EMERGING FROM THE SHADOWS CAPITAL WATCH THE LATEST ON LONDON REAL ESTATE Q3 2014

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1 CAPITAL WATCH THE LATEST ON LONDON REAL ESTATE A Cushman & Wakefield LONDON MARKETS Publication Q3 21 EMERGING FROM THE SHADOWS This quarter we examine the drivers for the recent surge in demand for land in this burgeoning market and question the longevity of the boom is Southbank here to stay? We certainly think so. A swathe of new developments are transforming London s Southbank, attracting residents and occupiers alike to an area which was previously considered a poor relation to the more established submarkets north of the river. From The Shard at London Bridge down to Vauxhall and over to Elephant & Castle, inspiring architecture, excellent transport connections and a bustling nightlife have contributed to turn Southbank into an area where people want to work, socialise and live. Residential developers recognised the strengths of Southwark long ago. Commercial developers are now snapping at their heels for potential development sites as large international companies and local occupiers are being increasingly drawn to new office developments on Southbank, which offer all the amenities of the City and West End but at more attractive rents, and in some cases, a stunning river frontage. As the occupiers flow south, we have seen a rise in applications for mixed use schemes, incorporating substantial retail and leisure space, such as Lend Lease and Delancey's regeneration of Elephant & Castle and the retail powerhouse of Battersea Power Station. The people who live and work in Southbank will undoubtedly need somewhere to shop, eat, exercise and socialise. The days of being a commuter hub, playing host to a thin band of government and commercial occupiers along the riverside are firmly behind Southbank, the metamorphosis has begun and a new, exciting market is emerging.

2 THE TRANSFORMATION OF A SLEEPING GIANT Southbank has historically provided economic overflow space for the City of London and the West End office markets. This overflow is attractive to local authorities as it brings significant economic activity and increasing rates income. However, the evolution of Canary Wharf and the introduction of the Jubilee line, easing transport to the area, provided a different type of floor space in central London, atypical of the traditional areas but suiting the needs of modern occupiers in huge quantum. For 2 years Canary Wharf overtook Southwark and Southbank as the primary safety valve for the City and as a consequence impaired rental growth in the area. Across London the incredible drive of residential values over the last 1 years relative to poorer commercial demand has moved major development sites from commercial use to residential. This situation has been exacerbated in the past five years with the downturn in the commercial sector which has been particularly felt in Southbank. However, with the growth of commercial occupational demand with recovery from recession, market forecasts for office demand over the next five years outstrips the forecast supply. This has been particularly relevant in Southbank. Commercial occupiers are increasingly seeking localities offering a diverse range of cultural and leisure amenities over more traditional locations. The rich cultural heritage south of the river, coupled with the vast array of high quality leisure venues on offer, is attracting a wave of new companies to the area including News International and Ogilvy & Mather. This trend has led to the delivery of new high quality commercial schemes such as Bankside, The Shard, The Place and the Shell Centre to address this demand, and we have seen rents south of the river rise accordingly. Lettings have been signed for refurbished space at London Bridge City at headline rents of 5. per sq ft, while News International are paying an average rent of 5. per sq ft at The Place. Prime rents now stand in excess of 5. per sq ft, which is an historical high for Southbank and rents are under upward pressure. This increase in commercial viability has led to a search for more sites across Southbank. The area benefits from good transport links, providing connectivity to the other submarkets of Central London. The major railway stations at Waterloo, London Bridge and Blackfriars, have received substantial investment over recent years, and a number of Underground stations, provide links via the Jubilee and Northern lines, Thameslink and South London overground services. This is key to unlocking key developments, as the increasing challenge of movement across the city is encouraging focus on the transport interchanges to reduce travel times to and from the offices. Furthermore they are on the periphery of the CAZ thereby closer to the working population and talent for the occupiers. With the occupational characteristics there is an improving appetite for investment in Southbank and yields hardening to sub-5%. When this is combined with the cheaper cost of providing commercial space relative to residential, we are seeing commercial bids for sites becoming increasingly more competitive. The problem for development is the tightness of supply. The map (right) highlights this issue; traditionally the commercial demand was focused on a tight market within a clearly defined and narrow area adjacent to the river, but much of this space has recently been redeveloped, so the demand for space is now causing developers and occupiers to look further south. Lend Lease and Delancey are regenerating large areas of Elephant & Castle, delivering c. 3, new homes and a new commercial and retail realm, vastly improving the perception across the wider area. We anticipate the search for new sites to be driven south, both as developers are pushed further away from the river by the constrained supply, whilst also being pulled further down Blackfriars Road and towards the new developments. Southwark Council have designated the Blackfriars Road as an area of growth, and as a result we are already seeing a number of sites from the river to St George s Circle being readied for development. Therefore, we see Southbank transforming over the next ten years from a compact area hugging the riverbank, to a significant submarket of great depth, both geographically and in terms of identity and use. Robert Murphy Partner, City Development T + () E robert.murphy@eur.cushwake.com Southbank is now firmly on the international investors' map with investment flowing in from Middle Eastern, German, US and UK investors. As the occupational led regeneration of Southbank continues apace into a modern dynamic business and social quarter, so the UK and international investor market has spotted the changing dynamics and the area is now firmly on the international investors' map. We believe commercial real estate is now worth over 15 billion in this quarter and this is rising annually. Historically the commercial and prime area has been clearly defined by the River Thames to the north and the railway line to the south, running between London Bridge and Waterloo, but as the evolution of London continues and the population grows, so the acceptable institutional investment area is extending southwards. The regeneration of the area has accelerated dramatically over the last 5 years and this is set to continue further with obsolete buildings undergoing redevelopment for a wide crosssection of uses. Investment volumes in Southbank between 213 and 21 have witnessed an explosion in turnover with over 3 billion of transactions traded in 25 separate deals over the period. Taking 213 alone, and excluding the 1.7 billion purchase of More London by St Martins (Kuwait Investment Authority), the volume traded at 1.1 billion is 7% higher than the previous record set in 25. SO, WHO ARE THE MAJOR LAND OWNERS NOW? Together, the Qatar Investment Authority, the owners of The Shard, The Place and joint venture owners at the Shell Centre and St Martins, who own London Bridge City and More London (in London s largest deal last year) represent the two largest commercial land owners in Southbank by value. UK institutions together with German funds, US investors and the UK REITs have also increased their presence in the area. Significantly M&G increased their holdings over the last 18 months purchasing circa 75 million of Southwark property in three separate acquisitions. Their holdings now totals over 6 million in Southbank. LONDON SOUTHBANK, SE1 COMMERCIAL PROPERTY OWNER BY REGION (JAN YTD TRANSACTIONS) CAPITAL WATCH The pie chart below illustrates the nationalities of purchasers in Southbank, SE1 over the last 2 months. residential development, mixed use schemes and cultural projects has created scarcity of opportunity for commercial investment. Planning policy in Southwark and the commercial viability of residential and retail developments are moulding the fabric of Southbank and creating a dynamic, vibrant new quarter. In additon to the UK funds, we have recorded acquisitions by Singaporean groups such as Ho Bee; other Middle Eastern groups such as Longulf, based in Yemen, and Kennedy Wilson (US investor). Property companies and private investors such as Delancey, London & Regional, Almacantar, Deerbrook and Chelsfield all have substantial holdings in Southbank. James Crawford Partner, City Investment T + () E james.crawford@eur.cushwake.com YIELDS The competition for new buildings and increasing rents are driving yields down. Net initial yields moved from 6.75% in 21 to 5.% or lower today. The tight development supply, exacerbated by the competition from THE TOP 5 SOUTHWARK DEALS BETWEEN JAN 213 AND 21 YTD: Owner Region 2 The UK REITs have also focussed attention in Southbank and these include Great Portland Estates, Land Securities, Derwent London and Canary Wharf. Address Purchaser Price (m) Net Initial Yield Capital Value PSF Date Purchased More London Estate St Martins 1,7.6% 81 Q % 69 Q 213 Middle East (73%) Bankside 1,2,3, 8-11 Southwark Bridge Road M&G Asia (3%) Europe (5%) UK (19%) Palestra,197 Blackfriars Road DEKA % 72 Q1 213 IBM Building,76 Upper Ground Cordea Savills 12.7% 566 Q3 213 Riverside House, Southwark Bridge Road M&G % 71 Q1 21 Q3 21

3 CENTRAL LONDON OFFICES 7 B C 13 A Long-standing Residential Culture / Religious / Education / Hospital / Government Focused routes of development activity Completed Hotel Completed Residential 2 Completed Commercial Completed Mixed Use Future Hotel Future Residential 9 Future Commercial Future Mixed Use MAJOR SCHEMES OVER 5, SQ FT SOUTHBANK DEVELOPMENT PIPELINE 5 RECENT COMPLETED DEVELOPMENTS 1 The Shard 2 The Place 3 2 Blackfriars Road FUTURE DEVELOPMENTS RESIDENTIAL A LONDON EYE B TATE MODERN C THE SHARD 23 On a macro level, London residential continued to see the strongest annual price growth of all the UK regions in Q3 21, with prices up 12.9% over the year. Average prices climbed to a new record high of 35,186, 2% above their 27 peak, according to Nationwide. As is well documented, London still needs to increase the delivery of new homes as it is running below demand requirements. Therefore supply will be stretched, impacting on price tension. From a developer market perspective, house builder share prices continued to improve throughout 21. The five largest house builders have seen share prices nearly triple on average. In addition, there is a healthy funding market by way of either equity or debt, especially for schemes up to million. Thus, across London, the land market is an extremely competitive arena with plc house builders, Housing Associations (RP s), foreign equity, land traders and retirement home developers all vying for consented and unconsented land plots. Most of the activity and headline grabbing deals have been focused on prime central London or river fronting schemes. Mainly due to their size, signature architecture and ability to attract foreign investment. The overseas road shows have been especially busy during the first half of 21 however there are now signs of a change in overseas buyer mentality. Interestingly, overseas buyers are now focused on less prime locations, where they anticipate capital growth, rather than opting for the safe haven of traditional prime locations. Couple this with the domestic buyer's increased ability to purchase (ie obtain a mortgage), developers are now focused on delivering schemes in more peripheral locations. This is especially pertinent to Southbank, where most of the focus for residential development has been on sites fronting the river for example King's Reach Tower, Blackfrairs, the Shell Centre, Neo Bankside, The Corniche and Bankside Quarter. There has always been an active land market for lesser known/in fill sites, where niche developers have focused on smaller opportunities. There is a distinct two tier market, which explains the significant variation in sales values ranging from 1,15 psf to 2,5 psf. There is a robust second hand flats sales market, but significantly, there is very little large scale new build activity within the vicinity. Native Land s Neo Bankside is now completed and sold with the last transactions at over 2, psf, Mount Anvil s Southside has been sold in bulk and other schemes coming through the pipeline do not compare. This is potentially set to change as Molior highlight there are some 38 schemes in the area which could deliver 6,666 private units. Interestingly the majority of these are situated further south as developers and end buyers are now seeing greater value in non-river fronting schemes. Jack Simmons Partner, London Residential T + () E jack.simmons@eur.cushwake.com Elephant & Castle 5 The Corniche 6 One Blackfriars 7 River Court FUTURE DEVELOPMENTS COMMERCIAL 8 Wedge House 9 Elephant & Castle Shopping Centre FUTURE DEVELOPMENTS MIXED USE 1 Southbank Tower 11 Elizabeth House 12 Bankside Quarter 13 Shell Centre 1 2 Blackfriars 15 Vauxhall Cross 16 Vauxhall Square 17 One Nine Elms 18 New Bondway Blackfriars Road 2 Eileen House 21 Southwark Fire Station Site 22 Doon Street 23 Keybridge House (Telephone Exchange) CUSHMAN & WAKEFIELD 3

4 NEW KIDS ON THE BLOCK SHAKE UP THE TENANT MIX ON THE SOUTHBANK Occupation of Southbank has long been characterised by professional organisations and government bodies, with the European HQ of EY, offices of PwC and legal practice Norton Rose Fulbright traditionally dominating the office uptake. The continued renaissance of the area (including the major refurbishment of London Bridge Station) has encouraged a healthy mix of new developments with offices, retail, residential and hotel uses all jockeying for position. The quality of the transport links into Waterloo and London Bridge and the new station entrance to Blackfriars Station on the Southbank, coupled with the area s distinctive riverside location has attracted a number of new inhabitants to SE1. These include household names such as News International, Ogilvy & Mather, Charles Tyrwhitt and global drinks brand Campari, along with a host of creative and professional SMEs such as GMO, Dot Digital and We Work. This trend is set to continue with advertising conglomerate Omnicom recently acquiring at Bankside 2&3 totalling 37, sq ft. The arrival of these media giants promises to create more synergies with these types of occupiers, attract satellite businesses and further increase Southbank s reputation as a location of creativity and entrepreneurial activity. Despite the influx of new tenants and a dwindling vacancy rate (6.9% at end of Q3), there is still a disparity between overall property costs which compares SE1 favourably to the City and West End. Recent examples of this are traditional West End occupiers Howard Kennedy Fsi and Ramboll taking 5, sq ft and 31, sq ft of office space respectively and Network Rail assigning their leases in King's Cross and moving 5, sq ft of their offices to Cottons Centre. The appeal of Southbank to this diverse mix of occupiers has meant that leasing take up in 21 reached 539, sq ft at the end of Q3 21. As one of London s newest architectural icons The Shard has shone a global spotlight on the submarket. Providing restaurants, residential, a hotel and hospital as well as a business school in addition to their offices, it is one of London s first truly mixed use buildings. Enjoying increased leasing momentum there is still, sq ft available making it the largest immediately available space in Central London. Achieving rents in the region of 7 psf The Shard is considerably ahead of the prime rental figure of 5 psf pa in itself a peak prime rental level for this part of London. We are experiencing rapid rental growth and anticipate year on year growth of 7.1% over the next five years, a rate that outpaces both the City and Midtown markets. Incentives are also rapidly reducing with rent free periods now considerably less than two months per year of term. Southbank is developing some serious momentum and we believe the area will continue to attract a diverse mix of tenants from across Central London. Rex Conyers-Silverthorn Partner, City Office Agency T + () E rex.conyers-silverthorn@eur.cushwake.com Top 1 Occupier Transactions in Southbank (213 up to Q3 21) Date Leased Building Name Address Post Code Tenant Name Leased SF Tenant Business Type A 15/7/213 The Place 25 London Bridge Street SE1 9SG News UK 3,167 Media B 8/8/213 Sea Containers House (North) 2 Upper Ground SE1 9PD Ogilvy & Mather 23,199 Media C 26/3/21 The Shard 32 London Bridge Street SE1 9SY HCA 69,9 D 17/5/21 1 London Bridge SE1 9QL Howard Kennedy Fsi 53,72 Legal E 25/3/21 Sea Containers House (South) 2 Upper Ground SE1 9PD We Work, Business Services F 27/9/213 Riverside House 2a Southwark Bridge Road SE1 9HA National Employment Savings Trust 38,3 G 3/6/ Boundary Row SE1 8HP Serviced Office Group 33,165 Business Services H 16/5/21 2 Blackfriars Road SE1 8NW Ramboll 31,2 Professional Services I 23/8/213 Cottons Centre Hay's Lane SE1 2QE FDM Group 3,363 Telecoms & IT J /11/213 Cottons Centre Hay's Lane SE1 2QE Network Rail 3, COTTONS CENTRE THE SHARD MORE LONDON CAPITAL WATCH Q LONDON BRIDGE

5 CENTRAL LONDON OFFICES B E F D H J A GROUP P LC C I G AN ECLECTIC MIX OF RESTAURANTS AND POP-UPS ENTICE THE CROWDS Southbank has undergone a significant transformation in recent years. What was once a fragmented neighbourhood is now one of London s key city quarters. Southbank has undergone a significant transformation in recent years. What was once a fragmented neighbourhood is now one of London s key city quarters. This transformation has taken place in a relatively short space of time and has involved not just residential and office development, but also an expansion of the area s numerous leisure and restaurant facilities including museums, theatres and galleries, creating an impressive cultural hub. The Southbank Centre which consists of the Royal Festival Hall, the Hayward Gallery, Queen Elizabeth Hall, and the Saison Poetry Library lies at the heart of Southbank, stretching from the Royal National Theatre to the Tate Modern and Shakespeare s Globe and proves most popular with restaurant operators; both chains and independents. This zone is home to an eclectic mix of some of the finest bars and restaurants in London, from stylish hotel bars, family friendly cafes to farmer s markets and pop-ups that are very artisan and champion a lot of local produce. There have also been innovations in Southbank; such as Wahaca opening their first pop-up restaurant from former shipping containers which went on to win an international design award. Established operators include names such as Skylon, Gillrays Steakhouse & Bar, Brasserie Joel, Benugo Bar and Kitchen and Canteen at Royal Festival Hall. Most of the branded restaurant chains at Royal Festival Hall have their highest turnover sites in this location with the constantly high footfall from both tourists and locals. In terms of new developments and future hot spots for restaurant and leisure operators to look out for, within Southbank area; Bankside is Southbank s largest submarket and includes much of the active and future development pipeline. The recently approved Ludgate and Sampson House development schemes will offer approximately 25, sq ft of retail and restaurant space, which will be delivered in phases from 215. In addition, the London Bridge Station redevelopment, which on completion in 218, is expected to attract over 15 million passengers annually, significantly increasing the area s footfall. The redevelopment will fully integrate the station and The Shard with the surrounding area and will deliver reportedly 66% more space including new retail, food and leisure facilities. Furthermore, the opening of three 5* hotels in the area: The Mondrian at Sea Containers, The Shangri-la at The Shard and the Hilton London Bankside should increase visitor numbers further, thus providing great potential for restaurant operators over the next five years. Exciting things lie ahead for leisure and restaurants in the Southbank district. Thomas Rose Partner, Head of Leisure & Restaurants T + () E thomas.rose@eur.cushwake.com CUSHMAN & WAKEFIELD 5

6 TAKE-UP ON TARGET TO SURPASS 27 LEVELS Another strong quarter of occupier activity was recorded during Q3 21 with 3.8 million sq ft of lettings signed. This is the sixth consecutive quarter of above average quarterly take-up and is the highest quarterly volume since Q 26. This means that to date, 9.3 million sq ft has been leased and, with a further 3.7 million sq ft currently under offer, the expectations are that 21 will surpass the last peak of 27. Meanwhile, there was an upturn in investment volumes this quarter, with.7 billion completed. This takes the annual volume to 12.5 billion, which is ahead of the same point in 213 when billion was transacted. WEST END SUPPLY Rising demand and a lack of speculative development continues to constrain West End supply, which declined further in Q3 to just 3.3 million sq ft available. This is the lowest level since 27 and brings the vacancy rate to below 3.5%. There is an acute shortage of large units in the West End, with just five buildings able to accommodate requirements in excess of 5, sq ft and this is leading to the migration of West End occupiers to alternative areas. The development market remains constrained and there was minimal new speculative completions this quarter. Over the next 12 months completions are expected to increase but speculative completions are anticipated to be just 5% of the 1 year average. As a result, supply is expected to head towards levels last seen in 2. Limited supply was reflected in the fact that prelettings accounted for a third of West End lettings TAKE-UP The leasing market recorded another quarter of above average take-up, with more than 1.1 million sq ft of space signed. This brings the year to date total to 2.9 million sq ft, which is up on the same period in 213. This quarter saw a resurgence in large lettings, with five transactions over 5, sq ft signed, which is more than the last two quarters combined. Reflecting the shortage of available space, three of these transactions were prelets. Following a relatively quiet Q2, the media & tech sector dominated leasing volumes in Q3, with the largest transaction being a16, sq ft preletting to Havas at 3 Pancras Square. RENTS Despite stronger letting activity, prime rents remained stable across the West End over the quarter, with the exception of Soho & Covent Garden which recorded quarterly growth of 3.2%.,, 3,5, 3,, 2,5, 2,, 1,5, 1,, 5, Banking & Financial Prof Services Legal Media & Technology YTD ANNUAL TAKE-UP YTD TAKE-UP BY SECTOR Retail & Leisure Manufacturing Other Unknown Grade B Secondhand Grade A New Grade A Prelets Under Offer Q1-Q3 213 Q1-Q3 21 1,, 1 8, 6,, 2, Euston & Marylebone Bloomsbury Hammersmith Kings Cross AVAILABILITY BY SUBMARKET Victoria Soho & Covent Gdn Paddington North of Oxford Street Mayfair & St James Knightsbridge Kensington % Q3 INVESTMENT VOLUMES 25 TO 21 YTD 8% 7% 6% 5% % 3% 2% 1% Grade B Secondhand Grade A New Grade A Overseas % Total bn INVESTMENT After a relatively subdued first half of the year, the volume of commercial property transacted in the West End during Q3 31 picked up and 2.1 bn was traded in 2. This is the highest quarterly volume this year and is more than double Q2 volumes. This brings total Investment volumes in the year to September to 3.95 billion. This is below the volumes recorded in the equivalent period in 213, when 5.9bn was completed and reflects the disequilibrium between supply and demand for investment product. Overseas money continued to dominate the market and was responsible for 61% of volumes. North American investors were the main source of overseas capital this quarter, although UK money accounted for the highest proportions overall. For the second consecutive quarter, prime yields remained stable at 3.5%. WEST END Q3 21 TOP 5 TRANSACTIONS BY SIZE (JULY- SEPT 21) Tenant Sq ft Address Building status Havas 16, 3 Pancras Square, N1 Prelet Parliamentary Estates 88, 39 Victoria Street, SW1 Grade A Dong Energy 81, 5 Howick Place, SW1 Grade A The Doctors Laboratory 81, 1 Mabledon Place, WC1 Prelet Jupiter Asset Management 56,35 Zig Zag Building, SW1 Prelet 6 CAPITAL WATCH Q3 21

7 LONDON IN FIGURES HAMMERSMITH 9.5 ARC 5.3% KENSINGTON 55. psf ARC.% PADDINGTON 57.5 psf ARC.% KNIGHTSBRIDGE 85. psf ARC 9.7% EUSTON & MARYLEBONE 67.5 psf ARC 12.5% NORTH OF OXFORD STREET 9. psf ARC.% MAYFAIR & ST. JAMES S 115. psf ARC.5% KING S CROSS 67.5 psf ARC 22.7% VICTORIA 75. psf ARC 7.1% BLOOMSBURY 6. psf ARC.3% CLERKENWELL & SHOREDITCH 52.5 psf ARC 1.5% MIDTOWN SOHO & 57.5 psf CITY CORE 6. psf COVENT ARC 9.5% ARC 9.1% GARDEN 8. psf ARC 1.3% SOUTHBANK 5. psf ARC 5.3% ARC - ANNUAL RENTAL CHANGE OUTER CORE 9. psf ARC 3.2% ALDGATE & WHITECHAPEL. psf ARC 3.5% STRATFORD 35. psf CANARY WHARF 36.5 psf ARC.3% ARC.% DOCKLANDS 23. psf ARC 2.2% CITY & DOCKLANDS Elaine Rossall Head of London Markets Research T + () E elaine.rossall@eur.cushwake.com SUPPLY Following the completion of a number of office developments, including 122 Leadenhall Street, supply in the City increased quarter on quarter. Supply reached a total of 9.8 million sq ft which is now marginally above the 1 year average. This equates to a vacancy rate of 7.2%. In contrast, supply in Docklands declined for the third consecutive quarter to stand at 1.6 million sq ft, which is the first time for eight quarters that supply has fallen below the 1 year average. The Docklands vacancy rate has fallen to 7.8%. Over the next 12 months development completions are expected to contract sharply, and will result in a squeeze on supply in 215 across the City & Docklands. TAKE-UP Leasing activity in the City reached 2.5 million sq ft, the highest quarterly total since Q 27. As a result 5.7 million sq ft has been let in the year to date, which is 3% above the same point in 213 when. million sq ft was let. Preletting activity continues to be a major source of leasing volumes across the City, particularly for larger transactions. A total of 957, sq ft or 36% of total lettings were prelets in Q3 21, which brings the annual prelet volumes to date to 1.6 million sq ft. Preletting volumes in the City are 5% ahead of the same point in 213. Take-up in Canary Wharf & Docklands decreased quarter on quarter, with 167, sq ft let. Nevertheless, this brings the annual total to 823, sq ft; 6% ahead of 213 total volumes. Total 21 leasing volumes will be the highest since 21. RENTS The impact of rising demand and the expectation of lower supply in 215 is placing rents under pressure. City Core rents now stand at 6 per sq ft, which is an increase of % since the start of the year. There is evidence of rents above this level being achieved on both tower space and terrace floors. INVESTMENT In the City & Docklands, total investment volume in Q3 21 reached 2.6 billion across 1 major transactions. Of this total volume there were five investment deals completed in excess of 16 million. This brings the annual total to 8.5 bn, which is higher than the same point in 213, when 6.3 bn was completed. With significant volumes under offer, expectations are that volumes will be ahead of volumes seen in 213. Overseas investors remain the most active in terms of transactional investment volume accounting for 78% of the Q3 21 total, although UK purchasers accounted for over half the number of deals transacted (22). Asia remains the main source of capital into London, and in the year to date Asian investors have accounted for almost a third of transaction volumes. 1,, 8,, 6,,,, 2,, ANNUAL TAKE-UP YTD Banking & Financial Insurance Prof Services Legal Media & Technology YTD Unknown TAKE-UP BY SECTOR Retail & Leisure Manufacturing Other Grade B Secondhand Grade A New Grade A Q1-Q3 213 Q1-Q3 21 CITY & DOCKLANDS Q3 21 TOP 5 TRANSACTIONS BY SIZE (JULY - SEPT 21) Prelets Under Offer 6,, 5,,,, 3,, 2,, 1,, AVAILABILITY BY SUBMARKET City Core City Fringe Southbank Midtown Docklands Q3 INVESTMENT VOLUMES 25 TO 21 YTD Tenant SQ ft Address Building status Amazon 31, Principal Place, EC2 Prelet M & G Investments Fenchurch Street, EC3 Prelet Mishcon de Reya 119,3 Africa House, Kingsway, WC2 Prelet Amazon 86,2 1 Leadenhall Street, EC3 Grade B Lloyds 72,1 125 London Wall, EC2 Grade A Stratford 1% 8% 6% % 2% % Grade B Secondhand Grade A New Grade A Overseas % Total bn CUSHMAN & WAKEFIELD 7

8 LONDON LOWDOWN STRONG YEAR END IN PROSPECT London s economic picture remains bright, with growth rates being maintained well ahead of the national average and leading indicators largely positive in the run in to the important year end period. Indeed, for business and for real estate, there are good reasons to expect the city to enjoy an equally if not better end to the year than in 213. The labour market is resolutely the most positive indicator for the market, with unemployment falls accelerating and jobs growth increasing. What is more, recruitment surveys suggest hiring intensions have actually accelerated in Q, and not just for senior level hires as the recovery broadens out. As in the opening quarter however, the pace of activity has shown signs of easing in some areas, with softer growth in variables ranging across the business, financial and consumer sectors. Visitor numbers to major tourist attractions grew at the slowest pace for over a year for example while share trading fell over the summer and merger and acquisition activity also dropped. A slowing in the pace of activity has also been noted in the residential market, with evidence that the Mortgage Market Review (MMR) has led to a tightening of underwriting standards which is slowing the market but also political factors to consider such as the prospect of a mansion tax on high value properties which has been raised once more. The RICS in fact reported house enquires and sales in London to be down in July and August. At the same time however, both are still higher than a year ago. Indeed, while there may be areas of the economy that are slowing, the overall balance for London is still very encouraging and even if Variables: Change to: UK M&A activity is down, global activity is up as is trading in a range of other financial markets, including real estate. As a result, 215 economic forecasts for London are likely to be increased further from the current 3 to 3.5%, which is on a par with 21, and this fully supports a more optimistic view on rental growth prospects at least for good quality office and retail space. David Hutchings Parnter, Head of EMEA Investment Strategy T + () E david.hutchings@eur.cushwake.com Nature Detail Period Q2 13 Q3 13 Q 13 Q1 1 Q2 1 Latest Date London unemployment Claimant count Quarterly change -7.7% -7.2% -11.2% -.9% -7.7% -8.% Aug London services jobs Private sector Annual change 6.5% 7.% 7.8% 6.% 7.9% 7.9% Jun Visitor numbers Key London attractions Annual change 3.% 9.7% 7.6% 5.5% 5.1% 3.6% July House sales (RICS) London sales per surveyor Monthly change to annual total 1.8% 1.% 2.% 1.3% 3.3% 1.% Aug Retail sales Volume, year-on-year, UK Annual change to monthly data 2.% 2.3% 5.%.5% 3.2%.% Aug Share trading volumes Total, LSE 3 month average change 1.% 3.8% -1.5% 23.2% -.8%.2% Aug IPO issuance Total, UK Annual change 17.6% -15.6% 36.5% 2.9% 36.5% 25.1% Aug Mergers & acquisitions UK total number Annual volume -39.6% -22.% -11.2% 3.5% -1.2% -1.2% Jun Earlier this month, Cushman & Wakefield and Spire Ventures announced its strategic partnership with Pi Labs, Europe s first propertyfocused technology accelerator company. Founded by Faisal Butt (Founder and CEO of Spire Ventures, formerly known as Hamilton Bradshaw Real Estate) and Umesh Kumar (former Techstars and Oxygen Associate) Pi Labs was created to assist start-ups focused on property and technology innovation. The programme will accelerate the growth of these companies by providing them with access to investment, mentoring and business space. This move underlines Cushman & Wakefield s commitment to support and drive innovation in property and tech hubs globally. From October 21, innovative property start-ups will be able to apply to join the Pi Labs accelerator programme which will be located within Second Home, a new iconic 2, sq. ft. space in Shoreditch. Founded by Rohan Silva, former adviser to David Cameron and chief architect of London s Tech City initiative, Second Home will set new global standards in the provision of stimulating private and social workplace environments supporting collaboration and co-working amongst creative and technology businesses. Through its strategic partnership with Pi Labs, Cushman & Wakefield s tech team led by Juliette Morgan, (Head of Property at Tech City UK) will relocate to Second Home and become an integral part of the accelerator programme. The Pi Labs programme was created out of the realisation that a platform approach to property innovation would improve the success rate of budding ventures when compared to the isolated efforts seen today. This unique initiative puts Cushman & Wakefield at the heart of London s tech ecosystem working alongside world-class entrepreneurs, tech innovators and creative companies while sharing the firm s extensive range of industry sector specialisms, contacts and networking opportunities. For Spire Ventures, Pi Labs is a natural next step after the venture capital platform s investment in emoov (the UK s largest online estate agent) and most recently, Spacious, positioning the firm as London s most active investor in prop-tech start-ups. 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