OnPoint. The Central London Market Q1 2014

Transcription

1 OnPoint The Central London Market Q1

2 Rise in demand signals continued market strength The volume of leasing activity slipped back slightly in Q1 after a rush of large deals in the second half of, but the underlying fundamentals remain sound, with strong demand from occupiers for Central London office space. Despite the strong take-up in recent quarters, demand remains very strong, with 3.3 million sq ft of space under offer at end Q1, the highest since Q3 7. Q1 saw a strong performance from the Docklands market, which has under-performed relative to the City and West End over the past year. The market saw 76, sq ft of take-up in Q1, not far off the figure of the 55, sq ft for as a whole. Yields continue to trend in, with prime City yields now at.5%. Significant competition around prime lending has seen margins as low as 1-16 basis points, meaning that the total cost of finance is comfortably below %. Market Indicators (QoQ) West End City Docklands Take-Up 77 ã 1,158 ä 76 ã Supply 3,3 ä 1,936 ä 1,91 ã Overall Vacancy Rate 3.6% ä 6.3% ä 7.3% ã Grade A Vacancy Rate.7% ä.3% ä 7.1% ã Occupier Demand 5,19 ã 9,998 ä 3,11 ã Prime Rent 15 â 6 â 38.5 â Under Construction,17 ä 3, ä 55 ã Investment Volumes 5m ä 1,98m ä 83m ä

3 Economic overview Upgrades to forecasts continue An already healthy GDP and employment growth outlook for the UK and London has been raised further this quarter, with both the IMF and the Bank of England signalling a brighter outlook with substantial upgrades. The Bank of England now predicts GDP growth of 3.% for the UK, which would be a very strong result and well above trend, while the IMF is tipping growth of.9%. This growth path is setting the UK apart from other European nations which remain on a slower growth trajectory. The upgrades indicate a return of upside risk, after a prolonged focus on downside risk in recent years. Q1 has seen evidence of a recovery in business investment, PMI surveys report strong growth in activity across manufacturing, construction and services, and retail sales remain very strong. Employment growth has also surprised on the upside, with the pace of growth in London out-stripping other global business centres. London is benefitting from both internal labour migration and globalisation; young people want access to London s bigger labour market and firms want to consolidate or expand where they can access large numbers of highly skilled staff and the largest client base. Loan terms easing Strong growth continues to lead to speculation regarding the timing of base rate hikes, but in spite of this, borrowing costs remain accommodative, with margins coming under pressure. A growing number of lenders are entering the market leading to increasing availability of capital. This is driving both the pricing of capital and the risk profile of lenders, who are prepared to lend at higher loan-to-value ratios and further up the risk curve. Significant competition around prime lending has seen margins as low as 1-16 basis points, meaning that the total cost of finance is comfortably below %. There is little doubt that as the quantum of capital chasing financing opportunities increases, will see further increase in risk appetite, and increasingly innovative capital structures, leading to loans being advanced at higher loan to values at lower all in costs of capital. GDP growth (Index, Q1 8 = 1) Source: Oxford Economics United Kingdom United States Germany France Italy Spain Financial and business services growth for selected global cities (Index, Q1 8 = 1) London New York Frankfurt Hong Kong Tokyo Paris Madrid Source: Oxford Economics Bank of England now predicts 3.% GDP growth for the UK OnPoint The Central London Market Q1 3

4 The Central London market Solid take-up continues in Q1 Central London take-up 5 - The volume of leasing activity slipped back slightly in Q1 after a rush of large deals in the second half of, but the underlying fundamentals remain sound, with strong demand from occupiers for Central London office space. Office take-up reached.3 million sq ft in Q1, dropping from.7 million sq ft in Q, but there are a number of significant requirements under offer which should boost activity in Q. The trend to pre-let has remained strong throughout Q1, signalling the strength of the market. millions sq ft West End City Docklands Docklands market returns to form Q1 saw a strong performance from the Docklands market, which has under-performed relative to the City and West End over the past year. The market saw 76, sq ft of take-up in Q1, not far off the figure of the 55, sq ft for as a whole. Central London demand The Docklands market compares favourably with other London locations in terms of affordability, with a prime rent of 38.5 per sq ft compared to 15 per sq ft and 6 per sq ft in City and West End respectively, and we expect to see continued strength in demand as more price-sensitive occupiers with larger space requirements look to secure space. m sq ft Active requirements 9 1 Under offer 11 1 Market buoyed by high volume of space under offer and strong replacement demand Despite the strong take-up in recent quarters, demand remains very strong, with 3.3 million sq ft of space under offer at end Q1, the highest since Q3 7. There was a particularly large increase in the West End, where active demand now stands at 3.6 million sq ft; up from.5 million sq ft last quarter. Replacement demand continues to come through, with new requirements boosting the level of active demand, reflecting the strength of occupier sentiment and employment growth. There are a number of significant requirements under offer which should boost activity in Q OnPoint The Central London Market Q1

5 Quantum of new supply continues to erode Central London vacancy rates 5 - Supply continued to reduce in Q1 with vacancy rates falling further to 6.3% in the City and 3.7% in the West End. Whilst some large completions are soon expected to boost supply, notably The Leadenhall Building, EC3 and Moorgate Exchange, EC in the City, this is likely to be only temporary as the development pipeline beyond this is limited over the next two years. Given this supply dynamic, larger occupiers are becoming less focused on location and driven more by the quality and deliverability of supply in their search for office space. Occupiers are increasingly viewing the Central London market as a whole, rather than having a traditional City or West End focus, including the emerging markets to the north, south and east. Availability (%) of overall stock 15% 1% 9% 6% 3% % West End City Docklands Central London prime headline rents 5 - Occupier migration increased during, largely from the West End, with the key beneficiaries being Regent s Place, Kings Cross, Farringdon and Shoreditch to the north of the core markets, London Bridge and Bankside in the Southbank and Midtown generally. We expect this trend to continue, at least until we see a return to higher levels of speculative delivery across Central London. per sq ft Upward pressure on rents Rents in the benchmark Mayfair and Central City markets were stable in Q1, but upward pressure remains and we expect prime rents to reach 115 and 65 per sq ft respectively by the end of. Rental growth has continued, however, in several London sub-markets outside of the core, such as Soho, Hammersmith and the northern side of the City, reflecting demand from occupier migration and the improvements in the quality of supply (we discuss the transformation of the northern fringe on page seven) million sq ft under offer at end of Q1, the highest since Q West End City Docklands OnPoint The Central London Market Q1 5

6 The Central London market Investment market pauses for breath in Q1 Central London investment volumes 5 - Trading volumes tapered off in Q1 after a rush of large deals in the second half of, totalling 1.9 billion, with 1.3 billion in the City and 5 million in the West End. This made Q1 the lowest quarter since Q1 1. Despite the reduced turnover, investor demand for Central London office stock remains very robust. The market is underpinned by a healthy occupier market, which offers prospects for rent driven capital value growth over the next few years. Reflecting this, asset management plays are highly sought after, especially by UK funds and property companies. billions Overseas United Kingdom 1 The market is also supported by improving credit conditions, with more favourable terms on offer than this time last year. A pick-up in bank s appetite for lending has been accompanied by the continued emergence of non-bank capital, and the increasing number of lenders in the market will lead lenders to take more risk in order to access the market, both in terms of loan to value and asset quality. Central London prime yields and the cost of money 5-8% 7% 6% 5% As the year progresses, we expect trading volumes to accelerate once more, as rising values motivate sellers to bring more stock to market. (%) % 3% % Yields continue to trend stronger 1% % Dec-6 Dec-7 Dec-8 Dec-9 Dec-1 Dec-11 Dec-1 Dec-13 Yields for smaller lot sizes came in to.5% in the City in Q1, with the West End stable at 3.75%. Yields are trending stronger across the whole UK market on the back of the improving economic outlook and the support this will provide for the occupier market. The weight of capital seeking London office stock is expected to maintain the downward pressure on yields in the near term. / Datastream West End City 5-year swap Bank rate Investor demand for Central London office stock remains very robust 6 OnPoint The Central London Market Q1

7 Issue to watch: Redefining the City fringe One of the great success stories of London over recent years has been the transformation of the areas to the north and east of the City into thriving neighbourhoods which appear to mix vibrant new businesses with cutting-edge youth culture. Shoreditch, Hoxton and Clerkenwell have become established parts of the Central London office and residential market remarkable given that they were distinctly fringe only a decade or two ago. The delivery of Crossrail in 18/19 will have a transformational effect on the area, establishing Farringdon as one of the major Central London transport hubs and acting as a catalyst for the redevelopment of the areas office stock. Shoreditch and Clerkenwell are developing different characteristics and will continue to diverge It is very evident that occupiers in Clerkenwell and Shoreditch are distinct, however there are some similarities, for example companies in the digital commerce and media space are widespread in both locations. However, conventional advertising agencies are almost absent in Shoreditch, and are clustering in Clerkenwell medialand is moving from Soho to the area around Farringdon station. Meanwhile, the software development, technical web development, cloud computing/big data and social media spheres are concentrated in Shoreditch. This represents a definite cluster of harder tech expertise in the area, representing 1.7% of take-up over the three years to. However, these companies appear to take slightly smaller units of space than the average. Aldgate is the real city fringe Aldgate has quite a different character from Shoreditch and Clerkenwell, and in some ways appears to be closer to the core City market. Financial services accounted for around a third of all takeup between 11 and. Unlike the other two submarkets, the advertising, marketing & communications sector is not particularly significant. While tech is important here, it is heavily concentrated in providers of data and cloud services (.%) and online financial services (1.5%); the digital and creative tech / tech commerce sectors that are so much a feature of Shoreditch are virtually absent in Aldgate. Redefining the fringe Given the transformation of the area, we believe it is time to retire the idea of the City fringe. Clerkenwell attracts different businesses to Shoreditch, and Aldgate has entirely different dynamics altogether and as such each can be viewed as separate sub-markets within the wider City market The area s office market has become more important and has developed a very unique character. The idea that it is simply the periphery of the City of London is now outdated. OnPoint The Central London Market Q1 7

8 The West End office market Occupier take-up 77, sq ft was let in 3 transactions, 15% below the long term quarterly average of 833, sq ft. There is a further 89, sq ft under offer, the highest since Q1 and 5% higher than the long term average of 576,7 sq ft, indicating that take-up volumes in should be robust. Almost a third of letting activity was pre-let in Q1 and 1% of the space under offer is on a pre-let basis. This is a continuation of the trend we saw emerge in. The TMT sector represented 53% of total take-up, and the largest transaction was 16, sq ft let by Google at 6 Pancras Square, N1. Other significant transactions in Q1 include: Golden Tree Asset Management acquired 6,5 sq ft at 33 Davies Street, W1 at 115 psf, OMV completed on,65 sq ft at 6 Buckingham Gate, SW1 at 67.5 psf and UK TV let 6,855 sq ft at 1 Hammersmith Grove, W6 at an average rent of 8 psf. West End take-up 5 - m sq ft New Secondhand Under construction Off plan West End demand 5-8 Occupier demand Overall demand increased by 3% to 5. million sq ft q-o-q, this is in-line with the 1 year average. The TMT sector continues to account for the largest share (39%) of overall demand, although we have also seen a recent resurgence in demand from other sectors, notably professional, banking and finance, and service sectors, which all recorded quarter-on-quarter increases in demand. Active demand stands at 3.6 million sq ft, up 5% from.5 million sq ft in Q and 8% higher than in Q1 last year. Significant requirements include Sony, sq ft plus, Apple 15,, sq ft and DONG Energy 8, 1, sq ft. m sq ft Active Potential Rolling 1 month take-up Existing supply and the development pipeline Total supply fell % q-o-q to 3. million sq ft. 63% of supply is second-hand. Speculative development under construction fell 16% q-o-q to. million sq ft, marginally higher than the long term average of 1.9 million sq ft. Bucking recent trends, UK investment outstripped overseas investment 8 OnPoint The Central London Market Q1

9 Building completions totalled 389,8 sq ft of which, 53% was pre-let or under offer. Completions include: 1 New Burlington, W1 (9,5 sq ft), 5-6 St James s Square, SW1 (16,5 sq ft), 39 Victoria Street, SW1 (88, sq ft) and Regent Quarter Block D, N1 (8,7 sq ft). 1 Welbeck Street, W1 (53,1 sq ft) was the only scheme to commence construction in Q1. Overall vacancy decreased by 1 basis points to 3.7% and remains significantly lower than the long term average of 5.%. Grade A vacancy is.7%, a decrease from.8% in Q and lower than the long term average of.9%. Rents Prime rents remained stable at 15. per sq ft (assuming a 1, sq ft floor plate and a 1 year term), an increase of 8% year-on-year. Rent free periods remain at 16 months. West End vacancy rates 5 - Availability (%) of overall stock 9% 8% 7% 6% 5% % 3% % 1% Overall West End prime headline rents Grade A 1 Investment volumes and yields 51 million was traded in transactions in Q1. This was the lowest quarterly total since Q 9 and is 61% below the 1 year quarterly average of 1.3 billion. The decline in investment volumes can be attributed solely to a limited supply of tradable assets in the West End, as investor demand remains very strong. Smaller lot sizes dominated the market in Q1, with 76% of transactions sub 5 million. Bucking recent trends, UK investment outstripped overseas investment and represented 71% of total transactions. Key deals include: 11-1 New Bond Street, W1 acquired by a private UK investor for 8 million, UK investor Meyer Bergman purchased 3-6 Piccadilly, W1 for 7 million and Canada Life disposed of 1 Queen Anne s Gate, SW1 to Henley Investment for 3 million. The weight of money (both UK and overseas) looking to invest in the West End market, coupled with forecast rental growth will continue to place pressure on pricing and yields. Yields remain unchanged at 3.75% for sub 1 million,.% for 1 to 8 million lot sizes and.5% for lot sizes over 8 million, but are trending stronger. per sq ft Prime Net effective West End investment purchases billion Property companies Institutions Others OnPoint The Central London Market Q1 9

10 The City office market Occupier take-up 1. million sq ft was let in 6 transactions, a % fall on the exceptional total recorded in the final quarter of and 13% below the 1 year quarterly average. Despite the quarter-on-quarter fall, year to date take-up is slightly ahead of the equivalent period in. Service industries were again the dominant sector in Q1, accounting for 5% of quarterly transactions. Banking and finance, and professional services each accounted for a further 7% market share. The 1, sq ft acquired by ING at 8-1 Moorgate, EC was the largest transaction of the quarter. Other notable transactions in Q1 include: 59, sq ft let to SEI Investments at Alphabeta, EC at a rent of 5.5 psf; The Walbrook, EC where GSMA have signed for 5, sq ft; and 8, sq ft pre-let to Macfarlanes at 98 Fetter Lane, EC. The amount of space under offer more than doubled to 1.8 million sq ft, compared to 85, sq ft at the end of and the highest quarterly total since Q 7, indicating that take-up will continue to be strong in coming months. Occupier demand Active demand decreased 8% to 6.3 million sq ft, compared to 6.8 million sq ft in Q but remains ahead of the 1 year quarterly average of 5.6 million sq ft. The service (%), banking and finance (6%) and professional (%) sectors account for the largest shares of active demand. Notable requirements currently considering options include Sony (, sq ft plus), Omnicom (3, sq ft) and Deloitte (, sq ft). Existing supply and the development pipeline Total supply decreased 3% to 6.8 million sq ft, and is now 16% below the 1 year quarterly average. The volume of Grade A supply also fell slightly to.7 million sq ft, equating to a vacancy rate of.%. City take-up 5 - m sq ft City demand 5 - m sq ft New Secondhand Under construction Off plan 7 8 Year to date take-up is slightly ahead of the equivalent period in Active Potential Rolling 1 month take-up 1 OnPoint The Central London Market Q1

11 The office element of Fenchurch Street, EC3 was the only City development scheme to reach practical completion in Q1. Development started on two City schemes in Q1 totalling 51, sq ft. The refurbishment of Angel Court Tower (35, sq ft) is scheduled to complete in Q 16 and the first phase of Helical Bar and Crosstree s redevelopment of The Bower, 7 Old Street, EC1 will be available in Q 15. Rents Prime rents and incentives remained stable at 6 per sq ft and months rents free, on an assumed 1 year term. We expect prime rents to reach 65 per sq ft before the end of the year, while incentives will move in by 3-6 months as the market becomes more landlord favourable and competition for space intensifies. City vacancy rates 5 - Availability (%) of overall stock 1% 1% 1% 8% 6% % % % Overall City prime headline rents Grade A 1 Investment volumes and yields 1.3 billion was traded in transactions in Q1, a significant fall on the record 5.9 billion traded in Q but slightly higher than the 1. billion traded in Q1. UK purchasers accounted for a 7% share of quarterly transactions, a significant increase compared to the 19% in 1 and % in. Notable transactions included Riverside House, SE1, which was purchased by M&G for 1 million, London and Regional s acquisition of 99 City Road, EC1 for 1 million and 1 Arthur Street, EC, which was purchased by M&G for 7 million. Prime yields moved in 5 basis points to.5% for sub million lot sizes,.75% for lot sizes of to 15 million lot sizes and 5.% for lot sizes of above 15 million. per sq ft Prime City investment purchases Net effective 1 8 billion 6 This was the highest quarterly take-up since Q Property companies Institutions Others OnPoint The Central London Market Q1 11

12 The Docklands & East London office markets Occupier take-up 76, sq ft was let in 11 transactions. This was the highest quarterly take-up since Q 1 when JP Morgan acquired 5 Bank Street (circa 1 million sq ft). Year to date take-up is already only 1% behind the 5, sq ft transacted during the whole of. The largest transaction of the quarter was the 5, sq ft acquired by EY (Ernst & Young) at 5 Churchill Place Other notable transactions included: 55, sq ft to HS at 1 Canada Square, 8, sq ft to EMA at 5 Churchill Place and 7, sq ft to Total Oil at 1 Upper Bank Street. There is an additional 556, sq ft under offer, including TFL (5, sq ft), Truphone (61, sq ft) and International Power (57, sq ft), indicating that take-up will continue at above average levels in the short term. Rents Prime rents remained unchanged at 38.5 per sq ft, however we expect to see rental growth in H due to the recent increase in occupier demand and the lack of newly developed stock. Investment volumes and yields 83 million was traded in three transactions in Q1 3,&5 Harbour Exchange was acquired by Clearbell Capital for 37 million, Tristan Capital Partners acquired 6 Mitre Passage for million and Delancey sold Quay House to Investin Properties for 1 million. Docklands take-up Occupier demand Overall demand increased 5% to 3.1 million sq ft in Q1, compared to. million at the end of. The significant increase in overall demand was driven by an uptick in the level of potential demand which increased to 1.5 million sq ft, up from 5, sq ft at the end of Occupiers with large requirements are increasingly considering options in Docklands due to the lack of suitable supply and rising rents in the City and elsewhere in Central London. Services (%) and Banking & Finance sectors (37%) account for the largest proportion of overall demand. m sq ft New Secondhand Under construction Off plan Docklands demand 5 - Existing supply and the development pipeline Total supply increased 7% to 1.5 million sq ft due to additional space brought to market at 1 Upper Bank Street, which was immediately placed under offer, and 5 Canada Square. Supply increased despite the strong take-up with a half of quarterly transactions pre-let or let during construction and therefore not affecting current supply. As a result the overall vacancy rate increased to 7.3%. 5 Churchill Place, the only scheme currently under construction in Docklands is now majority let ahead of completion in Q, following the lettings to EY and EMA. m sq ft Active Potential Rolling 1 month take-up 1 OnPoint The Central London Market Q1

13 Headline transactions West End 6 Pancras Square, N1C Area: 158,879 sq ft Tenant: Google Rent: 65 per sq ft Building Status: Under construction 33 Davies Street, W1 Area: 6,7 sq ft Tenant: Golden Tree Asset Management Rent: 115 per sq ft Building Status: New 57 Broadwick Street, W1 Area: 5,1 sq ft Purchaser: Shaftesbury Reported Price: 3.75 million Est Initial Yield: Development 1 Queen Anne s Gate, SW1 Area: 53,85 sq ft Purchaser: Henley Investment Reported Price: 3 million Est Initial Yield: 3.7% City 8-1 Moorgate, EC Area: 1,183 sq ft Tenant: ING Barings Rent: Confidential Building Status: Under construction Alphabeta, EC Area: 59,1 sq ft Tenant: SEI Investments Rent: 5.5 per sq ft Building Status: Under construction Riverside House, SE1 Area: 171,9 sq ft Purchaser: M&G Reported Price: 1 million Est Initial Yield: 5.73% 99 City Road, EC1 Area: 16,17 sq ft Purchaser: London & Regional Price: 1 million Est Initial Yield: 5.35% Docklands & East London 5 Churchill Place, E1 Area: 5,6 sq ft Tenant: EY Rent: 8.5 (estimated) Building Status: Under construction 3, & 5 Harbour Exchange, E1 Area: 19,6 sq ft Purchaser: Clearbell Capital Reported Price: 1 million Est Initial Yield: 11.% OnPoint The Central London Market Q1 13

14 Rental conditions across Central London West End village Belgravia & Knightsbridge Covent Garden Marylebone & Euston Mayfair North of Oxford Street Paddington Soho St James s Victoria Max min % annual change (average).% 9.3% 1.5% 13.7% 11.% -1.1% 8.7% 1.% 9.5% City village Central Core City Midtown Eastern Eastern Fringe Northern Northern Fringe Southbank Southern Western max min % annual change (average).5% 9.% 8.6% 1.9%.6% 5.3% 8.% 3.7% 5.% 1 OnPoint The Central London Market Q1

15 Planning policy and development update LEGISLATIVE CHANGES - HIGHLIGHTS Permitted development rights for changes from shop premises to banks and building societies In accordance with the Town and Country Planning (General Permitted Development) (Amendment and Consequential Provisions) (England) Order, new Permitted Development Rights will allow the movement from shops to banks and building societies without the need for planning permission. The regulations came into force 6th April. The legislation will allow under Class CA for shops (Class A1) to become banks, building societies, friendly societies or credit unions (A). Less favoured uses such as betting shops and pay day loan shops are excluded from the use definition. This change in legislation aims to retain the vitality of town centres by stimulating occupancy levels for uses that provide services and encourage footfall. Community Infrastructure Levy (Amendment) Regulations On the th February, the latest set of amendments to the Community Infrastructure Levy Regulations came into force. The changes reflect those set out in draft legislation laid before Parliament on 9 December. Changes include the ability for the LPA to set different rates for developments of different scales. The rules on payment in kind are relaxed, as is the vacancy test, and there are wider provisions for phased developments. Also introduced is an entitlement to credit where buildings are demolished and in certain cases where a development is revised. Additionally, the restriction on the pooling of planning obligations has been pushed back to April 15. Applications In February the City of London Corporation resolved to grant planning permission to Henderson Global Investors proposal for a 17m office tower at Leadenhall Street (the Leadenhall Triangle site). The building ranges from 7 and 3 storeys, reaching a maximum height of 17m AOD. It includes 89, sq ft of office floorspace and, sq ft of retail space at ground floor level. The scheme has been dubbed Gotham City. In March Southwark Council s planning committee resolved to grant planning permission to Londonewcastle and investor The Third Quarter for a residential-led mixed-use scheme at 19 Queen Elizabeth Street in London s SE1. Under the plans the existing four storey building will be extended and refurbished to provide nine warehouse style flats as well as 1,397 square metres of office space spread across two floors. The building, which was built in 193, is located at Butler s Wharf on the south bank of the River Thames. The London Borough of Tower Hamlets strategic development committee resolved to grant planning permission in March to Canary Wharf Group s 58-storey Newfoundland scheme in London s E1. The scheme at Westferry Road will comprise a 6 metre tower and a linked two storey building to comprise 568 new homes as well as 1,1 square metres of commercial space and internal and external amenity space. Off-site affordable housing will be provided across three donor sites at Burdett Road, Barchester Street and Lovegrove Walk To discuss how these changes may affect your development, contact Guy Bransby on or Jeff Field on Definition of Terms Floorspace Threshold Data refers to office floorspace in units of 5,38 sq ft and above. Grading A subjective assessment taking into account specification, floorplate efficiency and image. Take-Up Floorspace acquired for occupation by leasing, pre-leasing or purchasing a freehold or long leasehold interest. Supply Floorspace which is on the market and available for occupation. Floorspace which is under offer prior to a contractual commitment is included. Speculative development prior to practical completion is excluded. Speculative Development Floorspace under construction or comprehensive modernisation which will be available for speculative letting (or sale). The forecast of development completions relates only to developments currently under construction. Net Absorption a measure of the change in occupied stock between periods. Demand Some applicants search across two or three market areas. In such cases their demand appears in the total for each area. However, when calculating total Central London demand, duplicates are eliminated. Active Demand Organisations with a declared requirement for office accommodation which are actively in the market to acquire floorspace in the short term. Potential Demand Organisations with a potential requirement for office accommodation, but without a finalised brief in terms of timing. Prime Rent An opinion of the highest rent (excluding incentives) achievable upon a letting agreed at the quarter-end of a notional 1, sq ft unit of the best quality office space in a prime location. Net effective rents are calculated against our prime headline rent values and assume a 1-year term, a notional three month fit-out period and amortisation over 1 years. In practice net effective rents are subject to far more variability related to the specific characteristics of the individual premises. Prime Yield An opinion of the yield which would be appropriate for a freehold Grade A office investment in a prime location let at a current market rent to a tenant with a strong financial covenant. Investment Turnover Capital transactions comprising freehold and long leasehold acquisitions OnPoint The Central London Market Q1 15

16 Contacts LEASING Neil Prime Director Head of UK Office Agency + () neil.prime@eu.jll.com Adrian Crooks Director West End Agency & Development + () adrian.crooks@eu.jll.com Dan Burn Director City Agency + () dan.burn@eu.jll.com CAPITAL MARKETS Damian Corbett Director Head of London Capital Markets + () damian.corbett@eu.jll.com Julian Sandbach Director West End Investment + () julian.sandbach@eu.jll.com Chris Northam Director City Investment + () chris.northam@eu.jll.com RESEARCH Jon Neale Head of UK Research UK Research + () jon.neale@eu.jll.com Ben Burston Head of UK Office Research UK Research + () ben.burston@eu.jll.com Alex Hodge Business Development Manager UK Marketing + () alex.hodge@eu.jll.com The Central London Market Q1 On Point reports from JLL include quarterly and annual highlights of real estate activity, performance and specialised surveys and forecasts that uncover emerging trends. jll.co.uk COPYRIGHT JONES LANG LASALLE. This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage suffered by any party resulting from reliance on this publication.