GLENNY DATABOOK Q1 2017 · GLENNY DATABOOK Q1 2017 ... And what a turbulent 10 years it has ... to...

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

WELL PLACED PROPERTY ADVISORS

GLENNY DATABOOK Q1 2017

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 the 31st March 2017, based on property data obtained through our respective of� ces servicing the area delineated on the above map.

MARKET COMMENTARY

Welcome to the latest Databook, which in itself represents somewhat of a Glenny landmark as it’s the 10th Anniversary edition of our publication. And what a turbulent 10 years it has been, with the most severe � nancial crisis since the 1930s and the UK electorate voting to leave the European Union.

Despite these unprecedented events, our market has remained comparatively robust. There have been � uctuations over the period but in general, the market has fared well. Our latest research shows that rents are continuing to rise strongly, with prime rental growth across the region averaging 7.4% in the industrial sector and 11.5% in of� ces over the past 12 months.

Supply remains our major concern, with of� ce availability down to 5.0% of total stock and industrial availability at a staggeringly low 2.4%.

This has prompted a number of occupiers to commit to pre-lets and last year saw Amazon signing up to 2.2m sq ft of warehousing at London Distribution Park in Tilbury, whilst Cancer Research and the British Council are both considering of� ce moves to Stratford’s International Quarter.

The next 12-24 months are likely to be a period of considerable change and we look forward to reporting on the great opportunities that this will bring within our region.

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 letting, circa 5,000-10,000 sq ft.

Secondary Rent – The rent typically achievable on good quality second hand of� ce or industrial space in a given location.

Prime Capital Values – The best freehold ‘owner occupier’ capital value achievable on the sale of a circa 10,000 sq ft industrial unit, or a circa 5,000 sq ft of� ce building.

8-9

6-7

4-5

10-11

EAST LONDON

ESSEX

NORTH LONDON & HERTS

SOUTH EAST LONDON & KENT

2WELL PLACED PROPERTY ADVISORS GLENNY DATABOOK Q1 2017

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 the 31st March 2017, based on property data obtained through our respective of� ces servicing the area delineated on the above map.

MARKET COMMENTARY

Welcome to the latest Databook, which in itself represents somewhat of a Glenny landmark as it’s the 10th Anniversary edition of our publication. And what a turbulent 10 years it has been, with the most severe � nancial crisis since the 1930s and the UK electorate voting to leave the European Union.

Despite these unprecedented events, our market has remained comparatively robust. There have been � uctuations over the period but in general, the market has fared well. Our latest research shows that rents are continuing to rise strongly, with prime rental growth across the region averaging 7.4% in the industrial sector and 11.5% in of� ces over the past 12 months.

Supply remains our major concern, with of� ce availability down to 5.0% of total stock and industrial availability at a staggeringly low 2.4%.

This has prompted a number of occupiers to commit to pre-lets and last year saw Amazon signing up to 2.2m sq ft of warehousing at London Distribution Park in Tilbury, whilst Cancer Research and the British Council are both considering of� ce moves to Stratford’s International Quarter.

The next 12-24 months are likely to be a period of considerable change and we look forward to reporting on the great opportunities that this will bring within our region.

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 letting, circa 5,000-10,000 sq ft.

Secondary Rent – The rent typically achievable on good quality second hand of� ce or industrial space in a given location.

Prime Capital Values – The best freehold ‘owner occupier’ capital value achievable on the sale of a circa 10,000 sq ft industrial unit, or a circa 5,000 sq ft of� ce building.

8-9

6-7

4-5

10-11

EAST LONDON

ESSEX



2WELL PLACED PROPERTY ADVISORS GLENNY DATABOOK Q1 2017

Jul-Dec12

Jan-Jun 13

Jul-Dec 13

Jan-Jun14

Jul-Dec 14

Jan-Jun15

Jul-Dec 15

Jan-Jun16

Jul-Dec16

Jan-Mar 17

0

50

100

150

200

250

300

350

400

450

500

INDUSTRIAL PRIME INVESTMENT YIELDS

Investors have continued to target well-let industrial property in the light of the acute shortages of stock, as these assets are bene� tting from strong rental growth. Average prime yields across the Glenny region dipped below 5.00% for the � rst time on record, falling to 4.88% at the end of Q1 2017. Prime units in East London and North London & Herts let on a 10 year term to strong covenants are now expected to attract yields of 4.50%, whilst comparable properties in Essex and South East London & Kent would trade at 5.25%.

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

OFFICE INVESTMENTMARKET TRANSACTIONS

Investment activity in the of� ce sector slowed in the second half of 2016, with just over 20% of the annual total (£1.1bn) completing in the latter six months. Chinese investors have continued to play a major role in the East London of� ce investment market, with the largest transaction in the � nal quarter of the year being the £37m purchase of 3 Harbour Exchange by Hong Kong food group Lee Kum Kee. The Chinese group are one of the occupiers of the 91,600 sq ft building.

OFFICE PRIME INVESTMENT YIELDS

Average prime of� ce yields across the Glenny region have remained stable at 6.11% at the end of Q1 2017 following the slight upward drift in the pre-Brexit vote slowdown. Investors remain cautious about the rental growth prospects for the of� ce market despite the strong picture that is developing in the Eastern M25 region, where there remains an acute shortage of prime of� ce stock. As with the rest of the locations across the region, the Docklands market has seen yields remain stable at 4.75% as the outlook for rental growth has stalled.

OFFICE MARKET TAKE UP

Of� ce take up remained below the long run average for the Eastern M25 market in 2016, the third successive six month period that the target has been missed. The annual take up � gure was boosted by the letting of 542,000 sq ft at Barclay’s building at 10 South Colonnade, E14 as part of the government’s drive to reduce costs across their estate. This single letting accounted for almost 20% of the year’s activity.

OFFICE MARKET RENTS

Prime rents have continued to advance in most markets, growing by 11.5% on average across the region. The most signi� cant increase has been seen in North London & Herts (35.1% ^), where rents have adjusted over the past 12 months to be more in line with the other Glenny regions. South London & Kent has also seen a marked upturn in values, with rents in Greenwich, now re� ecting the locations close proximity to Docklands and the burgeoning of� ce markets at Stratford and The Royal Docks.

INDUSTRIAL INVESTMENTMARKET TRANSACTIONS

Industrial investment activity has remained buoyant throughout 2016 and the � nal quarter of the year saw £182m of activity which pushed the annual total to a record level of £604m, exceeding the previous record set in 2015. Several larger transactions completed in the � nal quarter of the year, including Tritax Big Box REIT’s acquisition of the 323,000 sq ft Co-op food distribution facility at West Thurrock for £56.5m (net initial yield of 5.53%) and Ares Management’s purchase of DC380, Harlow for £36.0m (net initial yield of 7.17%).

INDUSTRIAL MARKET TAKE UP

Take up across the Eastern M25 industrial market bounced back strongly in 2016 following two years of below trend levels of activity. The strong second half to the year was boosted by the 2.2m sq ft pre-let to Amazon at London Distribution Park Tilbury, which resulted in annual activity surpassing 8m sq ft for the second time in three years. Aside from the Essex region, all other Glenny regions saw take up in 2016 fall below trend levels, with supply shortages restricting activity.

INDUSTRIAL MARKET RENTS

Prime rents have continued to rise across all Glenny markets, with the average growth across the whole of the Eastern M25 region standing at 7.4% over the past 12 months. The most signi� cant increase has been seen in North London & Herts, where values have increased by 18.2%. Secondary rents have, once again, grown at a faster pace than the prime market, with values rising by 15.7% over the comparable period.

000

SQ

FT

£PSF £PSF

£M’S

£M’S

000

SQ

FT

Jul-Dec12

Jan-Jun13

Jul-Dec13

Jan-Jun14

Jul-Dec14

Jan-Jun15

Jul-Dec15

Jan-Jun16

Jul-Dec16

Jan-Mar 17

0

1,000

2,000

3,000

4,000

5,000

6,000

10 yr average

0.0 2.5 5.0 7.5 10.0 12.5 15.0 17.5

S E LONDON & KENT

ESSEX£9.50

£12.00

£16.50E LONDON DOCKLANDS

N LONDON & HERTS£13.00

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

2012 Q1 20172013 2014 2015 2016

Jul-Dec12

Jan-Jun 13

Jul-Dec 13

Jan-Jun14

Jul-Dec 14

Jan-Jun15

Jul-Dec 15

Jan-Jun16

Jul-Dec16

Jan-Mar 17

0

500

1,000

2,000

2,500

3,000

3,500

10 yr average1,500

0 10 20 30 40 50

S E LONDON & KENT

ESSEX£26.00

£32.00

£47.50

£40.00

E LONDON DOCKLANDS

E LONDON (OTHER)

N LONDON & HERTS£25.00

Jul-Dec12

Jan-Jun 13

Jul-Dec 13

Jan-Jun14

Jul-Dec 14

Jan-Jun15

Jul-Dec 15

Jan-Jun16

Jul-Dec16

Jan-Mar 17

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

2012 Q1 20172013 2014 2015 2016

DOCKLANDS PRIME OFFICE YIELD

AVERAGE PRIME OFFICE YIELD

10YR GILT YIELD AVERAGE PRIME OFFICE YIELD 10YR GILT YIELD

WELL PLACED PROPERTY ADVISORS GLENNY DATABOOK Q1 2017 3

DEMANDSUPPLYMARKET COMMENT RENTS & CAPITAL VALUES

Industrial take up in the Essex market in 2016 dwarfed previous years activity with the total for the year reaching 3.7m sq ft, with the Amazon pre-let at London Distribution Park Tilbury accounting for almost 60% of the region’s activity.

Take up in Q1 2017 saw activity return to trend levels, with transactions totalling 374,500 sq ft. Two large deals completed in the quarter; the Co-op leasing the 101,000 sq ft Unit 3 at Tower Thurrock, rendering the scheme fully let, and Millenium Cash & Carry’s purchase of the 119,000 sq ft Carcraft unit on Western Avenue, West Thurrock.

Supply has remained broadly stable at 2.2m sq ft, although there has been an increase in the level of grade A space on the market. Grade A accommodation now accounts for 47% of total availability, with 88% of grade A stock in units above 50,000 sq ft.

Demand has eased back from the strong levels recorded throughout 2016, due primarily to a reduced level of requirements for units of above 25,000 sq ft, where demand is down by almost two thirds on the previous period.

INDUSTRIAL MARKET AVAILABILITY(as at March 2017)

INDUSTRIAL MARKET REQUIREMENTS(as at March 2017)

INDUSTRIAL MARKET DEMAND RENTS & CAPITAL VALUES INDUSTRIAL

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

£PSFRENTS

CAPITALVALUES

PRIME SECONDARY PRIME

BASILDON £8.75 £7.50 £140

BRAINTREE £8.00 £6.50 £130

CHELMSFORD £9.25 £8.00 £150

THURROCK £9.50 £8.25 £160

INDUSTRIAL MARKET TAKE UP INDUSTRIAL MARKET AVAILABILITY

INDUSTRIAL

TOTAL AVAILABILITY 2.2M SQ FT PERCENTAGE OF SQ FT DEMANDED

6%0–5,000 4%

5,001–10,000

16%10,001–25,000

17%25,001–50,000

57%> 50,000

2%SUPPLY

5%0–5,000

11%5,001–10,000

20%10,001–25,000

17%25,001–50,000

47%> 50,000

54%DEMAND

0

250

500

750

1,000

1,250

1,500

Jul-Dec 12

Jan-Jun 13

Jul-Dec13

Jan-Jun14

Jul-Dec14

Jan-Jun15

Jul-Dec15

Jan-Jun16

Jul-Dec 16

Jan-Mar 17

10 yr average

4%TREND

000 SQ FT 000 SQ FT

Mar17

Dec 12

Jun13

Dec13

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

0

1,000

2,000

3,000

4,000

5,000

6,000

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

Mar17

Dec12

Jun13

Dec13

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

0

50

100

150

200

250

300

350

x%RENT

x%CAPVAL

0

2

4

6

8

10

£ SQ FT £ SQ FT

2.7%RENT

6.7%CAPVAL

Mar17

Dec 12

Jun13

Dec13

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

0

20

40

60

80

100

120

140

160

180

ESSEX

2ND HAND GRADE A


DEMANDSUPPLY RENTS & CAPITAL VALUES

OFFICESESSEX

MARKET COMMENT

Take up fell back below trend in 2016, following two years of at or above trend levels of activity. Overall take up in 2016 was 285,000 sq ft, with the second half of the year accounting for almost 60% of the year’s activity. The most signi� cant transaction in Q4 2016 was the 19,000 sq ft letting to Aon at Eastwood House Chelmsford.

Supply has continued to tighten, with total stock on the market standing below 700,000 sq ft for the � rst time since 2004/05. Grade A supply accounts for 18% of the total stock on the market, with 90% of grade A stock located in Chelmsford.

The amount of � oor space demanded has fallen back to its lowest level in two years, with a number of larger requirements having either been satis� ed or withdrawn from the market. Despite this easing in demand, there has been a strong upturn in smaller requirements, which have increased by 56% over the past six months.

Prime rents remained stable at £26.00 per sq ft but secondary rental levels continued to increase, rising by 6.7% across the rent survey locations. The most signi� cant increase in secondary rents were seen in Braintree, where values are up by 9.1% over the past six months and 41% since Q1 2015.

OFFICE MARKET REQUIREMENTS(as at March 2017)

OFFICE MARKET AVAILABILITY(as at March 2017)

OFFICE MARKET AVAILABILITYOFFICE MARKET TAKE UP

£PSFRENTS

CAPITALVALUES


BASILDON £17.50 £15.00 £210

BRAINTREE £16.50 £13.00 £205

BRENTWOOD £25.00 £19.00 £310

CHELMSFORD £26.00 £21.00 £325

OFFICE MARKET DEMANDS RENTS & CAPITAL VALUES OFFICE


000 SQ FT

0

50

100

150

200

250

300

33%TREND

10 yr average

Jul-Dec 12

Jan-Jun 13

Jul-Dec13

Jan-Jun14

Jul-Dec14

Jan-Jun15

Jul-Dec15

Jan-Jun16

Jul-Dec 16

Jan-Mar17

000 SQ FT

Mar17

Dec12

Jun13

Dec13

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

0

250

500

750

1,000

1,250

1,500

1,750

2,000

000 SQ FT No.

0

100

200

300

400

500

600

Mar17

Dec12

Jun13

Dec13

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

0

10

20

30

40

50

60

Mar17

Dec12

Jun13

Dec13

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

£ SQ FT £ SQ FT

0

5

10

15

20

25

30

0.0%RENT

0.0%CAPVAL

0

50

100

150

200

250

300

350

17%0–5,000

8%5,001–10,000

42%10,001–25,000

6%> 50,000

27%25,001–50,000

9%SUPPLY

47%0–5,000

17%5,001–10,000

36%10,001–25,000

65%DEMAND

NO OF REQS (RHS)000 SQ FT RENTAL VALUES CAPITAL VALUES (RHS)2ND HAND GRADE A


DEMANDSUPPLY RENTS & CAPITAL VALUESMARKET COMMENT

Shortages of supply remained the major issue for the East London industrial market throughout 2016 and into the � rst quarter 2017. Availability has now fallen below 700,000 sq ft, whilst the trend level of take up for the market is 1.4m sq ft per annum.

Take up in 2016 was 932,000 sq ft, with 62% of the year’s activity being completed in the � rst half of the year. The � rst quarter 2017 has seen take up improve, with a number of larger transactions completing. The most signi� cant of these was the 45,200 sq ft pre-let to DPD at SEGRO Park Newham and the 44,540 sq ft purchase of Unit 7 Beam Reach Rainham by The Hill Company.

Demand has fallen back from the peak levels seen in the latter half of 2016, with overall requirements down to 4.9m sq ft. The main easing in demand has been for units of above 25,000 sq ft, where requirements have halved over the past six months. It is too early to determine if this is a temporary slowing in demand or a cyclical downturn.

Prime rents increased to £16.50 per sq ft in the period to the end of March 2017, representing an increase of 3.1% over the past six months. However, the most signi� cant increase in prime rental values across Glenny’s rent survey locations in East London was in Beckton, where prime values were up by 7.4% to £14.50 per sq ft.

INDUSTRIAL MARKET REQUIREMENTS (as at March 2017)


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

£PSFRENTS

CAPITALVALUES


BARKING / DAGENHAM £13.00 £10.00 £200

BECKTON £14.50 £12.00 £225

ROMFORD £10.50 £9.00 £155

CANNING TOWN £16.50 £14.50 £275


9%0–5,000

8%> 50,000

20%5,001–10,000

27%10,001–25,000

36%25,001–50,000

4%SUPPLY

4%0–5,000 8%

5,001–10,000

16%10,001–25,000

18%25,001–50,000

54%> 50,000 46%

DEMAND

000 SQ FT

0

200

400

600

800

1,000

1,200

1,400

10 yr average

43%TREND

Jul-Dec12

Jan-Jun13

Jul-Dec13

Jan-Jun14

Jul-Dec14

Jan-Jun15

Jul-Dec15

Jan-Jun16

Jul-Dec16

Jan-Mar 17

000 SQ FT

Mar17

Dec12

Jun13

Dec13

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

0

1,000

2,000

3,000

4,000

5,000

6,000

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

Mar17

Dec12

Jun13

Dec13

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

000 SQ FT No.

0

50

100

150

200

250

300

0

50

100

150

200

250

300

£ SQ FT £ SQ FT

0.0

2.5

5.0

7.5

10.0

12.5

15.0

17.5

3.1%RENT

0.0%CAPVAL

Mar17

Dec12

Jun13

Dec13

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

INDUSTRIAL


EAST LONDON

2ND HAND GRADE A



EAST LONDON

MARKET COMMENT

The emergence of Stratford as a major of� ce location has proved to be a boost to the East London of� ce market, and the announcement of the potential of two further large scale relocations to The International Quarter Stratford have served to heighten interest in the region. Cancer Research is currently considering relocating their 100,000 sq ft head of� ce function to Stratford, whilst the British Council is also considering a similar relocation (50,000 sq ft).

Take up in Docklands was boosted by the 542,000 sq ft letting to HM Government at the Barclay’s building at 10 South Colonnade, E14. The relocation of the government of� ces is part of a drive to reduce costs across their estate.

Activity outside of Docklands also remained above trend levels, with 390,000 sq ft of lettings in 2016, although the � nal quarter of the year saw a slowing, with only 60,000 sq ft of lettings. Activity in Q1 2017 has remained slow across the East London market.

Supply has edged up in both the Docklands and Rest of East London market, with the combined availability � gure standing at 2.3m sq ft. Docklands accounts for 65% of total supply across the two markets. The combined availability rate in the East London of� ce market stands at 6.1%, with Docklands availability at 6.7%.

DOCKLANDS OTHER



£PSFRENTS

CAPITALVALUES


BARKING / DAGENHAM £16.00 £13.50 £175

ROYALS £35.00 £21.00 £650

ROMFORD £18.00 £12.50 £200

STRATFORD £40.00 £25.00 £750

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


6%0–5,000 5%

5,001–10,000

9%10,001–25,000

10%25,001–50,000

70%> 50,000

19%SUPPLY

18%0–5,000

5%5,001–10,000

26%10,001–25,000

23%25,001–50,000

28%> 50,000

39%DEMAND

000 SQ FT

0

100

200

300

400

500

600

700

800

900

Other 10 yr average

Docklands 10 yr average

87%TREND

Jul-Dec12

Jan-Jun13

Jul-Dec13

Jan-Jun14

Jul-Dec14

Jan-Jun15

Jul-Dec15

Jan-Jun16

Jul-Dec16

Jan-Mar 17

OFFICE MARKET TAKE-UP000 SQ FT000 SQ FT

Mar17

Dec12

Jun13

Dec13

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

0

500

1,000

1,500

2,000

2,500

3,000

3,500

OFFICE MARKET AVAILABILITY000 SQ FT No.

0

250

500

750

1,000

1,250

1,500

Mar17

Dec12

Jun13

Dec13

Jun14

Dec14

Jun 15

Dec15

Jun16

Dec16

0

10

20

30

40

50

60

0

10

20

30

40

50

Mar 17

Dec12

Jun13

Dec13

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

£ SQ FT £ SQ FT

0

100

200

300

400

500

600

700

800

5.3%RENT

0.0%CAPVAL

RENTS & CAPITAL VALUES OFFICE

OFFICES

NO OF REQS (RHS)000 SQ FT DOCKLANDSOTHERS CAPITAL VALUES (RHS)2ND HAND GRADE A



Take up fell below the long run trend level for the North London & Herts market despite a strong second half of the year. Total activity in 2016 was 1.4m sq ft, with 62% of the year’s activity completed in the last six months. The � rst quarter 2017 has seen activity fall back slightly, with 312,600 sq ft of lettings completed. The largest transaction being the 230,500 sq ft letting of DC 230 Harlow to Wincanton.

Supply remained broadly stable, ending Q1 2017 at 2.2m sq ft, with grade A supply representing only 15% of overall availability. Larger buildings (>50,000 sq ft) account for 62% of availability, although only two of the 11 buildings on the market are grade A, namely the 166,850 sq ft North London Distribution Centre En� eld and the 68,100 sq ft Unit 2 at Navigation Park.

Demand has reduced over the past six months from the peak levels recorded in the latter half of 2016, with total requirements standing at 8.0m sq ft. The main cause behind the drop off in demand has been the reduction in the number of requirements for units of more than 25,000 sq ft, where demand is down by 31%.

Prime rents have continued to rise, increasing by 18.2% over the past 12 months to the end of Q1 2017. Secondary rents have followed a similar trend, with the average increase in secondary rents over the past 12 months being 11.2%.

INDUSTRIAL MARKET AVAILABILITYINDUSTRIAL MARKET TAKE UP


INDUSTRIAL MARKET DEMAND


£PSFRENTS

CAPITALVALUES


ENFIELD £11.50 £9.75 £200

HARLOW £8.00 £7.00 £150

HODDESDON £9.00 £7.00 £150

TOTTENHAM /EDMONTON £13.00 £11.00 £200

RENTS & CAPITAL VALUES INDUSTRIAL


6%0–5,000

7%5,001–10,000

8%10,001–25,000

17%25,001–50,00062%

> 50,000

4%SUPPLY

2%0–5,000 5%

5,001–10,000

19%10,001–25,000

15%25,001–50,000

59%> 50,000 21%

DEMAND

0

250

500

750

1,000

1,250

26%TREND

000 SQ FT

10 yr average

Jul-Dec12

Jan-Jun13

Jul-Dec13

Jan-Jun14

Jul-Dec14

Jan-Jun15

Jul-Dec15

Jan-Jun16

Jul-Dec16

Jan-Mar17

000 SQ FT

Mar17

Dec12

Jun13

Dec13

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

0

1,000

2,000

3,000

4,000

5,000

6,000

0

2,000

4,000

6,000

8,000

10,000

12,000

000 SQ FT

Mar17

Dec 12

Jun13

Dec13

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

No.

0

50

100

150

200

250

300

350

0

2

4

6

8

10

12

14

£ SQ FT £ SQ FT

Mar17

Dec12

Jun13

Dec13

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

0

50

100

150

200

250

8.3% 0.0%RENT CAPVAL

INDUSTRIAL



2ND HAND GRADE A




OFFICE MARKET REQUIREMENTS (as at March 2017)


MARKET COMMENT

Take up for the North London & Herts of� ce market was 502,200 sq ft in 2016, although activity slowed in the second half of the year, with only 35% of the year’s activity completing in the latter six months.

This trend has continued in Q1 2017 with under 60,000 sq ft of take up recorded, the majority of activity (70%) being focused in Welwyn Garden City. The largest letting in the quarter was the Environment Agency taking 22,000 sq ft at XLB Property’s Alchemy building 15 Bessemer Road.

Supply has continued to tighten, standing at 858,600 sq ft at the end of March 2017, with grade A space representing less than 20% of the total. Almost 50% of grade A supply is at The Comer Group’s North London Business Park N11. The availability rate is the lowest amongst the Glenny regions, standing at 3.7%.

The growth in prime of� ce rents has accelerated over the past 12 months, having increased by 35.1% since the same time last year. Prime rents are now £25.00 per sq ft and whilst secondary rents have also increased, they have not achieved the same level of growth as values on grade A property, rising by 16.0% on average.

£PSFRENTS

CAPITALVALUES


ENFIELD £25.00 £19.00 £300

HARLOW £17.50 £12.50 £225

HODDESDON £17.50 £13.50 £215

WELWYN GARDEN CITY £20.00 £16.50 £260

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


15%0–5,000

9%5,001–10,000

31%10,001–25,000

29%25,001–50,000

16%> 50,000

4%SUPPLY

36%0–5,000

10%5,001–10,000

54%10,001–25,000

69%DEMAND

000 SQ FT

0

50

100

150

200

250

300

350

53%TREND

10 yr average

Jul-Dec 12

Jan-Jun13

Jul-Dec 13

Jan-Jun 14

Jul-Dec14

Jan-Jun15

Jul-Dec15

Jan-Jun16

Jul-Dec16

Jan-Mar 17

000 SQ FT

Mar17

Dec12

Jun13

Dec13

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

0

500

1,000

1,500

2,000

2,500

3,000

000 SQ FT No.

0

100

200

300

400

500

600

700

800

900

Mar17

Dec12

Jun13

Dec13

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

0

10

20

30

40

50

60

0

5

10

15

20

25

30

13.6%RENT CAPVAL

9.1%

Mar17

Dec12

Jun13

Dec13

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

0

50

100

150

200

250

300

350

£ SQ FT £ SQ FT

OFFICES





MARKET COMMENT

A strong second half of 2016 helped to push take up in the South East London & Kent industrial market close to trend levels of activity for the year, with total activity of 2.1m sq ft recorded. This was the � rst time in four years that the activity has fallen below the trend level. The year’s largest letting completed in the � nal quarter, the 266,600 sq ft letting to Wincanton at Angle 265, Rochester.

There has been a strong start to 2017, with more than 500,000 sq ft of take up. The most signi� cant transactions being the letting of 60,000 sq ft to Selco at 20 Kennet Road, Erith and 59,350 sq ft to DFS at Invicta Riverside Aylesford.

Supply has now fallen to 2.5m sq ft, with grade A supply representing 20% of the overall total. Larger units dominate grade A supply, with the largest being Erith 180 and Access Park Aylesford (86,000 sq ft) being the other unit above 50,000 sq ft. The availability rate is now down to 2.3%, the lowest level on record.

Industrial rents have continued to move up, bolstered by the lack of choice for grade A space. Prime rents in the region are now at £12.00 per sq ft and most locations have seen values edge upwards, rising by 11.1% on average. Secondary rents have followed this trend, although growth has been stronger, with values up by 18.9% across the region.



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

£PSFRENTS

CAPITALVALUES


ASHFORD £9.00 £6.50 £110

CHARLTON/WOOLWICH £12.00 £10.00 £200

DARTFORD £11.50 £9.75 £190

MAIDSTONE £7.50 £6.75 £150


12%0–5,000

11%5,001–10,000

26%10,001–25,000

12%25,001–50,000

39%> 50,000

14%SUPPLY

5%0–5,000 6%

5,001–10,000

17%10,001–25,000

24%25,001–50,000

48%> 50,000

38%DEMAND

000 SQ FT

0

250

500

750

1000

1250

1500

1750

2000

10 yr average

10%TREND

Jul-Dec 12

Jan-Jun13

Jul-Dec 13

Jan-Jun 14

Jul-Dec14

Jan-Jun15

Jul-Dec15

Jan-Jun16

Jul-Dec16

Jan-Mar 17

000 SQ FT

Mar17

Dec12

Jun13

Dec13

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

000 SQ FT No.

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Mar17

Dec12

Jun13

Dec13

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

0

50

100

150

200

250

300

350

400

0

2

4

6

8

10

12

14

£ SQ FT £ SQ FT

9.1%RENT

14.3%CAPVAL

Mar17

Dec12

Jun13

Dec13

Jun14

Dec14

Jun15

Dec15

Jun 16

Dec16

0

20

40

60

80

100

120

140

160

180

200

INDUSTRIAL




Take up fell below its long run trend level of activity for the � rst time in three years in 2016, with the total for the year standing at 530,000 sq ft, almost 50% down on the previous year’s � gure. The trend continued into Q1 2017, with 70,500 sq ft, recorded, due primarily to a lack of larger transactions.

Supply has remained stable over the past six months, standing at 1.4m sq ft, its lowest level in more than 10 years. Grade A availability represents only 8.0% of supply, due to a lack of larger buildings on the market. There is only one grade A building above 25,000 sq ft, the 25,600 sq ft Radius at Crossways Business Park Dartford.

Contrary to the experiences in the other Glenny regions, demand has improved over the past six months, rising to its highest level since 2013, 576,000 sq ft. The main impetus behind the increase in requirements has been the upturn in demand for buildings above 10,000 sq ft, which have increased by 38%.

Prime of� ce rents have continued to increase, rising by 16.6% on average over the past 12 months. However, the most signi� cant shift in values has been seen in the secondary market, where rents are up by 27.5%, with Greenwich (42.9%) and Bromley (28.6%) seeing growth in excess of that � gure.



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

£PSFRENTS

CAPITALVALUES


BROMLEY £28.50 £18.00 £300

DARTFORD £25.00 £15.00 £280

GREENWICH £32.00 £20.00 £325

MAIDSTONE £20.00 £12.00 £230


27%0–5,000

21%5,001–10,00028%

10,001–25,000

17%25,001–50,000

7%> 50,000

2%SUPPLY

5%0–5,000

6%5,001–10,000

21%10,001–25,000

23%25,001–50,000

45%> 50,000

27%DEMAND

000 SQ FT

0

100

200

300

400

500

600

700

800

10 yr average

60%TREND

Jul-Dec12

Jan-Jun13

Jul-Dec13

Jan-Jun14

Jul-Dec14

Jan-Jun15

Jul-Dec15

Jan-Jun16

Jul-Dec16

Jan-Mar 17

000 SQ FT

Mar17

Dec12

Jun13

Dec13

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

0

500

1,000

1,500

2,000

2,500

3,000

3,500

0

100

200

300

400

500

600

700

800

Mar17

Dec12

Jun13

Dec13

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

000 SQ FT No.

0

5

10

15

20

25

30

35

40

45

50

£ SQ FT £ SQ FT

0

5

10

15

20

25

30

35

RENT CAPVAL6.7% 8.3%

0

50

100

150

200

250

300

350

Mar17

Dec12

Jun13

Dec13

Jun14

Dec14

Jun15

Dec15

Jun16

Dec16

OFFICES



2ND HAND GRADE A


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. May 2017.

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 and James McFeely - 020 8591 6671Fifth Floor, Unex Tower, Station Street, Stratford, London E15 1DA

RESEARCH

For more information email [email protected]


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 £40.00 £750

2 ROYALS £35.00 £650

3 BARKING / DAGENHAM / RAINHAM £16.00 £175

4 ROMFORD £18.00 £200

2 ENFIELD £25.00 £300

3 WELWYN GARDEN CITY £20.00 £260

4 HODDESDON / CHESHUNT £17.50 £215

5 HARLOW £17.50 £225

1 BRAINTREE £16.50 £205

2 CHELMSFORD £26.00 £325

3 BRENTWOOD £25.00 £310

4 BASILDON £17.50 £210

1 GREENWICH £32.00 £325

3 BROMLEY £28.50 £300

4 DARTFORD £25.00 £280

5 MAIDSTONE £20.00 £230

INDUSTRIAL RENT CAPITAL VALUES

1 CANNING TOWN £16.50 £275

2 BECKTON £14.50 £225

3 BARKING / DAGENHAM / RAINHAM £13.00 £200

4 ROMFORD £10.50 £155

1 TOTTENHAM / EDMONTON £13.00 £200

2 ENFIELD £11.50 £200

4 HODDESDON / CHESHUNT £9.00 £150

5 HARLOW £8.00 £150

1 BRAINTREE £8.00 £130

2 CHELMSFORD £9.25 £150

4 BASILDON £8.75 £140

5 THURROCK £9.50 £160

2 CHARLTON / WOOLWICH £12.00 £200

4 DARTFORD £11.50 £190

5 MAIDSTONE £7.50 £150

6 ASHFORD £9.00 £110

KEY: CHANGES IN THE PAST 6 MONTHS

INCREASE DECREASENO CHANGE

MARKET COMMENT

Prime of� ce and industrial rents have experienced an uninterrupted period of growth which began in 2010. Over that time, prime of� ce rents have risen by 41.1% (or 5.0% per annum) on average, whilst industrial prime rents have increased by 37.8% (4.7% per annum).

Whilst the upturn in secondary rents begun later in the rental cycle, with industrial rents commencing their upward trajectory in 2012 and the of� ce rents a year later, the rate of growth in both markets has been greater. Over their respective periods industrial rents have grown by 52.3% (or 8.8% per annum) and of� ce rents by 46.7% (or 11.6% per annum).

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 and James McFeely - 020 8591 6671Fifth Floor, Unex Tower, Station Street, Stratford, London E15 1DA

RESEARCH

For more information email [email protected]


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

1 Mollison Avenue En� eld – Royal London Asset Management purchased the 144,750 sq ft distribution unit from Standard Life for £24.3m. The unit is let to educational supplies group Findel Plc for a further 21 years, with a rent review due in 2018. The purchase price re� ected a net initial yield of 4.47%.

SOUTH EASTLONDON & KENT KEY DEAL

Crossways Boulevard Dartford – London Metric Properties bought the 49,000 sq ft ‘last mile’ distribution unit let to European paper and packaging distributor, Antails for £6.3m. The occupier recently agreed a new 10 year lease, with RPI or open market uplifts, whichever is the higher level. The purchase price re� ects a net initial yield of 6.00%.

ESSEXKEY DEAL

Co-operative Food Unit Oliver Road West Thurrock – Tritax Big Box REIT purchased the 322,700 sq ft Co-op food distribution facility and adjacent lorry parking facility for £56.5m. The facility is one of the Co-op’s six UK distribution hubs and the only one located in the South East. The lease expires in 2025, with guaranteed rental uplifts of 2% per annum. The purchase price re� ects a net initial yield of 5.53%.

PRIME OFFICE YIELDS

PRIME INDUSTRIAL YIELDS



PRIME OFFICE YIELDS

YEAR YEAR

YEAR YEAR

PRIME OFFICE YIELDS

YEAR

YEAR

EAST LONDON KEY DEAL

3 Harbour Exchange, E14 – the 91,600 sq ft multi-let of� ce was purchased by Hong Kong food group Lee Kum Kee from Clearbell Property Partners II fund for £37m. Lee Kum Kee occupy one � oor of the 12 story building. The purchase price re� ected a net initial yield of 7.59%.

PRIME OFFICE YIELDS

EAST LONDON – OTHER DOCKLANDS

YEAR


4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

07 Q1 201708 09 10 11 12 13 14 15 16

NORTH LONDON

4.50%Q1 2017

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

07 Q1 201708 09 10 11 12 13 14 15 16

5.0%

6.0%

7.0%

8.0%

9.0%

07 Q1 201708 09 10 11 12 13 14 15 16

6.45%Q1 2017

6.00%Q1 2017

5.0%

6.0%

7.0%

8.0%

9.0%

07 Q1 201708 09 10 11 12 13 14 15 16

ESSEX

5.25%Q1 2017

07 Q1 201708 09 10 11 12 13 14 15 16

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

SE LONDON AND KENT

07 Q1 201708 09 10 11 12 13 14 15 16

5.0%

6.0%

7.0%

8.0%

9.0%

6.50%Q1 2017

5.25%Q1 2017

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

07 Q1 201708 09 10 11 12 13 14 15 16

EAST LONDON

4.50%Q1 2017

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

07 Q1 201708 09 10 11 12 13 14 15 16

4.75%Q1 2017

5.50%Q1 2017

OTHERDOCKLANDS

WELL PLACED PROPERTY ADVISORS WWW.GLENNY.CO.UK


RESEARCH

ARCHITECTURE

ASSET & PROPERTYMANAGEMENT

BUILDING CONSULTANCY

BUSINESS SPACE AGENCY

INVESTMENT

RESIDENTIAL DEVELOPMENT

REGENERATION & INFRASTRUCTURE

DEVELOPMENT

RESIDENTIAL MANAGING AGENTS

VALUATIONSERVICES

LEASE ADVISORY

STRATEGIC PLANNING




MOST ACTIVEAGENT

RUNNER UP 2016

EG

GREATERLONDON

INDUSTRIAL

MOST ACTIVEAGENT

RUNNER UP 2014

EGSOUTH EASTENGLAND

INDUSTRIAL(Excl London)

MOST ACTIVEAGENT

WINNER 2014

EG

GREATERLONDON

INDUSTRIAL

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 and James McFeely

020 8591 6671

[email protected] / [email protected]

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

RESEARCH

For more information email

[email protected]

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