glenny databook q3 2018 · to the end of q3 2018, following ˜ ve years of strong growth. on...

ESSEX I EAST LONDON I NORTH LONDON & HERTFORDSHIRE I SOUTH EAST LONDON & KENT

WELL PLACED PROPERTY ADVISORS

GLENNY DATABOOK Q3 2018

ESSEX I EAST LONDON I NORTH LONDON & HERTFORDSHIRE I SOUTH EAST LONDON & KENT

WELL PLACED PROPERTY ADVISORS


HERTFORDSHIRE ESSEX

KENT

NORTH LONDON

SOUTH EAST LONDON

EAST LONDON

INTRODUCTION

Glenny LLP is the leading property consultancy and chartered surveying practice specialising in the region accessed by the North East and South East sections of the M25 motorway, which we service through a network of strategically located of� ces in Essex (Basildon), East London (Stratford), North London and Hertfordshire (En� eld & Harlow) and South East London and Kent (Bexley).

The statistics in this report relate to Glenny’s analysis of the property market as at 30th September 2018, based on property data obtained through our respective of� ces servicing the area delineated on the above map.

MARKET COMMENTARY

Demand in the industrial sector has moved above 15m sq ft for the third time in four years, standing at 15.5m sq ft at the end of Q3 2018, but take up has fallen. It’s interesting to note that the � rst time we saw demand at this level across our region (2014), supply was almost double the � gure it stands at today and activity peaked at 8.5m sq ft for the year.

Shortages in supply have impacted on the current years take up which is expected to fall to its lowest level since 2012. In the � rst three quarters of 2018, take up across the Eastern M25 region stood at 3.3m sq ft and we estimate this to increase to 5.0-5.5m sq ft by the year end.

Market dynamics have had a signi� cant impact on both prime and secondary rents over the past � ve years, with prime rents growing by 8.0% p.a. on average, whilst secondary values are up by 10.9% p.a.

There has been 1.5m sq ft of new industrial stock completed over the past two years but occupiers are still faced with relatively little choice when looking for the right space to suit their needs.

The of� ce market has been dominated by events in East London, with Stratford International Quarter and Here East attracting new occupiers, whilst ABP’s development at Royal Albert Dock will transform the area when it completes in March 2019.

HMRC, Unicef and the V&A are the latest occupiers to take advantage of the competitive rents on offer at Stratford and more are expected to follow.

John BellHead of Business Space Agency and Investment

GLOSSARY

Market Availability – Relates to the amount of built stock on the market at the period end. The availability � gure does not include pre-let opportunities or new developments where construction is still ongoing.

Prime Investment Yield – The yield paid for an investment property let to an institutionally acceptable covenant for a lease term of 10-15 years at the current market rent.

Prime Rent – The rent achievable for the letting of a newly built property; typically for an industrial unit this would apply to a 20,000-25,000 sq ft building and for an of� ce building, circa 5,000-10,000 sq ft.

Secondary Rent – The rent typically achievable for good quality second hand of� ce space of 5,000-10,000 sq ft and industrial space of 20,000-25,000 sq ft.

Prime Capital Values – The best freehold capital value payable by an owner occupier on an industrial building of circa 10,000 sq ft and an of� ce building of circa 5,000 sq ft.

4-5 ESSEX

6-7 EAST LONDON

8-9 NORTH LONDON & HERTS

10-11 SOUTH EAST LONDON & KENT

12 RENTS AND VALUES & PRIME YIELDS

INDUSTRIAL PRIME INVESTMENT YIELDS

Prime industrial yields have continued to harden during 2018, with average yields across the region compressing to 4.25%, a fall of 38 basis points since the start of the year. Prime investments in the North London & Herts and East London regions continue to trade at a premium relative to the regional average, standing at 4.00%. The Essex and South East London & Kent markets have stabilised at 4.50%, with the rental outlook remaining positive.

INDUSTRIAL SECTOR AT A GLANCE… OFFICE SECTOR AT A GLANCE…

OFFICE INVESTMENTMARKET TRANSACTIONS

Investment in the Eastern M25 of� ce market look set to exceed £1bn for the third successive year in 2018, with £870m of transactions completing in the � rst three quarters of the year. Activity was boosted by a particularly busy second quarter, when more than 88% of the year to date total was completed. Three transactions of above £100m were concluded, the largest being the forward funding of HMRC’s new Stratford headquarters at 14 West� eld Avenue by Legal & General Property. Deutsche Asset Management have purchased the ‘under construction’ S9 building at Stratford International Quarter for £240m. The majority of the building was let to Cancer Research and the British Council in 2017.

OFFICE PRIME INVESTMENT YIELDS

Prime of� ce yields continued to harden over the year to September 2018, although the pace of improvements has slowed. Average prime yields across the Eastern M25 market have fallen to 5.69%, with yields in the Docklands and East London regions now down to 4.50% and 5.00% respectively. Outside of the East London markets, both the north London & Herts and Essex regions have seen yields converge at 5.75%, as investors have looked to take advantage of the lower capital value per sq ft � gures.

OFFICE MARKET TAKE UP

Take up in the Eastern M25 of� ce market is expected to fall below trend levels for the second successive year in 2018, with activity of 2.1m sq ft recorded in the � rst three quarters of the year. Whilst most of the sub markets across the Glenny region have seen a slowing in activity, the East London market, excluding Docklands has continued to attract new occupiers. The largest letting in the year to date has been the 240,000 sq ft pre-let to HMRC at 14 West� eld Avenue, Stratford, whilst the Victoria & Albert Museum is to open a 140,000 sq ft new collection, research and learning centre at Here East.

OFFICE MARKET RENTS

Prime of� ce rents have remained stable over the six months to the end of Q3 2018, following � ve years of strong growth. On average, prime rents across the region are 47.7% (8.1% per annum) higher than they were at the end of 2013, with the emerging of� ce market at Stratford seeing the most signi� cant increase, 92.0% (13.9% per annum). Secondary rents have also bene� tted from improving market conditions, rising by 64.2% (10.4% per annum) on average, with Basildon, Stratford and En� eld seeing rents more than double in value.

INDUSTRIAL INVESTMENTMARKET TRANSACTIONS

Investment transactions in the Eastern M25 industrial market in the nine months to the end of September 2018 have already exceeded previous levels of activity, with £606m of deals completed. The largest transaction over the past six months was the £36.2m purchase of Zenith Industrial Estate, Basildon by Orchard Street Investment Management, re� ecting a net initial yield of 3.85% for the reversionary investment. The year to date has been de� ned by the number of transactions, with 21 completions of £10m and above.

INDUSTRIAL MARKET TAKE UP

Take up has slowed in the � rst three quarters of 2018 after two strong years of activity. We have recorded 3.3m sq ftof activity for the � rst nine months of 2018 which we expect to increase to 5m sq ft by the year end. A shortage of ‘ready to occupy’ units of 100,000 sq ft and above has seen activity fall to its lowest level since 2012, with only four lettings above this threshold. The largest transaction in the year to date has been the 172,200 sq ft and 22 acres letting at Baytree, Dagenham to Paci� ca Studios.

INDUSTRIAL MARKET RENTS

Prime rents have continued to rise over the past 12 months, with all regions registering new record highs. South East London & Kent has seen the most signi� cant growth in prime rents over the past 12 months, appreciating by 14.8%, whilst North London & Herts and East London have also seen double digit growth of 14.3% and 12.1% respectively. Supply continues to be a major restriction to activity, with the availability rate across the Eastern M25 as a whole standing at 2.7% (7.6m sq ft), with only 1.5m sq ft of ready to occupy grade A space available.

000

SQ

FT

0

100

200

300

400

500

Jan-Jun14

Jul-Dec 14

Jan-Jun15

Jul-Dec 15

Jan-Jun16

Jul-Dec 16

Jan-Jun17

Jul-Dec 17

Jan-Jun18

Jul-Sep18

£M’S

000

SQ

FT

0

1,000

2,000

3,000

4,000

5,000

6,000

10 yr average

Jan-Jun14

Jul-Dec14

Jan-Jun15

Jul-Dec15

Jan-Jun16

Jul-Dec16

Jan-Jun17

Jul-Dec17

Jan-Jun18

Jul-Sep18

£PSF

0.0 2.5 5.0 7.5 10.0 12.5 15.0 17.5 20.0

S E LONDON & KENT

ESSEX

£9.75

£15.50

£18.50E LONDON

N LONDON & HERTS

£16.00

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

2013 Q3 20182014 2015 2016 2017

0

500

1,000

1,500

2,000

2,500

3,000

3,500

10 yr average

Jan-Jun14

Jul-Dec14

Jan-Jun15

Jul-Dec15

Jan-Jun16

Jul-Dec16

Jan-Jun17

Jul-Dec17

Jan-Jun18

Jul-Sep18

£PSF

0 10 20 30 40 50 60

S E LONDON & KENT

ESSEX

£30.00

£35.00

£47.50

£48.00

E LONDON DOCKLANDS

E LONDON (OTHER)

N LONDON & HERTS

£27.50

£M’S

0

250

500

750

1,000

1,250

1,500

1,750

2,000

Jan-Jun14

Jul-Dec14

Jan-Jun15

Jul-Dec15

Jan-Jun16

Jul-Dec16

Jan-Jun17

Jul-Dec17

Jan-Jun18

Jul-Sep18

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

2013 Q3 20182014 2015 2016 2017

DOCKLANDS PRIME OFFICE YIELD

AVERAGE PRIME OFFICE YIELD

10YR GILT YIELD AVERAGE PRIME INDUSTRIAL YIELD 10YR GILT YIELD

WELL PLACED PROPERTY ADVISORS GLENNY DATABOOK Q3 2018 3

DEMANDSUPPLYMARKET COMMENT RENTS & CAPITAL VALUES

Supply fell to 1.9m sq ft at the end of Q3 2018, the lowest recorded level of availability in the Essex market since 2007. Grade A supply has reduced by 44% to 575,200 sq ft over the past 18 months, whilst second hand space has edged up slightly (6%) over the same period, ending Q3 2018 at 1.3m sq ft.

The Essex market is the primary source of units above 100,000 sq ft in the Glenny region. At the end of Q3 2018 there were � ve ‘big box’ units on the market, with two new grade A buildings, namely the 165,000 sq ft Logistics Centre at London Gateway and the 162,056 sq ft Thurrock 162, West Thurrock.

Take up has slowed signi� cantly in 2018, falling to 816,700 sq ft in the � rst three quarters of the year. Despite the slowing in activity, Essex has registered the only take up of units above 100,000 sq ft in the Glenny region, with two transactions at London Gateway in the � rst quarter of the year and the 130,000 sq ft letting to the Commodity Centre at the former Wolseley Building, West Horndon.

Demand for industrial � oor space in the Essex region has bounced back strongly in Q2/Q3 2018, rising to 10.4 m sq ft, only 2% below the previous peak levels of demand at the end of 2016. Larger requirements (>50,000 sq ft) accounted for the majority of the increase in demand, with 20 requirements for units of 100,000 sq ft and above.

INDUSTRIAL MARKET AVAILABILITY(as at September 2018)

INDUSTRIAL MARKET REQUIREMENTS(as at September 2018)

NO OF REQS (RHS)000 SQ FT RENTAL VALUES CAPITAL VALUES (RHS)

£PSFRENTS

CAPITALVALUES

PRIME SECONDARY PRIME

BASILDON £9.50 £8.50 £160

BRAINTREE £8.75 £7.75 £150

CHELMSFORD £9.50 £8.75 £170

THURROCK £9.75 £9.00 £180

INDUSTRIAL

TOTAL AVAILABILITY 1.9M SQ FT PERCENTAGE OF SQ FT DEMANDED

7%0–5,000

11%5,001–10,000

16%10,001–25,000

14%25,001–50,000

52%> 50,000 13%

SUPPLY

3%0–5,000 6%

5,001–10,000

12%10,001–25,000

18%25,001–50,000

61%> 50,000 43%

DEMAND

INDUSTRIAL MARKET DEMAND RENTS & CAPITAL VALUES INDUSTRIALINDUSTRIAL MARKET TAKE UP INDUSTRIAL MARKET AVAILABILITY

0

250

500

750

1,000

1,250

1,500

39%TREND

10 yr average

Jan-Jun14

Jul-Dec 14

Jan-Jun15

Jul-Dec 15

Jan-Jun16

Jul-Dec 16

Jan-Jun17

Jul-Dec 17

Jan-Jun18

Jul-Sep18

000 SQ FT 000 SQ FT

0

1,000

2,000

3,000

4,000

Jun18

Sep18

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

Jun17

Dec17

Jun18

Sep18

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

Jun17

Dec17

000 SQ FT No.

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

0

50

100

150

200

250

300

350

400

Jun18

Sep18

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

Jun17

Dec17

0

2

4

6

8

10

£ SQ FT £ SQ FT

0

20

40

60

80

100

120

140

160

180

200

0.0%RENT

0.0%CAPVAL

ESSEX

2ND HAND GRADE A


DEMANDSUPPLY RENTS & CAPITAL VALUES

OFFICESESSEX

MARKET COMMENT

Take up in the Essex of� ce market is expected to approach trend levels of activity in 2018 for the � rst time since 2015. Activity in the � rst three quarters of the year was 206,000 sq ft, with 69% of take up in suites and units of 5,000 sq ft and below. The largest transaction over the six months to end September 2018 was the 11,300 sq ft letting at Kings House Brentwood to a serviced of� ce operator.

Supply continues to tighten in the Essex of� ce market, with only 507,600 sq ft of accommodation available at the end of Q3 2018. Grade A availability accounts for 97,200 sq ft of supply, with the 80% of stock located in Chelmsford including the largest grade A building on the market, the 44,850 sq ft Buckenham House at Coval Wells.

Registered demand has weakened over the past 12 months, with total requirements standing at 382,600 sq ft, down from 530,000 sq ft at the end of 2017. Whilst most sectors of the market have seen an easing in demand, requirements for buildings of 5,001-10,000 sq ft have strengthened signi� cantly.

Prime and secondary rents stabilised following 12 months of strong increases. The only market to see an upturn in rental values is Basildon, where secondary rents moved up by 3.1% to £16.50 per sq ft.

OFFICE MARKET REQUIREMENTS(as at September 2018)

OFFICE MARKET AVAILABILITY(as at September 2018)

£PSFRENTS

CAPITALVALUES


BASILDON £20.00 £16.50 £275

BRAINTREE £17.50 £13.75 £260

BRENTWOOD £30.00 £22.50 £400

CHELMSFORD £30.00 £22.50 £400


OFFICE MARKET AVAILABILITYOFFICE MARKET TAKE UP OFFICE MARKET DEMAND RENTS & CAPITAL VALUES OFFICE

000 SQ FT

10 yr average

0

50

100

150

200

250

300

13%TREND

Jan-Jun14

Jul-Dec 14

Jan-Jun15

Jul-Dec 15

Jan-Jun16

Jul-Dec 16

Jan-Jun17

Jul-Dec 17

Jan-Jun18

Jul-Sep18

000 SQ FT

0

250

500

750

1,000

1,250

1,500

1,750

Jun18

Sep18

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

Jun17

Dec17

000 SQ FT No.

0

100

200

300

400

500

600

Jun18

Sep18

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

Jun17

Dec17

0

10

20

30

40

50

60

70

£ SQ FT £ SQ FT

0

5

10

15

20

25

30

35

Jun18

Sep18

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

Jun17

Dec17

0

50

100

150

200

250

300

350

400

450

0.0%RENT

0.0%CAPVAL

34%0–5,000

15%5,001–10,000

35%10,001–25,000

16%25,001–50,000

16%SUPPLY

10%0–5,000

32%5,001–10,000

30%10,001–25,000

28%25,001–50,000

12%DEMAND

000 SQ FT RENTAL VALUES2ND HAND GRADE A NO OF REQS (RHS) CAPITAL VALUES (RHS)


DEMANDSUPPLY RENTS & CAPITAL VALUESMARKET COMMENT

Supply in the East London industrial market bottomed out in mid 2017 and has been increasing since. Total stock on the market at the end of Q3 2018 was 1.4m sq ft, with grade A supply standing at 392,400 sq ft. There is only one ‘ready to occupy’ building of 100,000 sq ft and above, the 103,600 sq ft R&D/lab facility, I-House Dagenham.

After a strong start to the year, take up in the six months to the end of September 2018 slowed, with only one transaction above 50,000 sq ft, the 71,659 sq ft letting to JSM Group at Steel Wharf, Barking. Take up in the � rst three quarters of the year has remained below the trend rate of activity at 606,600 sq ft.

Demand edged up to its highest level on record for the East London industrial market, reaching 9.5m sq ft, with the most signi� cant increase noted in larger requirements which represent 64% of the total. Contrary to the overall trend in demand, requirements for small units (<5,000 sq ft) fell by 25% from the early part of the year.

Prime rents stabilised in Canning Town, following the sharp upturn seen in the early part of the year. Over the past 12 months, rents in Canning Town have increased by 12.1%, whilst all other locations have remained stable.

INDUSTRIAL MARKET REQUIREMENTS (as at September 2018)


£PSFRENTS

CAPITALVALUES


BARKING / DAGENHAM £13.00 £10.00 £225

BECKTON / ROYALS £15.00 £13.50 £245

ROMFORD £11.00 £9.50 £200

CANNING TOWN £18.50 £15.50 £300


11%0–5,000

25%> 50,000

15%5,001–10,000

14%10,001–25,00035%

25,001–50,000

5%SUPPLY

2%0–5,000 6%

5,001–10,000

11%10,001–25,000

17%25,001–50,000

64%> 50,000

62%DEMAND

INDUSTRIAL MARKET AVAILABILITYINDUSTRIAL MARKET TAKE UP INDUSTRIAL MARKET DEMAND RENTS & CAPITAL VALUES INDUSTRIAL

000 SQ FT

0

200

400

600

800

1,000

1,200

1,400

10 yr average

30%TREND

Jan-Jun14

Jul-Dec 14

Jan-Jun15

Jul-Dec 15

Jan-Jun16

Jul-Dec 16

Jan-Jun17

Jul-Dec 17

Jan-Jun18

Jul-Sep18

000 SQ FT

0

500

1,000

1,500

2,000

2,500

3,000

Jun18

Sep18

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

Jun17

Dec17

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

Jun18

Sep18

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

Jun17

Dec17

000 SQ FT No.

0

50

100

150

200

250

300

350

£ SQ FT £ SQ FT

0.0

2.5

5.0

7.5

10.0

12.5

15.0

17.5

20.0

RENT CAPVAL

Jun18

Sep18

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

Jun17

Dec17

0

50

100

150

200

250

300

350

0.0% 0.0%

INDUSTRIAL

000 SQ FT RENTAL VALUES

EAST LONDON

2ND HAND GRADE A NO OF REQS (RHS) CAPITAL VALUES (RHS)



EAST LONDON

MARKET COMMENT

The fortunes of the Docklands and East London of� ce markets continued to follow different paths, with take up in the Docklands market running signi� cantly below trend levels, whilst activity in the East London market has remained above trend over the past 18 months.

Take up in the East London market reached 715,600 sq ft in the � rst three quarters of the year, boosted by the 240,000 pre-let by HMRC at 14 West� eld Avenue, Stratford in the early part of the year. An additional 268,500 sq ft was leased in Stratford over the period, with the largest letting being to the Victoria & Albert Museum who are opening a new 140,000 sq ft collection, research and learning centre at Here East.

Supply edged down for the � rst time in two years, falling by 4.5% to 3.1m sq ft at the end of Q3 2018. More than three quarters of ready to occupy available space is located in Docklands, although more than 1.25m sq ft of space is currently under construction in the East London market generally, with 460,000 sq ft already let.

Prime of� ce rents have remained stable � owing the sharp increases seen in 2016/17. Values have increased by 21.8% on average over the past two years, whilst secondary rents have risen by a similar level,19.1%, over the same time frame.

DOCKLANDS OTHER



£PSFRENTS

CAPITALVALUES


BARKING / DAGENHAM £20.00 £15.00 £225

ROYALS £35.00 £21.00 £650

ROMFORD £20.00 £17.00 £285

STRATFORD £48.00 £25.00 £750


4%0–5,000

3%5,001–10,000

8%10,001–25,000

13%25,001–50,000

72%> 50,000

5%SUPPLY

7%0–5,000

35%5,001–10,000

24%10,001–25,000

34%25,001–50,000

17%DEMAND

OFFICE MARKET TAKE UP OFFICE MARKET AVAILABILITY OFFICE MARKET DEMAND RENTS & CAPITAL VALUES OFFICE

000 SQ FT

Other 10 yr average

Docklands 10 yr average

0

100

200

300

400

500

600

700

800

900

15%TREND

Jan-Jun14

Jul-Dec 14

Jan-Jun15

Jul-Dec 15

Jan-Jun16

Jul-Dec 16

Jan-Jun17

Jul-Dec 17

Jan-Jun18

Jul-Sep18

OFFICE MARKET TAKE-UP000 SQ FT000 SQ FT

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Jun18

Sep18

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

Jun17

Dec17

OFFICE MARKET AVAILABILITY000 SQ FT No.

0

250

500

750

1,000

1,250

1,500

0

10

20

30

40

50

60

Jun18

Sep18

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

Jun17

Dec17

0

10

20

30

40

50

£ SQ FT £ SQ FT

0

100

200

300

400

500

600

700

800

0.0%RENT

0.0%CAPVAL

Jun18

Sep18

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

Jun17

Dec17

RENTS & CAPITAL VALUES OFFICE

OFFICES

000 SQ FT DOCKLANDSOTHER2ND HAND GRADE A CAPITAL VALUES (RHS)NO OF REQS (RHS)



Supply has continued to tighten, falling to 1.1m sq ft at the end of Q3 2018. Current levels of supply represent an availability rate of 1.6%, the lowest level within the Glenny region. Grade A space accounts for only 12% of total availability, standing at 132,800 sq ft.

The shortage of larger units has become a particular feature across the Glenny region, with only two second-hand ‘ready to occupy’ buildings in North London & Herts, namely the 144,750 sq ft One Mollison Avenue En� eld and the 105,300 sq ft Cranbourne House Potters Bar. The largest grade A ready to occupy building on the market is the 84,500 sq ft Unit 4 at En� eld Distribution Park.

Take up has eased signi� cantly following the strong year in 2017, with just 447,000 sq ft of activity recorded in the � rst three quarters of 2018. Whilst there has been a lack of larger transactions, activity in the sub 40,000 sq ft sector has been strong, with some record rents achieved on lettings, including Unit 5 at En� eld Distribution Park, where Farmdrop leased 24,298 sq ft at £13.75 per sq ft and 30/31 Great Cambridge Industrial Estate let to WWE at £14.50 per sq ft.

Demand bounced back strongly in Q2 and Q3, with 10.2m sq ft of requirements. Most sectors of the market saw an increase in demand, the only exception being for units of 10,001-25,000 sq ft, where demand was down by 18%.



£PSFRENTS

CAPITALVALUES


ENFIELD £13.75 £11.50 £235

HARLOW £9.50 £8.00 £175

HODDESDON £9.00 £7.75 £175

TOTTENHAM /EDMONTON £16.00 £13.50 £260

RENTS & CAPITAL VALUES INDUSTRIAL


6%0–5,000

10%5,001–10,000

11%10,001–25,000

21%25,001–50,000

52%> 50,000 10%

SUPPLY

2%0–5,000 5%

5,001–10,000

10%10,001–25,000

17%25,001–50,000

66%> 50,000

62%DEMAND

INDUSTRIAL MARKET AVAILABILITYINDUSTRIAL MARKET TAKE UP INDUSTRIAL MARKET DEMAND

0

250

500

750

1,000

1,250

65%TREND

000 SQ FT

10 yr average

Jan-Jun14

Jul-Dec 14

Jan-Jun15

Jul-Dec 15

Jan-Jun16

Jul-Dec 16

Jan-Jun17

Jul-Dec 17

Jan-Jun18

Jul-Sep18

000 SQ FT

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Jun18

Sep18

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

Jun17

Dec17

0

2,000

4,000

6,000

8,000

10,000

12,000

000 SQ FT No.

0

50

100

150

200

250

300

350

400

Jun18

Sep18

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

Jun17

Dec17

Jun18

Sep18

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

Jun17

Dec17

0.0

2.5

5.0

7.5

10.0

12.5

15.0

17.5

£ SQ FT £ SQ FT

0

50

100

150

200

250

300

6.7%RENT

6.1%CAPVAL

INDUSTRIAL


NORTH LONDON & HERTS





OFFICE MARKET REQUIREMENTS (as at September 2018)


MARKET COMMENT

Take up in the North London & Herts of� ce market has continued to fall below trend levels in the � rst three quarters of the year, with only 170,150 sq ft of activity recorded. Full year activity is expected to reach 250,000 sq ft, broadly in line with the totals recorded in 2017.

Several lettings of above 10,000 sq ft have boosted the total for the year, the largest being the 11,850 sq ft letting to Canada Life who took three � oors at 18 High Street Potters Bar, whilst Wates took 11,680 sq ft at the Civic Centre, En� eld. Following the trend of serviced of� ce operators increasing their regional presence, Regus took 10,200 sq ft at Vision 25 Innova Park En� eld.

Supply has continued to edge upwards in the North London & Herts of� ce market, moving up to 1.2m sq ft at the end of Q3 2018. Total availability is now 40% above the low point recorded in early/mid 2017, due primarily to the release of space at North London Business Park, N11. There is now a total of 294,000 sq ft available at North London Business Park across four buildings.

Rental values have remained stable across most locations in the six months to the end of Q3 2018. The only exception to this was in En� eld, where secondary rental values moved up to £21.50 per sq ft, an increase of 7.5%.

£PSFRENTS

CAPITALVALUES


ENFIELD £27.50 £21.50 £450

HARLOW £18.50 £13.50 £300

HODDESDON £17.50 £13.50 £270

WELWYN GARDEN CITY £21.00 £17.50 £350


12%0–5,000

9%5,001–10,000

22%10,001–25,000

23%25,001–50,000

34%> 50,000

5%SUPPLY

29%25,001–50,000

7%0–5,000

28%5,001–10,000

36%10,001–25,000

20%DEMAND


000 SQ FT

10 yr average

0

50

100

150

200

250

300

350

50%TREND

Jan-Jun14

Jul-Dec 14

Jan-Jun15

Jul-Dec 15

Jan-Jun16

Jul-Dec 16

Jan-Jun17

Jul-Dec 17

Jan-Jun18

Jul-Sep18

000 SQ FT

0

250

500

750

1,000

1,250

1,500

1,750

2,000

2,250

Jun18

Sep18

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

Jun17

Dec17

000 SQ FT No.

0

100

200

300

400

500

600

700

800

900

Jun18

Sep18

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

Jun17

Dec17

0

10

20

30

40

50

60

0

5

10

15

20

25

30

0.0%RENT

12.5%CAPVAL

Jun18

Sep18

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

Jun17

Dec17

0

100

200

300

400

500

£ SQ FT £ SQ FT

OFFICES




SOUTH EAST LONDON & KENT

MARKET COMMENT

Supply remained stable at 3.1m sq ft in the six months to the end of q3 2018, with availability dominated by second hand stock, which accounts for 88% of overall space on the market.

Grade A supply remains restricted, with only 377,130 sq ft of ready to occupy space currently available, with the largest unit at the recently completed Belvedere Wharf (89,363 sq ft). There is only one building of above 100,000 sq ft on the market, the 139,280 sq ft unit at Springhead Enterprise Park, Gravesend, which is currently under offer.

Take up has remained relatively buoyant, with activity of 1.4m sq ft recorded over the � rst three quarters of the year. Despite this relatively strong year, there has been a lack of larger lettings, with only two transactions above 50,000 sq ft, the 71,850 sq ft letting to APP Wholesale at Hailey Road, Erith and the 96,774 sq ft freehold purchase by Bexley Co at Erith Distribution Centre.

Demand for industrial and logistics � oor space in the South East London & Kent market has rebounded strongly in the six months to the end of Q3 2018, with 9.0m sq ft of requirements recorded, up from 5.6m sq ft in the early part of the year. The most signi� cant increase in requirements has been at the larger end of the market, where demand has doubled over the six month period.



£PSFRENTS

CAPITALVALUES


ASHFORD £10.00 £8.50 £160

CHARLTON /WOOLWICH £15.50 £14.00 £260

BELVEDERE / DARTFORD £13.00 £11.00 £225

MAIDSTONE £9.50 £8.50 £175


12%0–5,000

18%5,001–10,000

31%10,001–25,000

18%25,001–50,000

21%> 50,000

0%SUPPLY

2%0–5,000 3%

5,001–10,000

9%10,001–25,000

13%25,001–50,000

73%> 50,000

61%DEMAND

INDUSTRIAL MARKET AVAILABILITYINDUSTRIAL MARKET TAKE UP INDUSTRIAL MARKET DEMAND RENTS & CAPITAL VALUES INDUSTRIAL

000 SQ FT

0

250

500

750

1,000

1,250

1,500

1,750

2,000

10 yr average

28%TREND

Jan-Jun14

Jul-Dec 14

Jan-Jun15

Jul-Dec 15

Jan-Jun16

Jul-Dec 16

Jan-Jun17

Jul-Dec 17

Jan-Jun18

Jul-Sep18

000 SQ FT

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Jun18

Sep18

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

Jun17

Dec17

000 SQ FT No.

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

Jun18

Sep18

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

Jun17

Dec17

0

50

100

150

200

250

300

350

400

0

2

4

6

8

10

12

14

16

£ SQ FT £ SQ FT

3.3%RENT

4.0%CAPVAL

Jun18

Sep18

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

Jun17

Dec17

0

50

100

150

200

250

300

INDUSTRIAL




Take up in the South East London & Kent of� ce market is expected to fall below trend levels for the third successive year in 2018, with 390,000 sq ft of activity recorded in the � rst three quarters of the year. Full year activity is expected to reach 500,000 sq ft, 20% below the 10 year average for the region.

Activity in the region continues to be dominated by smaller lettings, with only two deals above 20,000 sq ft completing, the largest of these was the 25,580 sq ft letting to Diebold Nixdorf at Radius House at Crossways Business Park, Dartford, whilst Regus took 24,700 sq ft at One Elm� eld Park, Bromley.

Supply continued to tighten, falling to 1.0m sq ft at the end of Q3 2018, with grade A stock accounting for only 6% of ready to occupy product. The largest grade A space is at the recently refurbished 23,690 sq ft County Gate One Maidstone, with a further 19,280 sq ft available at the new build Connect 38, Ashford.

Prime of� ce rents stabilised in Q2 and Q3 but remain up over 12 months, with Maidstone and Dartford seeing growth of 12.5% and 4.0% respectively. Secondary rents have grown at a faster rate, increasing by 12.9% on average, with Maidstone (20%) and Bromley (12.5%) seeing the most signi� cant growth.



£PSFRENTS

CAPITALVALUES


BROMLEY £30.00 £22.50 £375

DARTFORD £26.00 £16.50 £310

GREENWICH £35.00 £25.00 £400

MAIDSTONE £22.50 £15.00 £250


33%0–5,000

18%5,001–10,000

34%10,001–25,000

15%25,001–50,000

9%SUPPLY

9%0–5,000

34%5,001–10,000

35%10,001–25,000

22%25,001–50,000

6%DEMAND


000 SQ FT

0

100

200

300

400

500

600

700

800

17%TREND

10 yr average

Jan-Jun14

Jul-Dec 14

Jan-Jun15

Jul-Dec 15

Jan-Jun16

Jul-Dec 16

Jan-Jun17

Jul-Dec 17

Jan-Jun18

Jul-Sep18

000 SQ FT

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Jun18

Sep18

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

Jun17

Dec17

0

100

200

300

400

500

600

700

800

000 SQ FT No.

Jun18

Sep18

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

Jun17

Dec17

0

5

10

15

20

25

30

35

40

45

50

£ SQ FT £ SQ FT

0

5

10

15

20

25

30

35

40

0.0%RENT CAPVAL

Jun18

Sep18

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

Jun17

Dec17

0.0%

0

50

100

150

200

250

300

350

400

450

OFFICES





This document is for general informative purposes only. The information in it is believed to be correct, but no express or implied representation or warranty is made by Glenny LLP as to its accuracy or completeness, and the opinions in it constitute our judgement as of this date but are subject to change. Reliance should not be placed upon the information or forecasting opinions set out herein for the purpose of any particular transaction, and no responsibility or reliability, whether in negligence or otherwise, is accepted by Glenny LLP or by any of its members, of� ces, employees, agents or representatives for any direct, indirect consequential loss or damage which may result from any such reliance or other use thereof.

All rights reserved. No part of this publication may be transmitted or reproduced in any material form by any means, electronic, recording, mechanical, further copying or otherwise, or stored in any information storage or retrieving system of any nature, without prior written permission of the copyright holder except in accordance with the provisions of the Copyright Design and Patent Act 1988.

Warning: the doing of an unauthorised act in relation to a copyright work may result in both a civil claim for damages and criminal prosecution. September 2018.

CONTACTESSEX

Jim O’Connell - 01268 540 771 3 Argent Court, Sylvan Way, Basildon, Essex SS15 6TH

EAST LONDON

Peter Higgins - 020 8591 6671 Fifth Floor, Unex Tower, Station Street, Stratford, London E15 1DA

DEVELOPMENT & INVESTMENT

John Bell - 020 3141 3540 | Philip Colman - 020 3141 3520Fifth Floor, Unex Tower, Station Street, Stratford, London E15 1DA

OFFICE AGENCY & LEASE ADVISORY

John Campbell - 020 3141 3546 | William Martin - 020 3141 3612Fifth Floor, Unex Tower, Station Street, Stratford, London E15 1DA


Ivan Scott - 020 8367 23341 Cross� eld Chambers, Gladbeck Way, En� eld, Middlesex EN2 7HR


Richard Seton-Clements - 020 8304 4911 21 Bourne Road, Bexley, Kent DA5 1LW


HERTFORDSHIRE

NORTH LONDON

EAST LONDON

SOUTH EAST

LONDON

ESSEX

KENT

2

4

35

1

1

1 2

4

3

5

6

2

4

3

1

2

3

4

5

OFFICE RENT CAPITAL VALUES

1 STRATFORD £48.00 £750

2 ROYALS £35.00 £650

3 BARKING / DAGENHAM / RAINHAM £20.00 £225

4 ROMFORD £20.00 £285

2 ENFIELD £27.50 £450

3 WELWYN GARDEN CITY £21.00 £350

4 HODDESDON / CHESHUNT £17.50 £270

5 HARLOW £18.50 £300

1 BRAINTREE £17.50 £260

2 CHELMSFORD £30.00 £400

3 BRENTWOOD £30.00 £400

4 BASILDON £20.00 £275

1 GREENWICH £35.00 £400

3 BROMLEY £30.00 £375

4 DARTFORD £26.00 £310

5 MAIDSTONE £22.50 £250

INDUSTRIAL RENT CAPITAL VALUES

1 CANNING TOWN £18.50 £300

2 BECKTON £15.00 £245

3 BARKING / DAGENHAM / RAINHAM £13.00 £225

4 ROMFORD £11.00 £200

1 TOTTENHAM / EDMONTON £16.00 £260

2 ENFIELD £13.75 £235

4 HODDESDON / CHESHUNT £9.00 £175

5 HARLOW £9.50 £175

1 BRAINTREE £8.75 £150

2 CHELMSFORD £9.50 £170

4 BASILDON £9.50 £160

5 THURROCK £9.75 £180

2 CHARLTON / WOOLWICH £15.50 £260

4 BELVEDERE / DARTFORD £13.00 £225

5 MAIDSTONE £9.50 £175

6 ASHFORD £10.00 £160

KEY: CHANGES IN THE PAST 6 MONTHS

INCREASE DECREASENO CHANGE

MARKET COMMENT

The growth in prime industrial rental values slowed in the six months to Q3 2018, increasing by 2.4% on average, down from 4.8% in the previous six month period. The slowdown arose because of the reduced number of locations recording growth in Q2 and Q3 2018, six, compared to ten in the previous period. Secondary rental values exhibited a stronger growth pattern, with 11 of the 16 locations seeing improvements in rents, resulting in average growth of 4.6%.

Rental growth in the of� ce sector eased, with prime rents remaining stable over the six months to the end of Q3 2018, whilst secondary rents edged up by 1.5%. The slowing in growth in the of� ce sector follows two years of strong increases, when prime and secondary rents have risen by 8.4% p.a. and 11.5% p.a respectively.

WELL PLACED PROPERTY ADVISORS WWW.GLENNY.CO.UK

CONTACTESSEX

Jim O’Connell - 01268 540 771 3 Argent Court, Sylvan Way, Basildon, Essex SS15 6TH

EAST LONDON

Peter Higgins - 020 8591 6671 Fifth Floor, Unex Tower, Station Street, Stratford, London E15 1DA


John Bell - 020 3141 3540 | Philip Colman - 020 3141 3520Fifth Floor, Unex Tower, Station Street, Stratford, London E15 1DA


John Campbell - 020 3141 3546 | William Martin - 020 3141 3612Fifth Floor, Unex Tower, Station Street, Stratford, London E15 1DA


Ivan Scott - 020 8367 23341 Cross� eld Chambers, Gladbeck Way, En� eld, Middlesex EN2 7HR


Richard Seton-Clements - 020 8304 4911 21 Bourne Road, Bexley, Kent DA5 1LW





HERTFORDSHIRE

ESSEX

KENT

NORTH LONDON

SOUTH EAST LONDON

EASTLONDON

NORTH LONDON & HERTSKEY DEAL

Flex Meadow, Harlow – F&C Property Growth & Income Fund purchased the Clipper Logistics unit at Flex Meadow Harlow for £11.3m from Legal & General Property. The price paid represented a net initial yield of 4.3%. Clipper Logistics lease expires in 2021 and a signi� cant reversion is expected at the next letting.

SOUTH EASTLONDON & KENT KEY DEAL

Capacity Dartford – Aberdeen Standard Investments forward purchased from Exton Estates Unit 3, which extends to 92,000 sq ft, for £21.5m sq ft. The unit is let to Bressendon who agreed a 25 year lease in late 2017, with construction expected to complete in early 2019. The purchase price re� ects a net initial yield of 3.87%.

ESSEXKEY DEAL

Zenith Industrial Estate, Basildon – Orchard Street Investment Management purchased Zenith Industrial Estate in Basildon for £36.3m from Legal & General Property. The nine unit estate has a WAULT of 8.14 years, with the purchase price representing a net initial yield of 3.85% on the reversionary investment.

PRIME OFFICE YIELDS

PRIME INDUSTRIAL YIELDS



PRIME OFFICE YIELDS

YEAR YEAR

YEAR YEAR

PRIME OFFICE YIELDS

YEAR

YEAR

EAST LONDON KEY DEAL

14 West� eld Avenue, E20 – Legal & General Property agreed to forward fund the new HMRC regional centre at 14 West� eld Avenue Stratford for £248m following the government of� ce signing an agreement to lease in early 2018. HMRC will occupy 240,000 sq ft of the 300,000 sq ft building in late 2020 and have agreed a 25 year lease. The purchase price represents a net initial yield of 3.98%.

PRIME OFFICE YIELDS

EAST LONDON – OTHER DOCKLANDS

YEAR


08 Q3 201809 10 11 12 13 14 15 16 17

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

NORTH LONDON

4.00%Q3 2018

08 Q3 201809 10 11 12 13 14 15 16 17

5.0%

6.0%

7.0%

8.0%

9.0%

08 Q3 201809 10 11 12 13 14 15 16 17

5.0%

6.0%

7.0%

8.0%

9.0%

5.75%Q3 2018

5.75%Q3 2018

08 Q3 201809 10 11 12 13 14 15 16 17

ESSEX

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

4.50%Q3 2018

08 Q3 201809 10 11 12 13 14 15 16 17

SE LONDON AND KENT

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

5.0%

6.0%

7.0%

8.0%

9.0%

08 Q3 201809 10 11 12 13 14 15 16 17

6.25%Q3 2018

4.50%Q3 2018

EAST LONDON

08 Q3 201809 10 11 12 13 14 15 16 17

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

4.00%Q3 2018

08 Q3 201809 10 11 12 13 14 15 16 17

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

4.50%Q3 2018

5.00%Q3 2018

OTHERDOCKLANDS

WELL PLACED PROPERTY ADVISORS WWW.GLENNY.CO.UK

RENTS AND VALUES PRIME YIELDS


RESEARCH

ARCHITECTURE

ASSET & PROPERTYMANAGEMENT

BUILDING CONSULTANCY

BUSINESS SPACE AGENCY

INVESTMENT

RESIDENTIAL DEVELOPMENT

REGENERATION & INFRASTRUCTURE

RESIDENTIAL MANAGING AGENTS

DEVELOPMENT

STRATEGIC PLANNING

VALUATIONSERVICES

ESSEX

Jim O’Connell

01268 540 771

[email protected]

3 Argent Court, Sylvan Way, Basildon, Essex SS15 6TH

EAST LONDON

Peter Higgins

020 8591 6671

[email protected]

Fifth Floor, Unex Tower, Station Street, Stratford, London E15 1DA


Ivan Scott

020 8367 2334

[email protected]

1 Cross� eld Chambers, Gladbeck Way, En� eld, Middlesex EN2 7HR


Richard Seton-Clements

020 8304 4911

[email protected]

21 Bourne Road, Bexley, Kent DA5 1LW


John Bell Philip Colman

020 3141 3540 020 3141 3520

[email protected] [email protected]



John Campbell William Martin

020 3141 3546 020 3141 3612

[email protected] [email protected]


RESEARCH

For more information email

[email protected]

LEASE ADVISORY

PROJECT MANAGEMENT




STRATEGIC LAND

COMPULSORY PURCHASE


MOST ACTIVEAGENT

RUNNER UP 2016

EG

GREATER LONDONINDUSTRIAL

EG

GREATER LONDONINDUSTRIAL

MOST ACTIVEAGENT

REGIONAL WINNER 2017

glenny databook q3 2018 · to the end of q3 2018, following ˜ ve years of strong growth. on...

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