Hillier Parker Central London office database

Citation

(1998), "Hillier Parker Central London office database", Property Management, Vol. 16 No. 2. https://doi.org/10.1108/pm.1998.11316bab.007

Hillier Parker Central London office database

Hillier Parker Central London office database

Keywords Occupation, Offices, Property market

The flurry of activity seen in the last few months pushed take-up in the City to levels exceeding those seen during the 1980s boom, according to the latest figures from Hillier Parker Research. Total take-up in 1997 reached 670,000 m² (7.2 million sq ft), marginally higher than the 645,000 m² (6.9 million sq ft) seen in 1986 at the height of the previous cycle (see Figure 6 and Table III).

"These figures confirm the strength of the market during 1997, particularly during the latter half of the year", comments Dr Nick Axford, HP's Head of Business Space Research. "Whereas in the late 1980s most deals involved buildings which were already built or were approaching completion, a significant proportion of take-up in 1997 was due to a handful of major pre-lettings to financial occupiers", Axford notes.

The five largest deals seen during 1997 were all concluded during the second half of the year ­ all but one of which were completed during the fourth quarter. Swiss Re have bought the site and will occupy 23,225 m² (250,000 sq ft) of the 70,000 m² building to be built on the Baltic Exchange site, while Merrill Lynch will occupy a 52,676 m² (567,000 sq ft) scheme at King Edward Buildings on Newgate St. These two transactions alone accounted for over 10 per cent of take-up during the year. Demand for the few remaining large new buildings was also strong, as several major banks competed to secure space. At Thames Court, Upper Thames Street, 21,182 m² (228,000 sq ft) was let to Rabobank and JP Morgan, and Commerzbank took 11,120 m² (120,000 sq ft) at 60 Gracechurch Street.

Figure 6 City of London office market take-up

With a number of major pre-lets still being negotiated, take-up figures are likely to remain high during the early part of this year, although shortages of top quality stock could restrict activity at the larger end of the market towards the end of 1998.

Almost as significant as the take-up figures is the fact that levels of both availability and speculative development are around 25 per cent lower than at the start of 1997. "Attitudes towards speculative development remain generally cautious, and it will be important for developers and funding institutions to maintain a pragmatic approach during 1998. Shortages of large, top quality space will almost certainly force prime rents higher during this year, and there is clearly scope for further new developments in the market. But the key lesson of the previous cycle is that buildings which rely solely on supply shortages for their viability, rather than providing the top quality accommodation which occupiers require, are unlikely to prove successful in any but the most extreme market conditions."

The statistics are drawn from the Hillier Parker Central London Office Database, which records all lettings, pre-lettings and sales to owner-occupiers. Deals are included in take-up figures at the date of completion of the transaction, not when the property is placed under offer.

Please note that the information provided in relation to 1997 take-up is based on provisional figures, and may be subject to subsequent amendment.

For further information contact Research: Nick Axford, HILLIER PARKER. Tel: 0171 915 7147; Fax: 0171 409 3016; City: Nick Baucher/Digby Flower, HILLIER PARKER. Tel: 0171 606 6600; Fax: 0171 606 1145.