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News Release

London

Apple and Wells Fargo boost Central London commercial property market


London, 17 October 2016 – Central London Office take up reached 2.3 million sq ft in Q3 compared to 1.7 million sq ft in Q2 of this year, headlined by a large deal to Apple and Wells Fargo’s purchase of 33 Central.

Apple’s acquisition of circa 500,000 sq ft at Battersea Power Station was the largest deal of the quarter. The building is currently under construction and Apple will occupy 40% of the development when they move in in 2021. Pre-leasing accounted for 43% of total take-up in Q3 compared to only 11% in Q2, and signals ongoing confidence in London from major global corporates, notwithstanding Brexit.

Neil Prime, Head of Central London Markets & UK Office Agency JLL, commented: “London market has sustained a solid level of leasing activity through the uncertain period immediately after the referendum. The deals to Apple and Wells Fargo have come as a welcome boost to confidence, and provide a strong signal that London retains its appeal to major global corporates.

“Brexit will be a lengthy process, and in the near term we expect take-up to remain below the highs of the past three years, but at the smaller end of the market we are seeing little impact on demand, and at the bigger end, the natural cycle of lease events will ensure continued turnover.”

Year to date take-up has reached 6.6 million sq ft, well below the first nine months of last year, when take up reached 9.3 million sq ft. However, activity was well above average in 2015 and the 2016 total is not far below long term average levels. Take-up in Q3 was dominated by the TMT sector which took a share of 35%, followed by the banking and finance sector with 23%.

Active demand stands at 8.9 million sq ft, ahead of the 10 year average of 8.1 million sq ft, indicating a solid underlying level of corporate interest, even though some occupiers may be more cautious in the aftermath of the referendum. Active demand continues to be driven by the TMT sector which accounts for 25% of all requirements.

Investment volumes of £1.8 billion in Q3 was the lowest quarterly total since Q1 2010 and significantly below the 10 year average of £3.5 billion. In the year to date, volumes have reached £8.1 billion, 30% below the equivalent period in 2015.

Julian Sandbach, Head of Central London Capital Markets, commented: “Lower volumes reflect the immediate reaction to the Brexit vote, with many institutional investors acting cautiously and sellers wary of being seen as open to discounted pricing.

“Moving into Q4, we expect volumes to recover as investor’s see more evidence of continued occupier demand and the spread between buyer’s and seller’s negotiating positions gradually closes. A large pool of capital stands ready to step in as and when we see clear evidence of stabilisation in pricing.”

Ben Burston, Head of UK Office and Capital Markets Research commented: “A string of positive economic indicators in September has lessened the risk of a sharp reaction to the Brexit vote, and the performance of the London market reflects this with an improved level of take-up in Q3.

“The first estimate of Q3 GDP in late October will be watched closely, and help determine the level of corporate and investor confidence in the final quarter, traditionally the most active period of the year for the London market.”