CAPITAL WATCH

I work for an agile, high-growth tech company currently located just outside the Old Street roundabout. Our Head of Real Estate has informed me that we have a lease expiry in June 2021 in our current building, and as such we are looking at our future real estate options. We would like to incorporate flexibility into our solution along with the ability to expand, which would support our company growth initiatives. The key requirement for our office search is a modern workspace that will stimulate our company culture and allow us to attract and retain talent. Our vision for our new headquarters would be a creative style of office space with plenty of natural light – ideally a converted warehouse with exposed brick walls and ceilings. However, I know this would be difficult to find outside the main media and tech hubs in Clerkenwell and Shoreditch. Our initial requirement would be for 20,000-25,000 sq ft of newly built or refurbished office space, ideally across two floors of around 10,000 sq ft. We would like to focus our search on “media hub” areas of the West End such as Soho, Noho and Covent Garden. However, we know that as these areas have grown in popularity, so have rents. Therefore, we would also consider alternative locations such as the South Bank, King’s Cross, and the Northern Corridor from Paddington to Old Street. Our main requirement would be to stay close to our target markets, clients and networking hotspots. Remaining close to local amenities and providing easy access for employees and clients is also essential. I have also been reading property articles which suggest that more than 50% of cranes across London represent office space that has been pre-leased or is under offer. Our search has therefore become more urgent, and we would like to start planning as soon as possible. Many thanks for your letter. To give you some context of the local market, companies such as yours have been at the forefront for office take-up across London over the past five years, and this trend looks set to continue. During the first three quarters of 2018, media and technology businesses have leased 2.6 million sq ft of space across London, accounting for 29% of total space acquired. Innovation and new technological advancements will see established media companies continue to expand and real estate needs challenged. New Grade A space has contracted for the fifth consecutive quarter, accounting for 47% of total supply – the lowest proportion since 2013. Supply levels are likely to continue trending downwards as pre-letting continues to remove space from the tightening development pipeline. We predict a shortage of new office space across London over the next two to three years, further indicated by the fact that 56% of all space under construction across London has been pre-let or is under offer. This trend is reflected in the number of occupiers currently considering options that will be delivered over the next three to four years. With this in mind, it is evident that now is the time to act on finding your new office space. Take-up is forecast to remain relatively stable for the remainder of this year and into the beginning of 2019. By finding solutions to the key challenges listed above, we can help you structure a flexible portfolio that utilises efficient space requirements while keeping an eye on your bottom line. Bearing in mind your size requirement, we have looked at office space across London that can accommodate 20,000 sq ft across two floors of 10,000 sq ft each. There are currently 74 options available across all London submarkets, ranging from newly built and refurbished to poor second-hand. Looking only at newly built or refurbished space narrows down the search to just 36 buildings available – of which 19 are located within the City submarkets, eight within east London and just nine within the wider West End markets. To put this into context, the average take-up per annum for newly built or refurbished space across 20,000-40,000 sq ft is 49 units: therefore there is currently less than a year's worth of supply on the market. When you acquired your current office you probably looked a year in advance. However, with the present leasing market dynamics we are seeing many occupiers such as yourselves looking for office space as much as three to four years pre-lease expiry or break. The slow pace of Brexit negotiations hasn’t hampered occupier demand for office space in the capital, so we would suggest starting your search as early as possible. We would be delighted to pull together a list of search options for you – and we look forward to helping you secure your dream office. Ȇ Ǎ ሙ Ǎ ೊ Ǎ ጕ Ǎ ׮ Ǎ ใ Ǎ ூ Ǎ ͱ Ǎͧ ǒ Aldgate & Whitechapel 3% 3% 3% 14% 33% 14% 11% 8% 11% Bloomsbury Docklands City Core Hammersmith Midtown Stratford White City Clerkenwell & Shoreditch By Hayley Armstrong, Senior Insight Analyst, UK Research hayley.armstrong @cushwake.com Dear Cushman &Wakefield, Cushman &Wakefield says Newly built/refurbished units available across London on floor plates of 10,000 sq ft + With occupiers increasingly exposed to low levels of office supply in Central London, Hayley Armstrong explores a hypothetical conversation between an occupier and our London Markets team. CUSHMAN & WAKEFIELD CUSHMAN & WAKEFIELD 29 LONDON IN FIGURES 28 LONDON IN FIGURES