THE RACE FOR SPACE

4 CUSHMAN & WAKEFIELD 5 RACE FOR SPACE One of the most noticeable of these is the paucity and cost of debt available to investors and developers. Estimates suggest that development debt fell from 27% of total lending to real estate in 2009 to less than 3% in 2017. This has led to a decline in the delivery of new space to the market, which has prompted tenants to consider their real estate options further in advance of a potential move than would previously have been the case. Fears that Brexit uncertainty would delay decision-making and see occupier requirements placed on hold have proved largely unfounded. Occupier demand has remained surprisingly robust since the EU referendum, and many businesses have focused on securing the best solution REGIONAL PRE-LETTING OVERVIEW to their long-term real estate needs beyond Brexit. This has led to a growing appetite for pre-letting, across a widening spectrum of business sectors, geographies and size bands. The trend is particularly pronounced in Central London where the near-term pipeline of space speculatively under construction is quickly being eroded. This report provides a deep-dive analysis of the causes and the nature of the increase in pre-letting in the UK and explores the consequences for both landlords and tenants. The pre-let market will play an increasingly important role in UK commercial real estate over the next five years; it will be essential to understand the dynamics behind the headlines. The UK commercial property market has undergone significant systemic changes since the global financial crisis (GFC). KEY PRE-LET TRANSACTIONS (2018) PRE-LETS BY BUSINESS SECTOR (2009-2018) Sony Pictures Brunel Building, 55 North Wharf Road, W2 77,000 sq ft, under construction SMBC 100 Liverpool Street, EC2 161,000 sq ft, under construction Facebook 11-21 Canal Reach & P2, King’s Cross, N1C 611,000 sq ft, off-plan LiveNation Farmiloe Building, 34 St John Street, EC1 63,000 sq ft, under construction SETTING TH SCENE KEY CENTRAL LONDON PRE-LETTING HIGHLIGHTS 2009-2018 9% tion of 2018 nual take-up s accounted y pre-lets 13 Average months between exchange and completion of scheme Media & Tech Source of 6 out of 10 largest pre-lets 2008-2018 Q3 69 Number of all pre-lets in excess of 100,000 sq ft over the last 10 years £ 13 Average months between exchange and completion of scheme 69 Number of all pre-lets in excess of 100,000 sq ft over the last 10 years 9 f pre-lets 018 Q3 25.9m Volume of pre-lets (sq ft) 2008-2018 Q3 24 Average number of pre-lets per annum 2008-2018 Q3 96,219 Average size of all pre-lets (sq ft) 2008-2018 Q3 % n of 2018 al take-up ccounted re-lets Media & Tech Source of 6 out of 10 largest pre-lets 2008-2018 Q3 13 Average months between exchange and completion of scheme 69 Number of all pre-lets in excess of 100,000 sq ft over the last 10 years 267 Number of pre-lets 24.4m Volume of pre-lets (sq ft) 27 Average number of pre-lets per annum 91,676 Average size of all pre-lets (sq ft) 27% Proportion of 2018 annual take-up volumes accounted for by pre-lets Media & Tech Source of 6 out of 10 largest pre-lets £ WHAT THIS REPORT AIMS TO ACHIEVE… • Assess the historical trends in pre-letting and how they might change in the future. • Explore what impact pr -letting has for both occupier and landlord decision making. • Examine the barriers and enablers for pre-letting in the UK office market. • Provide insight into the future needs of occupiers seeking pre-lets. 32% Media & technology 13% Professional services (inc Legal) 31% Banking & Financial 5% Retail & Leisure