THE RACE FOR SPACE

3 RACE FOR SPACE 03 Executive Summary 04 Setting The Scene 06 Historic Trends 08 Pre-Let Size Analysis 10 Occupier Sector Analysis 12 Pre-Let Location Analysis 14 Co-working: Is There An Impact On Pre-Letting? 16 Tower Analysis 18 What about the Regions? 20 Pipeline: How Much is Being Built? 22 Landlord Survey Analysis 24 Occupier Survey Analysis 26 Conclusion & Outlook CONTENTS Pre-letting has become a vital component of the UK office market for both occupiers and landlords. Against the backdrop of prolonged uncertainty in the run-up to Brexit, the factors involved in occupier decision-making are evolving. This report explores the trends in UK pre-letting and looks ahead to how pre-letting might impact the UK office market in the future. OUR KEY FINDINGS FROM THIS REPORT WERE: 1. Pre-letting looks set to continue across the UK, especially in Central London. Supply levels are set to trend downward and occupiers will be forced to look even further ahead to secure quality space. For large transactions this could be as far as 4-5 years ahead of a lease event. 2. Occupiers have not been dissuaded from committing to large-scale office moves in Central London in the wake of the EU referendum result, although we are now approaching unchartered territory and there is potential for a downturn in occupier sentiment. 3. Flexibility has become the main focus for most pre-let occupiers. They require the ability to commit to a core space but with options to expand or reduce their footprint over time. EXECUTIVE SUMMARY DEFINITIONS For the purposes of the report, we will be analysing both off-plan pre-lets and pre-lets under construction. Unless otherwise stated, all analysis in the report includes transactions above 5,000 sq ft. OFF-PLAN An agreement between the tenant and landlord to lease a building where construction has yet to start. UNDER CONSTRUCTION An agreement between the tenant and landlord to lease a building where construction or refurbishment is underway and is prior to practical completion. 2 CUSHMAN & WAKEFIELD