London Offices Market Analysis

Transcription

1 London Offices Market Analysis Issue 4 Oct - Dec 2009

2 Agent share by number of disposals done 2009 C20 M10 Y5 K15 (GREY) Pie chart Rank Agent Name No. of Disposals City West End 1 CB Richard Ellis DTZ Knight Frank Jones Lang LaSalle Strutt & Parker Richard Susskind & Co 97 7 King Sturge GVA Anton Page E A Shaw 76 =11 Farebrother 75 =11 Drivers Jonas 75Up to 250, m+ 13 Cushman & Wakefield BNP Paribas Real Estate Savills Allsop 250,000 to 500, , ,000 to1m to 500, Colliers Godfrey Vaughan 46 =18 Ingleby Trice Kennard 37 =18 NB Real Estate Edward Charles & Partners ,000 to 750, Crossland Otter Hunt Brogan Danvers Gold Matthews & Goodman Dron & Wright 31Up to 250, m+ 25 Tuckerman This analysis details the top agents by number of disposals done and has been split out to reveal, where applicable, which office and therefore which market is more active. CB Richard Ellis tops the table, and ends the year with a 19 deal lead over second placed DTZ. It is most active in the City, with a 95:81 split. Also more active in the City are Jones Lang LaSalle and Strutt & Parker. DTZ was most active in the West End, as were Knight Frank, King Sturge, GVA and Drivers Jonas. The highest placed single office agent is Richard Susskind, C20 which M10 finished Y5 sixth K15 (GREY) with 97 deals. Despite the current market Pie conditions, chartthe City still leads over the West End, in terms of numbers of deals completed which are attributable to a specific office 649 to 524. Up to 250,000 Working/ 2 resident Up to 250,000 Working/ 2 resident 18 1m Sheep Day trip nside M25 500,000 to 750,000 1m Sheep On business/ not shopping 250,000 to 500, ,000 to1m Tourist On business/ not shopping Up to 250,000 Working/ 2 resident Day nside M Working/ resident 250,000 to 500,000 Top 5 agents by disposals done - office breakdown ,000250,000 to1m to 500, ,000 to1m DTZ Jones Lang LeSalle Day trip Knight Frank nside M25 500,000 to 750, ,000 to 750,000 Tourist Day nside M 54% 46% 47% 53% Two news columns 90mm wide 52% 48% Two news column CB Richard Ellis Strutt & Parker 46% 44% Two news columns 90mm wide City West End Two news column 54% 56% 1 For all data enquiries call

3 London Offices market analysis Central London agents market share league table disposals 2009 Rank 2008 Rank 2009 Agent Disposals (sq ft) No Deals Market Share 1 1 CB Richard Ellis 2,632, % 4 2 Knight Frank 1,476, % 3 3 DTZ 1,420, % 2 4 Jones Lang LaSalle 1,168, % 7 5 Strutt & Parker 957, % 5 6 Cushman & Wakefield 888, % 6 7 Savills 555, % 12 8 Drivers Jonas 549, % 9 9 King Sturge 486, % GVA 470, % Farebrother 461, % 8 12 BNP Paribas Real Estate 431, % BH2 373, % Richard Susskind & Co 367, % Allsop 266, % E A Shaw 253, % Anton Page 221, % NB Real Estate 211, % Edward Charles & Partners 198, % Ingleby Trice Kennard 149, % Colliers Godfrey Vaughan 142, % Dron & Wright 118, % Pilcher Hershman 101, % na 24 Hutchinson Morrison Childs 101, % na 25 Kinney Green 95, % Watermark Place, EC4 CB Richard Ellis top by over one million sq ft CB Richard Ellis retains top place for 2009 after letting over 2.6 million sq ft, taking a 23% market share. It acted on more disposals than any other agent, 176 in total, and now stands almost 1.2 million sq ft above the chasing pack. Its largest transaction was at Watermark Place, EC4, where Nomura took the entire 488,000 sq ft building through a transaction joint with second placed Knight Frank which climbs two places on 2008 after acting on 110 transactions and disposing of 1.48 million sq ft. Knight Frank cemented its second place finish following the disposal of 144,000 sq ft to Clyde & Co at St Botolphs, EC3. This was a joint transaction with CBRE and Cushman & Wakefield, which negotiated the terms of the deal. CBRE also advised on the 180,000 sq ft disposal at Ropemaker, 90 Upper Thames Street, EC2, where the Bank of Tokyo-Mitsubishi UFJ has taken space spread over nine floors. The deal was through a joint transaction with Jones Lang LaSalle which has slipped by two places to fourth this year achieving a 10% market share. JLL also advised on the 63,000 sq ft taken by IG Index at Cannon Bridge House, 25 Dowgate Hill, EC4, and the disposal of Wells & More s, 45 Mortimer Street, W1, where 62,000 sq ft was let to New Look. DTZ again takes third place after disposing of over 1.4 million sq ft spread over 157 lettings. Its largest disposal saw News International take 186,000 sq ft at 3 Thomas More Square, E1, in a transaction with 13th placed BH2 which has slipped out of the top ten. Elsewhere DTZ let 70,000 sq ft at Bow Bells House, EC4, to Aberdeen Asset Management through a deal with sixth placed Cushman & Wakefield. Drivers Jonas and GVA climb into top ten Fifth place has gone to Strutt & Parker this year after climbing two positions on 2008, acting on 100 transactions and letting 960,000 sq ft. Its largest letting was the disposal of 123,000 sq ft to Catlin Underwriting Agencies at 20 Gracechurch Street, EC3, through a joint agency disposal with CBRE and Savills. Sixth placed Cushman & Wakefield completed 67 deals this year and other than the two lettings already mentioned it acted on the letting of 116,000 sq ft to the Bank of China at 1 Lothbury, EC2, which enabled Drivers Jonas to climb four places to eighth position. This was its largest letting of the 75 completed this year and helped it to achieve a 5% share of the market. Savills finished seventh this time round after completing on 55 lettings totalling 555,000 sq ft. One of its largest lettings has seen AstraZeneca UK take over 49,000 sq ft on two floors at 2 Kingdom Street, W2, through a transaction with table toppers CBRE. Elsewhere, Robert Fleming Insurance Brokers has taken just shy of 40,000 sq ft on part of the third and fourth floor at 20 Gracechurch Street, EC3, in a transaction joint with CBRE and Strutt & Parker. Ninth place this year went to King Sturge following 93 transactions giving it a 4% market share. Completing the table is GVA with 84 deals.its largest disposal to take place was the 71,000 sq ft deal at 272 High Holborn, WC1, where the University of Arts London has taken the entire building through a letting with Farebrother. For all data enquiries call

4 Agents market share by market 2009 City core West end Rank Agent Disposals (sq ft) No deals Market share Rank Agent Disposals (sq ft) No deals Market share 1 CB Richard Ellis 1,608, % 1 CB Richard Ellis 571, % 2 Knight Frank 823, % 2 DTZ 398, % 3 Strutt & Parker 626, % 3 Jones Lang LaSalle 347, % 4 Jones Lang LaSalle 566, % 4 Cushman & Wakefield 240, % 5 DTZ 445, % 5 Knight Frank 200, % CB Richard Ellis climbed three places to top the City core table this year. In addition to its deals at Watermark Place, St Botolphs, and Ropemaker, it let 43,000 sq ft to Orrick Herrington & Sutcliffe at 107 Cheapside, EC2. Knight Frank took second place, achieving a 21% share of the market. This was largely due to the Nomura deal, but elsewhere it disposed of 144,000 sq ft at the Broadgate Tower, EC2, to serviced office provider Regus in a deal joint with Jones Lang LaSalle which slipped three places to fourth completing on 45 deals. Its joint agency transaction with Knight Frank to Itochu Europe at the Broadgate Tower, EC2, helped it achieve a 15% market share. Strutt & Parker took third with a 16% market share, and DTZ completes the table after letting 445,600 sq ft. Midtown Rank Agent Disposals (sq ft) No deals Market share 1 Farebrother 422, % 2 CB Richard Ellis 226, % 3 E A Shaw 170, % 4 GVA Grimley 144, % 5 Jones Lang LaSalle 131, % CBRE retained top spot in the West End after completing 82 transactions, claiming a 19% market share. The 63,000 sq ft letting to the Institute of Ismaili Studies, at 210 Euston Road, W1, at the start of the year helped secure its first place. DTZ took a 13% share of the market letting almost 400,000 sq ft. Its largest transaction was to New Look, which took 62,000 sq ft at Wells & More s 45 Mortimer Street, W1, in a deal with third placed JLL which disposed of 350,000 sq ft. Cushman & Wakefield finished fourth after acting on 41 deals, its largest being the 28,000 sq ft letting to Heidrick & Struggles International Incorporated at Iona, 40 Argyll Street, W1, through a transaction with Strutt & Parker. Knight Frank took fifth place and a 7% share of the market. City fringe Rank Agent Disposals (sq ft) No deals Market share 1 Richard Susskind & Co 325, % 2 DTZ 278, % 3 BH2 275, % 4 Anton Page 158, % 5 BNP Paribas Real Estate 142, % Farebrother again took top spot in Midtown after completing an impressive 60 transactions totalling 422,000 sq ft. Its largest letting saw the University of the Arts London take 71,000 sq ft at 272 High Holborn, WC1, in a transaction joint with GVA Grimley which finished fourth this year. CBRE was second with 15 deals and a 16% market share. The lettings of 49,000 sq ft to Capgemini UK and 36,000 sq ft to GDF Suez Energy UK at 40 Holborn Viaduct, EC1, both joint with BNP PRE, helped secure its position. E A Shaw climbed two places to third with 50 deals, up by 20 on Its letting of 13,000 sq ft to Adidas UK at 6 Langley Street, WC2, with Cooper Collins was its largest transaction. JLL finished fifth letting 132,000 sq ft over 12 transactions, its most notable joint with CBRE to British American Tobacco at Arundel Great Court, WC2. Docklands Rank Agent Disposals (sq ft) No deals Market share 1 Knight Frank 210, % 2 Cushman & Wakefield 166, % 3 CB Richard Ellis 133, % 4 Jones Lang LaSalle 86, % 5 DTZ 34, % Once again Richard Susskind is top of the yearly table in the City fringe. It acted on an impressive 84 lettings and achieved a 23% market share. Of the 326,000 sq ft let, a 48,000 sq ft deal to Datamonitor at Farringdon Road, EC1, was its largest and DTZ s second largest transaction. Elsewhere, the 186,000 sq ft letting to News International at Trinity Tower, 3 Thomas More Square, E1, was DTZ s largest transaction and helped it in taking second place. This letting also secured third place for BH2, and a 19% market share. Anton Page again finished fourth, with a creditable 59 lettings the largest coming at Arnold House, Holywell Lane, EC2, where 19,000 sq ft has been taken by CCA International (UK) in a disposal joint with Allsop. BNP PRE took fifth this year with 11 transactions totalling 142,400 sq ft. Southbank Rank Agent Disposals (sq ft) No deals Market share 1 DTZ 63, % 2 E A Shaw 48, % 3 Knight Frank 37, % 4 Kalmars 29, % 5 BNP Paribas Real Estate 14, % Knight Frank topped the Docklands table with eight deals earning it a 51% share of the market. Of the 211,000 sq ft disposed, the 89,000 sq ft letting to LOCOG at 25 Canada Square, was its largest. This transaction also helped Cushman & Wakefield climb two places to second. An undisclosed letting of 73,000 sq ft and a 4,000 sq ft letting to Multitrax at the same property also added to both agents overall figures. CBRE slipped to third with a 32% market share. An 82,000 sq ft letting to the FSA at One Canada Square was its most significant transaction which also helped JLL to take fourth, two places lower than last year. DTZ completes the Docklands table with two deals totalling 35,000 sq ft. With a 21% market share DTZ remained at the top of the Southbank table. It completed 63,000 sq ft worth of disposals with its largest transaction occurring at the Cottons Centre, Hay s Lane, where 30,500 sq ft was let to Markit Group. E A Shaw acted on 14 deals climbing to second. A 16,000 sq ft letting to Guy s and St Thomas NHS Foundation Trust at Mary Sheriden House, St Thomas Street was its most notable transaction. This letting also contributed to Kalmars fourth place finish. The 23,000 sq ft letting to Teach First at 4 More London and the 15,000 sq ft letting at Riverside House, 2a Southwark Bridge Road, taken by Patsystems aided Knight Frank in taking third position and BNP PRE fifth place. 3 For all data enquiries call

5 London Offices market analysis Central London agents market share league table acquisitions 2009 Rank Agent Acquisitions (sq ft) No deals Market share 1 Drivers Jonas 859, % 2 CB Richard Ellis 633, % 3 Knight Frank 340, % 4 DTZ 288, % 5 Jones Lang LaSalle 234, % 6 Devono Limited 233, % 7 King Sturge 160, % 8 Cushman & Wakefield 151, % 9 Allsop 131, % 10 BNP Paribas Real Estate 131, % 11 GVA 129, % 12 Savoy Stewart 117, % 13 Montagu Evans 108, % 14 Carter Jonas 88, % 15 E A Shaw 83, % 16 Lambert Smith Hampton 81, % 17 Susan Earl Commercial 74, % 18 Newton Perkins 61, % 19 Crossland Otter Hunt 53, % 20 Savills 52, % 21 Farebrother 51, % 22 Collins Commercial 48, % 23 Chapman Bates 45, % 24 Hexell Wylie 43, % 25 Ingleby Trice Kennard 39, % Ropemaker, EC2 Drivers Jonas overtakes DTZ to take top spot Drivers Jonas climbed from fourth place to top the acquisitions table for 2009 after achieving a 17% market share. This was principally due to the fact that it represented Nomura in the largest deal to sign this year at Watermark Place, 90 Upper Thames Street, EC4, where 488,000 sq ft was taken. Other notable instructions in its 18 deals include University of the Arts London, for which it acquired 71,100 sq ft at 272 High Holborn, WC1, and IG Index which let 63,300 sq ft at Cannon Bridge House, 25 Dowgate Hill, EC4. Climbing one place and taking a 12% share of the market is CB Richard Ellis which advised on 50 deals this year. Its largest deals securing this position include acting for the Bank of China in its 115,600 sq ft acquisition at One Lothbury, EC2, and on behalf of New Look in the 61,600 sq ft letting at Wells & More s, 45 Mortimer Street, W1. Following behind is Knight Frank which climbed an impressive eight places this year acting on 340,200 sq ft to secure third place. Acting on the second largest acquisition of the year it advised the Bank of Tokyo-Mitsubishi UFJ in its 180,600 sq ft acquisition at Ropemaker, 25 Ropemaker Street, EC2. Elsewhere it secured 42,800 sq ft for Orrick Herrington & Sutcliffe at 107 Cheapside, EC2, helping it achieve a 7% share of the market. DTZ slips to fourth while Devono climbs to sixth DTZ slipped from the top spot to take fourth place this year with its largest deal acting for IHS UK to secure 33,900 sq ft at 133 Houndsditch, EC3. This, coupled with advising FBN Bank on its 32,000 sq ft acquisition at 5 Aldermanbury Square, EC2, saw it take a 6% share of the market. Coming in fifth was Jones Lang LaSalle which slipped two places advising on 234,800 sq ft, with its most notable deal acting for Mastercard at 10 Upper Bank Street in Docklands where 32,300 sq ft was taken. Not far behind and moving up four places is Devono, which completed more than three times the number of deals of first placed Drivers Jonas. Its largest deals included advising Calder UK in acquiring 16,200 sq ft at Arundel Great Court, 2 Arundel Street, WC2 and securing the entire 15,300 sq ft The Terrace, Tooley Street, SE1, for Red Bull, to achieve a 5% share of the market. Retaining seventh place and acting on 160,700 sq ft worth of acquisitions is King Sturge, which successfully advised TLT Solicitors in its letting of 24,600 sq ft at 20 Gresham Street, EC2. Elsewhere it acted for TMP Worldwide in its 23,000 sq ft acquisition of the newly-built 265 Tottenham Court Road, W1. Climbing up one place to eighth spot is Cushman & Wakefield, which completed 26 transactions this year with its acquisition of 16,800 sq ft for Banco do Brasil and a 12,000 sq ft for IR Group at 8 Curtain Road, EC3, contributing to its 3% share of the market. The final two places in the top ten also took a 3% share of the market and went to Allsop and BNP Paribas Real Estate. Despite only advising on four transactions and not making the table last year, Allsop successfully acted for Catlin Underwriting in its acquisition of 122,700 sq ft at 20 Gracechurch Street, EC3. BNP Paribas Real Estate completes the top ten after acting on eleven deals. It s most notable was the 31,100 sq ft letting by EDF Energy at Derwent London s Qube, 90 Whitfield Street, W1. For all data enquiries call

6 Central London letting agents league table Q Rank Agent Disposals (sq ft) Total 1 CB Richard Ellis 1,137, Cushman & Wakefield 616, Knight Frank 596, Jones Lang LaSalle 538, Strutt & Parker 492, Savills 357, DTZ 332, Drivers Jonas 320, BNP Paribas Real Estate 217, King Sturge 170, GVA 159, Farebrother 131, Edward Charles & Partners 103, Richard Susskind & Co 94, NB Real Estate 72, Allsop 60, BH2 58, Teacher Marks 56, Dron & Wright 56, E A Shaw 53, City core 1 CB Richard Ellis 516, Strutt & Parker 320, Cushman & Wakefield 296, Jones Lang LaSalle 259, Drivers Jonas 249, West End 1 CB Richard Ellis 343, DTZ 133, Knight Frank 108, Cushman & Wakefield 108, Strutt & Parker 101, Midtown 1 CB Richard Ellis 169, Farebrother 119, BNP Paribas Real Estate 108, GVA Grimley 80, Jones Lang LaSalle 77,762 6 Docklands =1 Knight Frank 166,087 3 =1 Cushman & Wakefield 166, CB Richard Ellis 101, Jones Lang LaSalle 86, Miles Commercial 14,159 1 City Fringe 1 Richard Susskind & Co 76, Knight Frank 67, BNP Paribas Real Estate 51, Strutt & Parker 47, DTZ 43,934 2 Southbank 1 Knight Frank 23, E A Shaw 13, Montagu Evans 8, Brogan Danvers Gold 5, DTZ 4,976 1 CB Richard Ellis took top spot in Q with top five finishes in four out of the six markets and first place finishes in the City core, West End and Midtown. It disposed of over 500,000 sq ft more than any other agent with its largest transaction seeing 144,000 sq ft let to Clyde & Co at St Botolphs, EC3, through a deal with second placed Cushman & Wakefield and third placed Knight Frank which both took a 16% share of the market. Cushman & Wakefield climbed four places on last quarter after finishing joint first in Docklands and achieving three top five place finishes. Its largest transaction was the disposal of 115,500 sq ft at 1 Lothbury, EC2, to the Bank of China. This deal also aided Drivers Jonas in completing 30 transactions and climbing five places to eighth position this quarter taking an 8% share of the market. Knight Frank made the top five in four of the markets and topped the Southbank and Docklands table. Other than its letting to Clyde & Co its largest transaction was at 25 Canada Square, where LOCOG has taken 89,000 sq ft through a joint agency transaction with Cushman & Wakefield. Elsewhere it disposed of 32,000 sq ft to the UK Payments Administration at 2 Thomas More Square, E1, in a letting joint with BH2 and DTZ. Jones Lang LaSalle climbed to fourth this quarter with 49 transactions and a 14% share of the market. Its largest letting was at Cannon Bridge House, 25 Dowgate Hill, EC4, where IG Index has taken 63,000 sq ft through a deal joint with CBRE. Elsewhere the letting of 56,000 sq ft to FSA at One Canada Square with CBRE enabled it in taking a fourth place finish in Docklands. Strutt & Parker completes the top five this quarter. It acted on 44 deals totalling 493,000 sq ft. Its 13% market share was largely down to the 123,000 sq ft disposal to Catlin Underwriting Agencies at 20 Gracechurch Street, EC3 through a deal joint with CBRE and Savills. St Botolphs, EC3: Clyde & Co takes 144,000 sq ft 20 Gracechurch Street, EC3: 123,000 sq ft let to Catlin Underwriting Agencies 5 For all data enquiries call

7 London Offices market analysis Summary statistics City Core City Fringe Docklands Midtown Southbank West End Overall Q1,2,3, Q Q1,2,3, Q Q1,2,3, Q Q1,2,3, Q Q1,2,3, Q Q1,2,3, Q Q1,2,3, Q4 Takeup (million sq ft) annual or quarter total New/Refurb existing Premarketing Secondhand Under Construction Total Availability (million sq ft) annual quarterly average or quarter end Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 New/Refurb existing Premarketing Secondhand Under Construction Total Availability Rate % annual average or quarter Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 % 8.40% 12.55% 12.54% 10.69% 13.26% 12.52% 4.79% 8.64% 10.40% 7.08% 9.70% 9.18% 5.09% 6.16% 6.64% 5.50% 9.49% 10.04% 6.92% 9.97% 10.22% Under Offer and Withdrawn (million sq ft) quarter or quarterly average Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 Under offer Withdrawn Average Asking prices ( psf) quarter or quarterly average *New leases only Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 New Build Existing Second-hand Grade A Investment Sales (million sq ft) Annual or quarter total Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 Total sq ft No Transactions Construction Starts (million sq ft) Annual or quarter total Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 Total started Pre-let Speculative Completed Space Still available (million sq ft) (completion by full year or part of year) Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 Q1,2,3,4 Q4 Total completed Still available Future Completions (million sq ft) for full year or part of year Delivery date Total to complete Amount still available % still available 56% 96% 0% 63% 0% 0% 0% 21% 0% 84% 0% 0% 8% 0% 59% 55% 0% 0% 57% 39% 59% For all data enquiries call

8 Overview Introduction The property market is at the end of a momentous decade, in which investment and development boomed and then spectacularly bust. The IPD estimates that the total size of the UK economy grew by up to 60% in just seven years before collapsing by almost 20% in two years, a key indicator that the normal property cycle has been broken. The past year has certainly continued to be a struggle and despite some positive movements the implications of the turbulent financial markets are here to stay for both the short term and medium term outlook. London s economic status as a global financial centre has been rocked and despite the bank of England issuing a 1 trillion re-capitalisation of the banks the UK economy has continued to slip into recession. Although appearing to still hold dominance in the short term, it is the long term status London will hold as the financial centre of the world which is being questioned. The severe lack of debt available and reluctance by banks to lend is still hampering the real estate investment market and deals have been few and far between. Despite this there has been some marked improvement in activity, which has picked up towards the back end of the year, as overseas investors continue to make use of the weak value of the sterling and fair priced capital and are eager to claim prime well let stock before opportunities run dry. This does offer some promise to the market reiterating that it remains to be perceived as an important global hub of economic activity. The occupier market also started to respond towards the end of 2009 after two quarters of stagnation. There are now increasing signs of recovery with large requirements re-surfacing as good quality space remains limited and tenants with up and coming lease breaks search for new offices. Agents appear to be far busier than this time last year and the sheer volume of deals has risen dramatically. Capital values move as rents play catch up Capital values slid throughout 2009 as the national recession deepened and instability spread throughout the real estate market. This has started to stabilise for good quality well let properties as prime investment opportunities become limited and renewed demand drives pricing. This renewed interest has even prompted the largest positive movement in capital values in 15 years, with values surging in November by 2.4% according to the IPD Index. This has resulted in some sale prices even exceeding asking values for prime well located stock, like the sale of 5 Churchill Place by Canary Wharf Group where the freehold was sold to a private overseas investor for 208 million, 38 million above the book value in June. The continued lull in the value of the Sterling has also meant that London-based capital is offering good value to overseas investors, opportunity funds and well positioned REIT s which have long established access to debt. Those who are able to capitalise now are likely to reap the rewards as we head into the next upturn. Concerns surrounding investment opportunities have shifted away from yield levels, which had been the main focus of the market decline, to the valuation impact caused by the decline in rental values, which inhibits average annual returns. Rents across the capital still appear to be playing catch up, especially for secondary stock which is in abundance in the current market. We are unlikely to see any positive push for this grade until 2011 with values sliding further in the early months of 2010, although tenants may turn to refurbishment if no suitable space is available. Rental values for prime stock on the other hand are beginning to stabilise as demand returns and there is likely to be some positive movement for the most sought after floor plates while supply continues to be contained. Occupier dynamics shift There is no doubt that London has had to shift its focus on occupier behaviour, responding to changing occupier dynamics with different tenant groups propping up individual markets. Certain key occupier groups now have to focus on survival rather than expansion, a growing issue as unemployment hit 2 million earlier in the year. One area outside the finance industry to be largely affected by expansion cut backs is the public sector. Heavy caps on spending and increasing debt and job losses are likely to stem demand for the next few years and this is likely to impact the West End, a prime location for government agencies. Deals, in general, are taking longer to complete and several transactions failed at the final hurdle earlier this year including Fortis Bank pulling out of taking space at 150 Cheapside, EC2 after its board failed to back the proposed move. Elsewhere, LaSalle Asset Management failed to secure space at 20 Gresham Street, EC2. That said, Canadian Bank CIBC is now expected to take 50,000 sq ft, TLT Solicitors is under offer on 22,000 sq ft and Majedie Investments is taking 12,000 sq ft at 150 Cheapside. At 20 Gresham Street CHP Consulting and TLT Solictors have exchanged on 35,000 sq ft. We have startedto see some large transactions returning, with the most notable seeing Nomura take the entire newly completed Watermark Place, EC4, which instigated a flurry of renewed interest in the City market. Rent free periods hit a high of four years in 2009 and a shift to shorter term more flexible lease structures appears fundamental in the current market. The West End has benefitted from its diverse occupier dynamics and cut priced rental values offering prime occupancy for those previously priced out of this market. This has resulted in a continued demand for sub 10,000 sq ft deals, helping prop up the market. The City s heavy reliance on the finance industry has certainly seen a stem in demand in general throughout 2009 as one would expect, but limited development and completions have kept vacancy rates contained, protecting the market from an over supply of stock, a problematic characteristic of previous recessions. We are likely to see a surge in the demand from the business services industry over the forthcoming years as the finance industry continues to be streamlined. Development stifled as market suffers The severe cut backs in lending by the banks over the past two years have drastically affected the volume of development in London. Projects have been put on hold and speculative development has ground to a halt. Proposed iconic buildings have continued to be sidelined quarter after quarter and they are likely 5 Churchill Place, E14: Sold to overseas investor for 208 million 150 Cheapside, EC2: CIBC, TLT Solicitors and Majedie Investments under offer to take space 7 For all data enquiries call

9 London Offices market analysis to remain on the back burner until both a recovery in the real estate market and wider economy is in full swing. Developments such as British Land s Cheesegrater site on Leadenhall Street, EC3, have even opted for interim uses for their sites by short-listing more than a dozen young architects for a temporary solution to fill the Richard Rogers site which appeared to come to a standstill last summer. The severe lack of debt is likely to mean that construction starts will continue to be few and far between over the forthcoming year and this could pose huge problems for the market in months time. Reduced planning and development now will inevitably mean a stem in the flow of the construction pipeline and subsequently occupiers will have to turn their attention to refurbishments, should they wish to take space in the capital. On a more positive note, the long awaited Shard of Glass has finally gone under construction with steelworks now visible above ground level. This will not only provide an alternative large floor plate location for occupiers once completed in 2012, but also a symbolic icon for a London emerging from a period of hardship and recession. We have also started to see a shift in occupational usage with mixed use policies being seen as a means of spreading risk while also regenerating non-core hubs within the capital. Outlook for 2010 The London real estate market has certainly seen a shift in the way it operates over the past few years and despite slightly recovering demand starting to prompt a mild improvement in market sentiment we are still in for a long haul on the road to recovery. The severe lack of liquidity has hampered the wider economy dragging it deeper into recession. A much more regulated structure in the finance sector will continue to mean a cautious approach by the banks and this will shape the speed and extent of the recovery of the London office market for the next few years. At present the severe lack of debt available is continuing to stifle the market for home based investors especially, and focus continues to remain on active portfolio management, something which has prompted British Land to review its holdings with a 50% interest sale of Broadgate to US private equity firm Blackstone. Occupier demands have shifted and a new, leaner and more efficient approach to space management will mean that a restriction on new office space demand is likely to continue as outgoings continue to be minimised. The natural cycle of the London office market means that supply is always likely to experience periods of constraint. In addition, the local context for development at sub-market level, including planning policy, means that there are locations which have a tendency to be more supply restricted than others. The result for these areas is higher costs for office occupiers. It is important, however, to take a long-term view to ensure that there is an adequate supply of office land for future development to meet the potential need for offices arising from projections of employment change. And if the economy recovers as predicted in , we are at present likely to see a restricted supply of stock. The question asked at the start of the recession was, Is the impact on the financial services sector purely cyclical or part of a long overdue alteration to the regulation in the finance sector? I think it is clear that it is a bit of both, with the natural cycle of peak and trough heightened by a panic filled finance market, exposed following years of overconfident investment. As some are saying, we appear to be moving out of the naughty noughties and into the lean and probably mean teens. The banking sector is being overhauled since the availability of cheap debt and foolhardy lending activity has dried up and we are set to see a much greater regulated structure going forward where availability of debt is harder to come by, carrying many more restrictions. This is likely to mean that subsequent market activity will remain contained. Rewards are certainly there for those with access to debt and those active now could become key players in the market of tomorrow. It is important to remember that at some point the economy will recover, demand will show steady signs of growth, confidence will return to the investment and development community and values/rents will turn up. The market seems to be nearing the first rung on this ladder but whether the finance industry and subsequent development will respond in time to prevent a shortage of stock in the next upturn, we are clearly still uncertain. 20 Gresham Street, EC2: 35,000 sq ft let to TLT Solicitors and CHP Consulting Shard of Glass, SE1: Construction begins For all data enquiries call

10 City core Take up Take up in the City core improved again this quarter, and is up by 29% on last quarter and 234% on this time last year. This increase was purely due to lettings of secondhand space and stock under construction. Secondhand stock saw activity increase by 155% with lettings totalling 734,000 sq ft. The largest deal of this grade was when the Bank of China took 115,600 sq ft at the Bank of England s 1 Lothbury, EC2. The largest transaction of the quarter, and the sole letting of stock under construction, came at St Botolphs, EC3, where Clyde & Co has taken a prelet of 144,000 sq ft on the 10th-13th floors. Lettings of new stock fell this quarter dropping by 39% on Q3, but still up by 1305% on the extreme lows of this time last year. The largest transaction out of the 463,000 sq ft taken was at the Atlas Capital and Aviva owned 20 Gracechurch Street, EC3, where Catlin Underwriting has taken 123,000 sq ft. No premarketed space was taken this quarter. Take up(sq ft) 24 months New/Refurb existing 462, Premarketing - n/a n/a Secondhand 734, Under Construction 144, n/a Total 1,340, The volume of space placed under offer was down by 13% on Q3 with a total of 557,000 sq ft receiving interest. The largest potential deal is at Drapers Gardens, EC2, with BlackRock in talks of taking upwards of 230,000 sq ft. 1 Lothbury, EC2: Bank of China purchases long leasehold for occupation Supply WARNING: THIS IS A TEMPLATE. Supply(sq ft) Q months 'SAVE AS' BEFORE MAKING ANY CHANGES Supply in the City core fell in Q4 dropping by a further 4% on Q3 and this time last year. The improved level of take up has helped contain the increasing amount of secondhand space being shed, and all grades have seen a decline with the exception of premarketed stock, which has remained at the same level as last quarter. The largest decrease saw supply of new stock fall by 14% on Q3. This was a result of space being withdrawn from the market with the largest retraction removing the fourth floor measuring 17,800 sq ft at 14 Cornhill, EC3. Supply of stock under construction fell by 7.6% this quarter. This was largely due to the letting at St Botolphs, EC3. The availability of secondhand space fell marginally, slipping by 0.78%, despite a marked improvement in take up. The largest new addition to the market was of this grade at 2 Minster Court, EC3, where an additional 55,000 sq ft is now available after Moodys Investors services vacated. The availability of premarketed stock has remained unchanged this quarter., standing at 7.3 million sq ft. In most cases subs will add heading, subheading and source New/Refurb existing 2,918, Premarketing 7,322, Secondhand 4,398, Under Construction 1,751, Total 16,390, The amount of space withdrawn from the market has risen again increasing from the 114,100 sq ft in Q3 to 133,300 sq ft spread over 12 properties. The largest retraction of space saw 33,200 sq ft of secondhand stock taken off of the market at Cobham House, 20 Blackfriars Lane, EC4, where the lease available is set to expire. 30 King Street, EC2: Rent of 45 per sq ft released Colour palette for bar charts Availability rate The availability rate in the City core has been contained this quarter and has moved in from 13.46% to 12.54%. This has been a result of a marked improvement in take up activity and a limited supply of stock, with completions continuing to be pushed back to protect the market. Despite this the rate is now the highest in London after overtaking the City fringe. There is 930,000 sq ft of speculative stock set to complete in 2010, but how many of these schemes will continue to be sidelined remains to be seen. Demand for good quality stock in the City has certainly been on the up, and any new space which does complete is likely to be absorbed quickly due to the lack of options currently available. Availability rate 15 % Goats Sheep Ducks Cats Dogs Geese Colour palette for line graphs 3 Q1 07 Q2 07 Q For all data enquiries call

11 London Offices market analysis IS A TEMPLATE. WARNING: THIS IS A TEMPLATE. E MAKING ANY CHANGES Asking rents 'SAVE AS' BEFORE MAKING Asking rents ANY CHANGES The slide in average asking rents has halted this quarter with both new build and secondhand In most rents cases beginning subs to will stabilise add after heading, four subheading and source New build (existing) straight quarters of decline. The averages now stand at and 80 per sq ft per sq ft respectively. The new build average has held steady following the release of a 70 rent of 45 per sq ft on the ground and first floor at 30 King Street, Colour palette EC2. There were also no rental reductions seen this quarter for 60 for bar charts this grade of space. The average rent for good quality secondhand space also 50 remains unchanged. Despite the loss of the top end rent of 55 per sq ft, previously quoted at 5 Aldermanbury Square, EC2, prior to a 40 letting to FBN, the removal of the low rent of 5 per sq ft at Atlas House, 1-7 King Street, EC2, after the space was withdrawn from 30 the market, has helped balance the figures. heading, subheading and source WARNING: THIS IS A TEMPLATE. 'SAVE AS' BEFORE MAKING ANY CHANGES Construction starts with prelets In most cases subs will add heading, subheading and source Completed space actively marketed Q1 07 Q2 07 Q3 07 Secondhand C20 M10 Y5 K15 (GR Graph bars C10 M30 Y70 K10 (B Graph bars C50 M25 Y10 K25 (B Graph bars Colour pale for bar char C100 M20Colour Y0 K50 pale (D Graph barsfor line gra C10 M30 Y70 K40 (D Graph bars Cheesegrater, EC3: Scheduled start for Q C50 M35 Y35 K0 (DA Graph bars 1.2 sq ft (m) Speculative Prelet 1.5 sq ft (m) Completed Still available Colour pale C0 M90 Y100 for bar K0 cha (RE Line graphs Construction Construction activity has been hit hard in Q with no new starts getting underway, as with Q3, and no completions taking place. Of the 1.65 million sq ft set to complete in 2010, 930,000 sq ft remains speculative. The largest scheme set to be finalised is at St Botolphs, EC3, where 522,000 sq ft is scheduled for completion in Q2, with half of the space prelet to Clyde & Co and Lockton International. Elsewhere the 93,000 sq ft new build behind the existing façade at Princes House, Gresham Street, EC2, is expected in Q with all of the space still speculative. Two starts are scheduled for 2010, the largest being British Land s 588,000 sq ft Cheesegrater site on Leadenhall Street, EC3. However it is uncertain when this build will actually get off the ground, and it is likely to take a prelet to get the construction phase in progress sq ft (m) Q1 10 Q2 10 Colour palette - for line graphs Q3 10 Completions with space available Q4 10 Q1 11 To complete Q3 11 Q4 11 Still available Q2 12 C30 M100 Y0 K10 (P Line graphscolour pale for line gra C100 M0 Y20 K20 (T Line graphs 88 Wood Street, EC2: Rockspring purchases freehold for 183m Colour pal for line gra Investment The volume of investment transactions remains the same as last quarter, with properties totalling one million sq ft having been sold. Three of these were part of a portfolio disposal as CB Richard Ellis Investors sold Cutlers Exchange, Cutlers Court and Houndsditch, EC3 to Henderson Global Investors for 35.2 million, reflecting a yield of 11.25%. The largest sale took place at 88 Wood Street, EC2, where Rockspring purchased the freehold interest from ING Real Estate on behalf of the Korean National Pension Service for 183m. Elsewhere, 1 Lothbury, EC2 was sold by Goodbody Stockbrokers for 86 million to the Bank of China, which plans to occupy the space in Q For all data enquiries call

12 West End Take up The West End has performed well this quarter with take up rising again, up by 75% on last quarter and 102% on this time last year. This increase has been a result of an improvment in lettings of new build stock, up by 291%, and secondhand stock, up by 35%. The letting to the University of Westminster at 101 New Cavendish Street, W1, boosted the volume of new stock taken by 45,000 sq ft along with the 28,000 sq ft let to Heidrick & Struggles International at Iona, 40 Argyll Street, W1. The 21,000 sq ft lettings to Kardamyla Holdings at 10 Lower Grosvenor Place, SW1, and National Savings & Investments at 1 Drummond Gate, SW1 contributed to the rise in take up of secondhand stock. The improved level of take up has also been down to almost 50,000 sq ft of stock under construction being taken following the letting to AstraZeneca UK at 2 Kingdom Street, W2, where construction has since completed. This was also the largest transaction in the West End this quarter. Once again there has been no premarketed stock taken. The volume of space placed under offer fell this quarter and is down by 46% on Q3 with 189,000 sq ft of potential deals in the pipeline. The largest possible letting is at Haymarket House, Take up(sq ft) Q months New/Refurb existing 253, Premarketing - n/a n/a n/a Secondhand 624, Under Construction 49, n/a n/a Total 927, Haymarket, SW1, where 15,300 sq ft is under offer on the first floor. Elsewhere, 15,200 sq ft is set to be taken at Sheraton House, Great Chapel Street, W1, by an undisclosed party. 101 New Cavendish Street, W1: University of Westminster takes 45,000 sq ft Supply WARNING: THIS IS A TEMPLATE. Supply(sq ft) Q months 'SAVE AS' BEFORE MAKING ANY CHANGES The volume of supply has fallen in the West End this quarter, dropping by 8%, although it is still up by 14% on this time last year. This has been a result of improved take up activity which has contained the volume of secondhand space available, down by 7%. The largest new availability is of this grade at Southside, 105 Victoria Street, SW1, where almost 36,000 sq ft is now available on the sixth and seventh floors. Elsewhere 29,000 sq ft is now available at Rathbone Place, W1. Improved lettings of space under construction has meant that supply for this grade has fallen by 66%. The largest availability of this grade remains the 180,000 sq ft Quadrant Scheme, Regents Palace, W1. There have been no new additions to stock under construction this quarter. Despite take up of new stock dramatically improving there has been a rise in supply levels this quarter. The amount of space available is up by 64% on Q3 and 177% on this time last year. This has not been due to additions to this market, as there has not been any, but a result of several completions taking place. The largest was In most cases subs will add heading, subheading and source New/Refurb existing 1,189, Premarketing 1,361, Secondhand 5,207, Under Construction 383, Total 8,141, at Regent s Place, NW1, where the 373,500 sq ft office element has completed and remains available in its entirety. The volume of space withdrawn from the market has fallen, dropping from 109,000 sq ft last quarter to 68,000 sq ft in Q4. The largest retraction came at 10 Grosvenor Street, W1, where 11,200 sq ft has been withdrawn from the market on the third floor with London Diversified Fund Management UK still in occupation. Elsewhere, at 1 Knightsbridge, SW1, part of the second floor, comprising of 11,100 sq ft, has been removed. 2 Kingdom Street, W2: 50,000 sq ft let to AstraZeneca Colour palette for bar charts Availability rate The improved levels of take up and restricted supply has stabilised the availability rate containing it at 10% after eight quarters of increase. There has been a handful of larger transactions this quarter which along with a continued demand for sub 10,000 sq ft units has helped prevent the availability rate from rising. With 790,000 sq ft of speculative stock set to complete before the end of 2010, demand must remain high if this rate is to remain restricted. Availability rate 12 % Goats Sheep Ducks Cats Dogs Geese Colour palette for line graphs 2 Q1 07 Q2 07 Q For all data enquiries call

13 London Offices market analysis IS A TEMPLATE. WARNING: THIS IS A TEMPLATE. E MAKING ANY CHANGES Asking rents'save AS' BEFORE MAKING Asking rents ANY CHANGES Asking rents for new build stock responded in Q4 going against the trend of the last In three most quarters. cases The subs average will now add stands heading, at 75 subheading and source New build (existing) per sq ft, substantially up on the 58 per sq ft of last quarter. This is 100 per sq ft due to just two quoting rents remaining, a rent of 55 per sq ft at Davis House, 129 Wilton Road, SW1, and a rent of 95 per sq ft at 23 Savile Row, W1, on the first-fourth floors. Colour palette 80 In contrast, the average rent for good quality secondhand for bar charts space has fallen for the fourth consecutive quarter. The average is currently per sq ft down by 1.50 on last quarter. This 60 has been a result of a low rent of per sq ft being quoted on part of the lower ground floor at Charter House, Carteret Street, SW1. There has also been a 10 per sq ft rent drop on the fifth and sixth floors at Portman Square, W1, where the rent 40 now stands at per sq ft. heading, subheading and source WARNING: THIS IS A TEMPLATE. 'SAVE AS' BEFORE MAKING ANY CHANGES Construction starts with prelets In most cases subs will add heading, subheading and source Completed space actively marketed Q1 07 Q2 07 Q3 07 Secondhand C20 M10 Y5 K15 (GR Graph bars C10 M30 Y70 K10 (B Graph bars C50 M25 Y10 K25 (B Graph bars Colour pale for bar cha C100 M20Colour Y0 K50 pale (D Graph barsfor line gra C10 M30 Y70 K40 (D Graph bars 10 Grosvenor Street, W1: 11,200 sq ft withdrawn C50 M35 Y35 K0 (DA Graph bars 0.8 sq ft (m) Speculative Construction Construction starts have been minimal following the 315,400 sq ft of last quarter, with just 3,000 sq ft getting underway at 26 Charlotte Street, W1. Completions in contrast, have shot up with 984,000 sq ft finalising, up by 280% on last quarter. Other than the already mentioned Regent s Place, NW1, and 2 Kingdom Street, W2, Network Rail s 160,600 sq ft refurbishment at Buckingham Palace Road, SW1, has been finished. Elsewhere, phases 2 & 3 at Arup s Site on Fitzroy Street, W1, have now concluded with the 85,000 sq ft refurbishment by Derwent London set to be occupied by Arup, and outside Victoria Station the Peak, 5 Wilton Road, SW1 has been finished, and all of the 78,000 sq ft remains available. Prelet 1.0 sq ft (m) sq ft (m) Q1 10 Q2 10 Colour palette - for line graphs Q3 10 Completions with space available Q4 10 Q1 11 Completed To complete Q3 11 Q4 11 Still available Still available Q2 12 Colour pale C0 M90 Y100 for bar K0 char (RE Line graphs C30 M100 Y0 K10 (P Line graphscolour pal for line gra C100 M0 Y20 K20 (T Line graphs The Peak, 5 Wilton Road, SW1: Construction of 77,000 sq ft completed Colour pale for line gra Investment Investment activity in the West End has improved for the third quarter running, with 25 transactions taking place. A total of one million sq ft was sold with the largest deal taking place at the United States Embassy, Grosvenor Square, W1. Qatari Diar Real Estate purchased the virtual freehold interest from the US Government for an undisclosed sum, although the building was expected to raise around 400 million when it was put up for sale in A private client of the Bank of Ireland sold the freehold of Windsor House, Victoria Street, SW1 to London & Orient on behalf of a private Hong Kong investor. The private investor purchased the property for 116 million, representing a yield of 5.73%. For all data enquiries call

14 Midtown Take up Take up in Midtown has improved significantly with activity up by 50% on last quarter and 92% on this time last year. Once again the only lettings to take place were of new and secondhand stock which rose by 287% and 19% on last quarter respectively. The largest transaction to take place was of secondhand stock where the University of Arts London took 71,000 sq ft at 272 High Holborn, WC1. Elsewhere, British American Tobacco has taken 26,000 sq ft on the third and fourth floors at Arundel Great Court, 2 Arundel Street, WC2. Capgemini UK took 49,000 sq ft of new stock at 40 Holborn Viaduct, EC1, and GDF Suez Energy UK also took 35,900 sq ft at the property. WARNING: THIS IS A TEMPLATE. ft is set to be taken on the tenth floor. 'SAVE AS' BEFORE MAKING ANY CHANGES The volume of space placed under offer fell this quarter, Supply In most cases subs will add heading, subheading and source Supply has remained contained in Midtown declining by 7% with the most substantial fall seeing the availability of new stock drop by 25% as a result of a marked improvement in take up of this grade. Supply of secondhand stock fell by 7%, whilst the levels of available premarketed and under construction stock remained static. The largest new addition to the market was of secondhand stock at Beacon Capitals MidCity Place, High Holborn, WC1, where 10,600 sq ft is now available on part of the first floor. Elsewhere at 1 Plough Place, EC4, 9,700 sq ft has been made available with the Rogan Si group looking at vacating. The largest availability of new stock still on the market is the 152,000 sq ft Nexus Place, Farringdon Road, EC4. The volume of space withdrawn in Q4 has again restricted Take up(sq ft) Q months New/Refurb existing 126, Premarketing - n/a n/a n/a Secondhand 299, Under Construction n/a Total 426, dropping from 205,000 sq ft to 78,000 sq ft. The largest potential deal in the pipeline is at 65 Kingsway, WC2, where 13,800 sq ft is now under offer. Elsewhere at 6 New Street Square, EC4, 11,700 sq Supply(sq ft) Q months New/Refurb existing 481, Premarketing 811, Secondhand 2,427, Under Construction 669, Total 4,389, supply levels, with 97,800 sq ft being retracted. The largest property to be taken off of the market was the 18,300 sq ft Calthorpe House, Phoenix Place, WC High Holborn, WC1: 71,000 sq ft let to University of Arts London Colour palette for bar charts Availability rate The availability rate contracted further this quarter following the improved take up levels and restricted volume of supply, falling from 10.25% to 9.19%. The Midtown market appears to be attracting tenants looking for prime space in the capital. With 871,000 sq ft of speculative stock set to complete here in 2010 demand must continue to improve if this rate is to be contained. However, as the availability of good quality space elsewhere dries up it is likely that tenants will continue to focus on Midtown. Asking rents Average asking rents continued to slide this quarter for new build stock, however the rate of decline has begun to slow. The average now stands at 42 down by 1 per sq ft on last quarter. This fall has been a result of a 7.50 rent drop at Riley House, 4-7 Red Lion Court, EC4, where the asking price now stands at per sq ft. Average rents for good quality secondhand stock slid by a further 1.25 and now stand at per sq ft. this decline has come from a very low rent of 4.99 per sq ft being released on the lower ground and first floor at New Court Carey Street, WC2. The previous rent quoted at the property was 15 per sq ft. Construction Construction activity was down this quarter with no completions taking place following the 158,400 sq ft which completed last quarter. Construction starts remained subdued with just 24,300 sq ft getting underway. This was at the new build Essex House Essex Street, WC2, where Charles Taylor Consulting is set to re-occupy the space upon completion. Asking rents 80 per sq ft New build (existing) Secondhand Q1 07 Q2 07 Q3 07 Midtown is set to see 871,300 sq ft of speculative space complete in 2010, with the largest scheme yet to see any activity being the 406,000 sq ft development at Central St Giles, 1-13 St Giles High Street,WC2. Investment Investment activity in Midtown was down by one transaction on last quarter, with six sales totalling 234,000 sq ft taking place. The largest deal was the 50 million sale of 5 Chancery Lane, EC4, where Ignis Asset Management sold the property to German investor, Hanseatic Funds at a yield of 6.43%. MidCity Place, High Holborn, WC1: 10,600 sq ft comes onto the market Colour palette for line graphs 13 For all data enquiries call

15 London Offices market analysis Docklands Take up Take up activity in Docklands has shown a vast improvement on the lows of last quarter with activity levels up by 521% as a result of 267,900 sq ft of secondhand stock being taken. Secondhand stock was, for the third quarter running, the only grade to experience any activity with the largest of seven lettings coming at 25 Canada Square where the London Organising Committee for the Olympic Games (LOCOG) took 89,000 sq ft spread over three floors. The lack of large floor plates available in the City is starting to improve the competitiveness of Docklands, and with several other large scale requirements out there, we could continue to see significant WARNING: THIS IS A TEMPLATE. 'SAVE AS' BEFORE MAKING let to Morgan Stanley. ANY CHANGES sized transactions taking place in this market. The amount of space placed under offer soared this quarter with 372,000 sq ft of potential deals in the pipeline. The largest In most cases subs will add heading, subheading and source Supply Supply in Docklands remained relatively contained, up by just 3.5%. The largest increase has seen the supply of new build stock rise by 59%, not a result of new additions to the market but due to the completion of 30 North Colonnade where 205,000 sq ft, previously prelet by Fimilac SA, remains available. This meant the volume of available stock under construction fell by 35%. Supply of secondhand space also rose and is up by 17%. An addition of 303,000 sq ft at 5 Canada Square boosted these figures with Bank of America reportedly moving to Merrill Lynch s City based office at Newgate Street, EC1, following a $50 billion merger last year. Take up(sq ft) Q months New/Refurb existing n/a Premarketing - n/a n/a n/a Secondhand 267, Under Construction - n/a n/a Total 267, possible transaction is at Cabot Square, where BarCap is poised to take around 340,000 sq ft of additional space, previously Supply(sq ft) Q months New/Refurb existing 551, Premarketing 5,075, Secondhand 1,782, Under Construction 374, Total 7,784, Once again there has been very little space withdrawn with just three properties being taken off of the market. 25 Canada Square: LOCOG takes 89,000 sq ft Colour pale for bar cha Availability rate Despite a vast improvement in take up activity and a contained supply level the availability rate has been pushed out further this quarter and now stands at 10.4%, up on the 8.46% of last quarter, and the highest it has been since Q This increase has been down to the completion at 30 North Colonnade meaning the addition of 205,000 sq ft of physical stock to the market. With no space scheduled to complete in 2010, and demand for large floor plates starting to improve it is possible that this figure will start to retract in the near future. Asking rents Asking rents have remained relatively unchanged this quarter up by 25 pence to per sq ft for new stock and down by 1 for good quality secondhand space where the average now stands at per sq ft. A new rent of per sq ft was released for new build stock at 5 Churchill Place, on the ground, tenth and 11th floors. A low rent of 15 per sq ft has been released at 40 Marsh Wall on the fourth and fifth floors which has lowered the secondhand average and a rent drop of 2 per sq ft at 3 Selsdon Way has also helped contribute to the decrease. The outlook for Docklands is one of uncertainty. There is still the possibility that tenants may move away from the Wharf as they continue to downsize, but the recent flurry in activity and demand for large, good quality floor plates, bolstered by the lack of prime space in the City, may help in stabilising any rental movements. Construction Construction activity has remained subdued in Docklands again this quarter with no new starts taking place. In contrast completions were up with 727,000 sq ft being finalised. The largest Availability rate 12 % Goats Sheep Ducks Cats Dogs Geese Q1 07 Q2 07 Q3 07 completion took place at 15 Canada Square where the entire property is already prelet to KPMG. Elsewhere 327,000 sq ft was finalised at Fimalac s 30 North Colonnade. The construction pipeline seems to be relatively contained, there is no speculative space set for completion next year and of the 2.5 million sq ft due for completion in 2011 nearly 80% has already been prelet, with the majority taken by JP Morgan at Riverside South. Investment Investment sales took place for the first time here since Q with three transactions totalling 1.68 million sq ft having completed. The largest was 8-16 Canada Square, where HSBC agreed a sale and leaseback with the National Pension Service of Korea for million. Elsewhere Canary Wharf Group s 5 Churchill Place, was sold to a Bermuda-based investor for 208 million, 38 million more than its June book value. 30 North Colonnade: 330,000 sq ft completes this quarter Colour pal for line gra For all data enquiries call

16 City fringe Take up The City fringe saw a decline in take up activity, dropping by 17% on Q3, however take up is still up by over 100% on this time last year. The only grade to see an increase in lettings was new build stock, with 51,000 sq ft being taken. The largest deal to complete was the 20,700 sq ft disposal to Sapient at Eden House 5-14 Bishops Square, E1. Elsewhere, 9,700 sq ft has been taken at Cosmopolitan, 2-16 Phipp Street, EC2, by an undisclosed occupier. Take up of secondhand space and stock under construction dropped by 22% and 78% respectively. The largest letting was of secondhand stock and came at 2 Thomas More Square, E1, where UK Payments Administration has taken 31,700 sq ft. Elsewhere WARNING: THIS IS A TEMPLATE. EC1, where 67,000 sq ft is now under offer. 'SAVE AS' BEFORE MAKING ANY CHANGES at Finsgate 5-7 Cranwood Street, EC1, an undisclosed tenant has taken 26,900 sq ft. Once again no premarketed space was taken this quarter. In most cases subs will add heading, subheading and source Supply Supply remained contained, falling by 5% on Q3. There is a reduced amount of new stock available, down by 36%, as a result of improved take up. The largest availability here is of premarketed stock and is at the proposed 530,000 sq ft Northgate Place, EC2. Supply of secondhand stock remained stable dropping by just 1%. The largest addition to the market was at Brunning House, 100 Whitechapel Road, E1, where 51,500 sq ft has been made available after the SBJ Group vacated the property. The volume of available space under construction was also down by 16%, due to 8,500 sq ft being taken at Bowling Green Lane, EC1. The volume of space withdrawn from the market totalled Take up(sq ft) Q months New/Refurb existing 51, Premarketing - n/a n/a n/a Secondhand 264, Under Construction 10,767 n/a Total 326, An increased amount of stock was placed under offer with a total of 167,900 sq ft receiving interest up on the 108,000 sq ft of last quarter. The largest potential deal is at 19 Charterhouse Street, Supply(sq ft) Q months New/Refurb existing 321, Premarketing 1,978, Secondhand 2,319, Under Construction 196, Total 4,815, ,000 sq ft with the largest retraction being 9,400 sq ft on the third and fourth floors at City & Generals 3-7 Herbal Hill, EC1. 2 Thomas More Square, E1: UK Payments Administration takes 31,600 sq ft rex features Colour palette for bar charts Availability rate The availability rate has continued to fall dropping to 12.5%, down from the 13.5% of last quarter. This reduction has come from a limited amount of stock being placed onto the market. The rate has now fallen below that of the City core, which is the highest in London. With 340,000 sq ft of speculative space set to complete it is likely that this rate could be pushed out slightly unless the renewed demand for top end space absorbs any newly completed stock. Asking rents The fall in the average asking rents has begun to stabilise with the rate of reduction slowing for the first time this year. The average for new build stock is down by 75 pence and now stands at per sq ft. This was due to a 3 reduction in the rent on the fourth floor at Compton Street, EC1, where the asking rent is now per sq ft. Average rents for secondhand stock fell by 1.25 on last quarter and now stand at 24 per sq ft. The reduction was a result of a 15 drop on the second floor at Charterhouse Street, EC1, where the asking price is now per sq ft. Asking rents 60 per sq ft New build (existing) Secondhand Q1 07 Q2 07 Q3 07 Lane, EC2. There is a total of 537,000 sq ft set to complete in 2010, 63% of which remains speculative. The largest scheme due is Derwent London s 247,300 sq ft Angel Building, EC1, expected to complete in Q with the majority of the space already prelet to Cancer Research. Finsgate, 5-7 Cranwood Street, EC1: Palmer GVA Property Fund purchases long leasehold Colour palette for line graphs Construction Three completions took place this quarter totalling 47,000 sq ft, up on the 33,000 sq ft of last quarter. The largest scheme to to finish was at Meritcape s Fashion Street, E1, where the 26,200 sq ft building is part let. Elsewhere the 18,300 sq ft refurbishment at Gosswell Road, EC1, has come to a conclusion, with all of the space still available. Again construction starts have been minimal with a mere 2,200 sq ft getting underway at the proposed new build at 2-4 Holywell Investment Investment sales more than doubled, with 8 deals totalling 107,800 sq ft taking place. The largest deal was the sale by Invesco of its long leasehold interest in Finsgate, 5-7 Cranwood Street, EC1. The Palmer GVA Property Fund purchased the building for 10.6 million on behalf of the Palmer Capital Development Fund. In addition, Goldhawk Estates Saffron Hill, EC1 was sold to The Chartered Institute of Water and Environmental Management off of an asking price of 2.45 million. 15 For all data enquiries call

17 London Offices market analysis Southbank Take up The Southbank was one of only two markets to see a decline in take up this quarter with activity levels down by 28% on the improved figures of last quarter. There was just 51,000 sq ft taken spread across a total of eight transactions. The lettings were distributed equally between new and secondhand stock, with new build seeing an increase of 95% on the lows of last quarter. The largest transaction was of this grade when 23,300 sq ft was taken by Teach First at 4 More London. Secondhand figures were down by 57% on Q3 and 38% on this time last year. The largest letting to take place was at Ludgate House, 245 Blackfriars Road where Capita Group has signed for WARNING: THIS IS A TEMPLATE. where 4,900 sq ft is under offer. 'SAVE AS' BEFORE MAKING ANY CHANGES 8,300 sq ft of additional space on part of the second floor. There is currently only 25,500 sq ft under offer on Southbank. In most cases subs will add heading, subheading and source Supply Supply has risen here, up by 30% on Q3 and 38% on this time last year. The most notable increase was for premarketed stock which saw a rise of 94% with over 850,000 sq ft now available. At the Kings Reach Tower, Stamford Street, the entire 412,900 sq ft proposed refurbishment is now being marketed. Elsewhere supply increased slightly for secondhand stock, up by 8% on Q3 and 20% on this time last year, with the largest new availability being the 11,600 sq ft at Surrey House, 20 Lavington Street, where the second - fourth floors, currently occupied by Workspace Group, are now being marketed. The supply of new build stock fell due to an improvement in take up with just 24,000 sq ft remaining available. There has been no change in the volume Take up(sq ft) Q months New/Refurb existing 26, Premarketing - n/a n/a n/a Secondhand 25, Under Construction - n/a n/a n/a Total 51, This is an increase of 10,000 sq ft on last quarter but is still a low amount. The largest potential deal is at 16 Great Guildford Street, Supply(sq ft) Q months New/Refurb existing 24, Premarketing 852, Secondhand 701, Under Construction 347, n/a 0.00 Total 1,925, of space under construction with a total of 347,300 sq ft at three schemes still available, the Shard of Glass being the largest. No space was withdrawn this quarter. Ludgate House: Capita Group takes 8,300 sq ft Colour pale for bar char Availability rate The availability rate rose only slightly this quarter and is up by 0.4% standing at 6.64%. The 28% fall in take up activity and 30% rise in supply have not been sufficient enough to push the rate out further, and the limited supply pipeline is continuing to protect the market from large scale increases in availability rates. There continues to be little in the way of prime new stock for occupiers to choose from with the largest availability consisting of three units at City Step, 5-7 Bear Lane. With all of the space due to complete next quarter at 7 More London already prelet the rate is likely to remain contained for the early part of Availability rate 8 % Goats Sheep Ducks Cats Dogs Geese Kings Reach Tower: 412,900 sq ft now being marketed Colour pale for line gra Asking rents The average rent for new build stock on Southbank remains at this quarter. There is only one property quoting an asking rent and this is on part of the second floor at 2 More London. Average rents for good quality secondhand stock fell from 26 to per sq ft. This was a result of a low rent of 10 per sq ft being released on the sixth floor at Sea Containers House. 2 Q1 07 Q2 07 Q3 07 Construction Construction activity on the Southbank has once again been very subdued with no new starts getting underway and no completions taking place. The one completion scheduled for this quarter, the 6,100 sq ft refurbishment at Octavia House, 54 Ayres Street, has now been pushed back to Looking ahead, the development at 7 More London, which is already prelet to PricewaterhouseCoopers is expected to complete. There are no new starts currently scheduled for Southbank. Investment Two properties have been sold this quarter totalling 65,300 sq ft. The largest was the sale of 30 Park Street which achieved 31 million. Blink Point sold the freehold to a close-ended fund managed by KGAL. For all data enquiries call

18 What London offices monitors Markets City core: EC1A, EC2M, EC2N, EC2R, EC2Y, EC2V, EC2A (only Finsbury Pavement, Finsbury Square, Appold Street and Chiswell Street), EC3, EC4 (excluding EC4A & EC4Y) City fringe: EC1M, EC1N (excluding postcode sector 2), EC1R, EC1V, EC1Y, EC2A (excluding Finsbury Pavement, Finsbury Square, Appold Street and Chiswell Street), E1 Southbank: SE1 postcode sectors, 0, 1, 2 & 9 Docklands: E14 Midtown: EC4A & EC4Y, EC1N (postcode sector 2), WC1, WC2 (excluding Leicester Square) West End: W1, SW1, NW1 sectors 2 (Euston Road only), 3, 5 & 6, Leicester Square (WC2) and W2 sectors 1, 2 & 6 Additional markets: South central: Remainder of SE1 and SE11 North central: Remainder of NW1 and N1 West central: Remainder of W2, W6, W8, W14, SW3, SW5, SW6, SW7 & SW10 Data: Building stock: Any office building over 93 sq m (1,000 sq ft) in City Core, West End, Midtown, Docklands, City Fringe and Southbank and over 465 sq m (5,000 sq ft) in North Central, West Central and South Central. Availability: Any unit above 93 sq m (1,000 sq ft) in buildings subject to the above stock thresholds Take up: Any unit above 232 sq m (2,500 sq ft) subject to stock thresholds. Planning: Any project over 232 sq m (2,500 sq ft) subject to stock thresholds Definitions Quarters: For data collation reasons, our quarters run from the 1st of the month to the last day of the 3rd month i.e. 1st January to 31st March; 1st April to 30th June; 1st July to 30th September and 1st of October to 31st December. Agency league tables: The total space disposed by each agent adds up to more than total take-up. This is because space in joint agency deals has been attributed to all agents involved. The market share is each agent s share of take-up, not the total of all agents. The tables include all completed deals over 93 sq m (1,000 sq ft) within our boundaries (see map) including prelets and excluding space under offer, lease renewals, restructures, management agreements, or investment sales. Availability rate: Total building stock figures divided by vacant space which is actively being marketed. Neither figures include space under construction or yet to commence construction. Availability and take up: New/Refurb (existing) is a combined total of newly constructed and refurbished space; Premarketing is any space marketed which is yet to commence construction; Secondhand is any space which has previously been occupied; Under Construction is a combined total of refurbishment and redevelopment projects currently under construction. Space under offer is included. Investment properties are not included. Average asking prices: An average of asking prices by grade of space by market. Only space available on new leases with a quoting rent is collated. Space under offer has been included. Please note that Secondhand Grade A space is previously occupied units with air conditioning and one or more of raised floors, under floor trunking or perimeter trunking. Investment sales: Subject to stock thresholds, a total of space sold as freehold, long leasehold or virtual freehold, both for investment and for owner occupation. Construction starts with prelets: A total of space commencing refurbishment or redevelopment by quarter with a total of that space prelet. This includes space not on the market. Completed space actively marketed: Simply a total of completed refurbishments and redevelopments being actively marketed by quarter. Includes space let but never occupied. Completions with space available: A total of all office space currently under construction by completion date with how much is still available. This includes space not on the market. 17 For all data enquiries call

19 London offices market analysis Fax back I would like to receive further information about London Offices I would like to receive further information about other EGi research products Name: Job title: Company: Telephone: Address: Fax back to We will use your contact details (name and address) to provide any services requested by you and to tell you about important changes to these services. These details will be used by us and by businesses within RBI and its associated companies to provide you with information about other services and products and will also be disclosed to third party businesses and advertisers for the same purpose. If you do not wish to be contacted for this purpose, please express your preferences below: I do not wish to receive relevant information and offers from EGi and Estatesgazette.com I do not wish to receive relevant information and offers from RBI I do not wish to receive relevant information and offers from selected 3rd parties For all data enquiries call

20 London Offices Contacts Andy Heard Research Analyst London Offices Estates Gazette 1 Procter Street London WC1V 6EU andrew.heard@egi.co.uk Hannah Gardiner London Research Product Manager LO Sales and Subscriptions Daniel Clements Sales manager daniel.clements@egi.co.uk This report is published for general information only. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no legal responsibility can be accepted by London Offices or EGi for any loss or damage resultant from the contents of this document. As a general report, this document does not necessarily represent the view of EGi in relation of particular properties or projects. Reproduction of this report in whole or in part is allowed with proper reference to EGi s London Offices..