72% 5,126,126 4,526,154 72% -1.8% 3.7%

Dec-17 566,643 66% 5,350,279 4,428,542 61% -2.2% 3.9%

Jan-18 354,070 90% 5,443,897 4,625,751 59% 4.5% 3.8%

Feb-18 283,816 82% 5,270,287 4,800,007 65% 3.8% 4.0%

Mar-18 430,538 80% 5,340,293 4,674,771 61% -2.6% 3.9%

Apr-18 289,756 82% 5,417,096 4,583,388 59% -2.0% 3.8%

May-18 286,906 82% 5,364,026 4,536,129 59% -1.0% 3.7%

Jun-18 525,288 84% 5,127,650 4,492,323 60% -1.0% 3.7%

Jul-18 1,181,886 86% 5,808,248 4,741,176 56% 5.5% 3.9%

Aug-18 249,019 86% 5,794,030 4,760,149 56% 0.4% 3.9%

Sep-18 148,723 85% 5,033,858 5,147,690 71% 8.1% 4.2%

TABLE 3

Supply

TABLE 4

Rents

£ per sq ft Top Average

Grade A Grade B Prime* Rent free**

Sep-17 £135.00 £75.11 £45.00 £116.43 20

Oct-17 £175.00 £83.15 £64.73 - -

Nov-17 £105.00 £78.18 £52.17

Dec-17 £150.00 £87.71 £52.45 £127.67 15

Jan-18 £102.50 £71.53 £54.25 - -

Feb-18 £120.00 £82.42 £71.33 - -Mar-18 £98.62 £71.68 63.25 £98.62 20

Apr-18 £86.00 £70.90 £62.50 - -

May-18 £185.00 £79.80 £64.69 - -

Jun-18 £104.00 £72.16 £51.17 £103.50 24

Jul-18 £120.00 £79.53 £60.40 - -

Aug-18 £150.00 £78.27 £68.24 - -

Sep-18 £92.50 £74.69 £54.95 £103.30 22

WE Potential demand (sq ft) 318,000

WE Active demand (sq ft) 3,754,500

WE Total demand (sq ft) 4,072,500

% change on 12 month ave -21%

Under offer (sq ft) incl. pipeline 1,902,048

Under offer this month (sq ft) 318,000

% change on ave 109%

Landlord controlled supply 74%

Tenant controlled supply 26%

*Average prime rents for preceeding 3 months ** Average rent free on leases of 10 years for preceeding 3 monthsCompletions due in the next 6 months are included in the supply figures

Sq ft Refurb Devs Total % Pre-let

2018 1,077,698 1,225,786 2,303,484 39%

2019 886,009 1,967,258 2,853,267 67%

2020 724,449 1,693,922 2,418,371 16%

2021 702,900 1,790,691 2,493,591 31%

Total 3,391,056 6,677,657 10,068,713 40%

Demand figures include Central London requirements

03

Market Watch | West End offices

Address Floor/s Sq ft Grade Achievedrent

Tenant Lessor

1 Kingdom Street, W2 3 26,792 A £55.21 Vodafone Finastra

MediaWorks, White City, W12 pt1,2nd 20,211 A £50.00 Net a Porter Stanhope, Mitsui Fudosan

1 Kingdom Street, W2 1(W) 10,055 A - Vodafone British Land

Euston House, 24 Eversholt Street, NW1 8th (part) 8,580 A £54.77 Landmark Spaces Stenham, Riverside Capital

Elsley Court 20-22 Great Titchfield St, W1 LG,G 7,342 A £77.50 Miroma Ventures -

57 Broadwick Street, W1 1 7,287 A - OakNorth Bank Shaftesbury

8 Bloomsbury, WC1 2 6,646 A £74.00 Syncona Aviva Life & Pensions

Address Floor/s Sq ft Grade Quoting rent Lessor U/O

WestWorks, White City, W12 G,2,Pt 4,5 164,191 A £50's Stanhope, Mitsui Fudosan 52,725

5 Merchant Square, W2 G-7 159,110 A £60.00 Marks & Spencer 159,110

The Post Building, 21 New Oxford Street, WC1 1-3, Pt 4 136,586 A High £80's

Brockton Capital, Oxford

Properties 49,077

1 Page Street, SW1 LG-9 126,045 A £57.50 Burberry

The Foundry, 77 Fulham PalaceRoad, W6 G-4 110,277 A £57.50 AXA 42,098

64 Victoria Street, SW1 1-10 96,574 A TBC Westminster City Council

25 Wilton Road, SW1 G-6 78,995 A £70.00+ Royal London

Albany House, 94-98 PettyFrance, SW1 Entire 60,479 A £40.00 TFL

TABLE 7

Significant September transactions

TABLE 8

Significant supply

04

Market Watch | West End offices

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MAP 1

Savills West End office submarkets

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