CITY FLOOR REVIEW. A floor-by-floor analysis of the City office market Q4 2015

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CITY FLOOR REVIEW A floor-by-floor analysis of the City office market Q4 215 QUARTERLY SUMMARY Take-up falls 3% on the quarter, but 215 volumes still 22% up on 214 Banking, finance and insurance

1 CITY FLOOR REVIEW A floor-by-floor analysis of the City office market Q4 215 QUARTERLY SUMMARY Take-up falls 3% on the quarter, but 215 volumes still 22% up on 214 Banking, finance and insurance occupiers account for largest share of occupational activity in Q4 Royal Bank of Canada s 244,98 sq ft pre-let at 1 Bishopsgate largest deal of Q4 Serviced office providers continue to be acquisitive as WeWork take three buildings in EC1 Supply falls by 11% on the quarter and by 42% on the year Prime rents finish the year at 68 per sq ft a 1% annual increase

2 FOURTH QUARTER REVIEW THE QUARTER IN NUMBERS Q ON Q Y ON Y COMMENT 35 floors available, totalling 2.25 million sq ft 13% by floors (-11% by sq ft) -2% by floors (-42% by sq ft) By volume, supply in the City has fallen by 11% on the quarter and 42% on the year. With the exception of EC3, where the addition of a handful of refurbished floors to the market meant Q4 supply posted a marginal increase of 6%, all other postcodes witnessed a reduction in availability. 183 floors Despite quarterly take-up falling 3%, 6.3 million sq ft of space transacted during the whole of % up on 214. taken-up during Q4, totalling 1.3 million sq ft 4% by floors (-3% by sq ft) -29% by floors* (-2% by sq ft)* 141 floors under offer totalling.94 million sq ft 12% by floors (-3% by sq ft) 28% by floors (-4% by sq ft) It was a positive end to 215 as the number of floors under offer rose by 12%. 6% of the space under offer was good quality, either new or refurbished space, and by volume, the majority was on floorplates between 1, and 2, sq ft in size. EC2 has the most amount of space under offer following significant interest in the Salesforce Tower and 1 Cheapside. 31 floors taken-up by serviced office providers during Q4, totalling.26 million sq ft 48% by floors (64% by sq ft) 21% by floors* (12% by sq ft)* WeWork acquired three buildings during Q4, including Holborn, 145 City Road and 3 Brooke Street. Occupier demand for flexible office space is strong, driven by corporates and mid-cap firms as much as it is SMEs and companies in the TMT sector. 7,48 sq ft average size of floor taken-up in Q4 6,76 sq ft 6,291 sq ft 68 per sq ft City prime headline rents 66 per sq ft 62 per sq ft The average size of floor transacted jumped by almost 1, sq ft during Q4. Prime headline rents increased by 1% during 215 and finished the year at 68 per sq ft; with the rental gap between core and fringe locations substantially narrowing during 215. *on Q4 214

3 215 REVIEW As we enter a new year, now is a good time to take stock of what has happened over the last twelve months. Several records have been set during the year and here we outline some of the landmark achievements of 215. Most active occupational postcode Highest headline rent Largest single occupational transaction With 373 floors totalling 2.4 million sq ft taken-up, this was the most active postcode during 215. Headline deals in the banking, finance and insurance sector included Royal Bank of Canada s pre-let at 1 Bishopsgate and Investec Bank taking 61, sq ft at 3 Gresham Street were complemented by large deals from serviced office providers WeWork and London Executive Offices. The highest reported rent of 9 per sq ft was paid by Affinity Shipping for level 44 (6,584 sq ft) at the Leadenhall Building. The building itself attracted several high profile tenants during 215 and floors in this building attracted some of the highest rents of the year. The agreement by Deloitte to pre-let 275, sq ft at 1 New Street Square in EC4 was the largest single occupational deal of the year. The deal was signed on a 2 year lease and added to the 256, sq ft of space already occupied at Land Securities s New Street Square development. Largest single floor let Most active occupier sector Largest investment transaction The pre-letting by the Royal Bank of Canada of the 44,293 sq ft first floor of 1 Bishopsgate was the largest single floor transacted in 215. This sector was the most active by take-up during 215. This is due to large scale lettings throughout the year from the likes of the Commonwealth Bank of Australia, Investec, Royal Bank of Canada, Brit Insurance Holdings and Arthur J Gallagher. Cathay Life (Taiwan) s purchase of the Walbrook building in EC4 for a headline price of 575 million, reflecting an initial yield of 4.1%, was the largest investment transaction of 215.

4 Q4 215 SUPPLY Here we detail our findings on the supply of floors by each postcode, indicating the number of available floors for each floor size category as well as the respective quality of each available floor. 35 floors 13% on Q3 SUPPLY 2.25m sq ft -11% on Q3 141 floors 12% on Q3 UNDER OFFERS.94m sq ft 3% on Q3 ANGEL CITY ROAD EC1 This is now the most under supplied postcode with only 316,374 sq ft on the market. GOSWELL ROAD OLD STREET Floor size (sq ft) EC1 OLD STREET 1,-2,5 2,51-4, 4,1-7, 7,1-1, 36,137 sq ft CLERKENWELL ROAD 1,1-2, 2,1+ 69,99 sq ft 66,499 sq ft 9 EC1 23,64 sq ft 48,532 sq ft Number of 7 available 3 floors CHANCERY LANE A4 HOLBORN FARRINGDON ROAD ST BARTHOLOMEW S HOSPITAL LONDON WALL EC2 ST PAUL S FLEET STREET ST PAUL S 71,576 sq ft EC4 MANSION HOUSE Floor size (sq ft) MILLENIUM BRIDGE RIVER THAMES 1,-2,5 2,51-4, 4,1-7, 2,18 sq ft New Refurbished Unrefurbished City boundary Sub-market boundary 7,1-1, 1,1-2, 2,1+ 9 EC sq ft Number of 7 available 3 floors ,59 sq ft 65,245 sq ft 218,582 sq ft 29,635 sq ft EC4 Overall supply in EC4 fell again during Q4 with take-up of the largest floorplates over 2, sq ft in size driving this reduction. Source: Gerald Eve Arrows indicate quarterly movement in the number of floors.

5 GREAT EASTERN STREET Floor size (sq ft) 1,-2,5 2,51-4, 4,1-7, 7,1-1, 1,1-2, 2, EC2 1 Number of available floors ,963 sq ft ,283 sq ft 253,218 sq ft 76,889 sq ft 72,67 sq ft 41,62 sq ft EC2 Whilst the number of floors increased, the actual volume of space on the market fell by 26%. This is a considerable quarterly fall and is due to an increase in occupier activity on floors over 1, sq ft in size. SHOREDITCH HIGH ST SPITALFIELDS LONDON WALL EC3 EC3 Floor size (sq ft) This is the only postcode to have posted an increase in the volume of space on the market during Q4 as it rose by 6%. This is largely due to the addition of large floorplates at the Aviva Tower and the Monument Building. 1,-2,5 LOWER THAMES STREET 2,51-4, 4,1-7, 7,1-1, RIVER THAMES ST KATHERINE DOCKS 1,1-2, 2,1+ RIVER THAMES 9 EC3 71,491 sq ft Number of 7 available 3 floors ,315 sq ft 388,799 sq ft 99,489 sq ft 94,536 sq ft 36,224 sq ft

6 DEVELOPMENT PIPELINE AND RENTS.9 Million sq ft Q3 216 Q4 216 Q1 217 Q2 217 Q3 217 Q4 217 Q1 218 Q2 218 Q3 218 EC4 EC3 EC2 EC1 Source: Gerald Eve 68. PRIME HEADLINE RENTS Q4 215 per sq ft We recorded a 1% increase in prime rents during 215, rising from 62 per sq ft in Q4 214 to 68 per sq ft in Q Such a significant increase has been due to the combination of consistently reducing levels of supply and steady levels of tenant demand. Occupiers continue to require high quality centrally-located office space in order to attract and retain the best staff and are often proving willing to pay the increased rental levels to do so. Whilst we are likely to see an increase in the return of secondhand space over the next few years as the offices vacated by occupiers signing up to pre-lets is returned to the market, the supply of new space in the pipeline remains thin. A review of the development pipeline suggests that there is just under 89, sq ft due to be delivered to the market in the second half of 216. Assuming occupational demand continues at around the same rate as witnessed during 215, where 6.3 million sq ft of space was transacted, then the current environment of rental growth looks set to continue. There are risks to this outlook, perhaps most notably the uncertainty which could arise surrounding the impact of an EU referendum, however we expect rental growth to continue in 216. We forecast that prime rents could reach 75 by the end of the year, with slower rates of positive growth expected thereafter. We did see an increase in the number of schemes entering the planning system towards the end of 215, which in turn will create more supply to the market over time, but these schemes will not address the balance in the short to medium term. Looking to 217, there is only 1.9 million of sq ft of space due to enter our supply figures. The majority of this space is in EC4, with schemes such as 2 Old Bailey and 33 King William Street expected to deliver larger floors, but there is still a shortage of options to satisfy the larger requirements for space. Looking further ahead to 218, there is currently only 1.1 million sq ft due to be added to future supply, the majority of which is housed in 1 Bishopsgate, EC2, which is already attracting significant levels of occupier interest.

7 DEFINITIONS Availability Floorspace over 1, sq ft in size and available to move into within six months which may or may not be vacant but which is actively marketed by an appointed agent. We monitor availability in central London at an individual floor level as well as by the total volume of space. Each floor is assigned a floor size category and is graded for quality. The availability data covered in this report represents buildings within the postcodes EC1, EC2, EC3 and EC4, as depicted in the map. The floor area in sq ft adopted throughout is the net internal area. Newly available space Space on the open market (including developments) which are within 6 months of completion. This includes units of secondhand space which are undergoing refurbishment. Requirement A declared requirement for office accommodation with appointed agents, which needs to be satisfied in the foreseeable future. Our requirements data covers all of the postcodes EC1, EC2, EC3 and EC4, unless otherwise stated. If the requirement has a preferred size range, the average size of the requirement is used. Given requirements often include a range of targeted geographies, we have included the requirement for each of the sub-markets when analysing individual sub-markets, but, when calculating overall City requirements, duplicates are removed. Prime headline rents The rent being paid which may not take account of concessions such as rent free periods or other incentives. We have adopted the best achieved methodology and where there is no evidence; rents are recorded on the basis of the best hypothetical transaction which could be achieved at the end of that quarter. Our definition of a prime transaction covers a 1, sq ft office in a low rise, grade A building signed on a ten year lease. Tower rents refers to the same floor size and profile but within a high rise tower building. Incentives This refers to the concessions offered by a landlord to a tenant as part of the negotiation process. Incentives usually adopt the form of rent free periods, but can also be in the form of capital contributions or the fit-out of the building. Future supply This is essentially a review of development due to be delivered to the market and does not include space bought to the market in the future due to lease expiries or the natural churn of stock. We cover those floors over 1, sq ft in size which are being developed and are due to be delivered to the market. Refurbished: A floor which has been comprehensively refurbished and is of good specification, floorplate efficiency and image, but is in a building which is not new or been comprehensively refurbished. Unrefurbished: Poorer quality space, usually offered for occupation as is. Under offer Space which a prospective occupier has agreed in principle to occupy, but is most likely to not as yet be under any legal or contractual obligation to do so. Take-up Occupational transactions including offices let or sold to an occupier, developments pre-let or pre-sold to an occupier or an owner occupier purchase of a freehold or long leasehold. Quality of choice This is a subjective measure holistically assessing the appropriateness of current availability to modern office requirements. Whilst our figures may represent a large number of floors available in particular size categories or postcode geographies, the floorplate efficiencies or amenities on offer within this supply may not meet all the expectations of modern office tenants and the quality of choice would be lower. Floor / Floorplate As well as the total volume of space being marketed as available, we also monitor the number of floors which account for this total volume. We monitor whether it is a full floor or part floor which is being marketed, although for our statistics, we treat an individuallymarketed part floor as one floor. If a floor is capable of subdivision to accommodate two suites, but can likewise be occupied together, we use the total floor plate for that floor. Net absorption This measures the net overall balance of occupied space over a prescribed time period. We calculate net absorption by subtracting the change in available space (both by the number of floors and the overall volume of space) between two time periods from the amount of development completions added to the market within the same time period. For our calculation we assume that all available space is vacant on the premise that space that is marketed as being available is underused and likely to be vacated. Known sub-let space and lease renewals are not factored into net absorption except where the lease renewal includes the leasing of addition al space, and then that additional space is counted. Pre-letting of space in non-existing buildings is not counted in net absorption until the development is completed and the tenant takes occupation. Floor quality New: Floor in a newly-developed or newly-refurbished building, including sub-let space in new buildings which have not been previously occupied.

8 CONTACTS Gerald Eve s City team provides specialist advice across a number of disciplines including agency, investment, lease consultancy, rating, valuation, planning and development and project management. To find out more about us and what we could do for you please visit our website () or contact the following people direct. CITY Simon Prichard Senior Partner Tel. +44 () Mobile +44() sprichard@geraldeve.com Fergus Jagger Office Agency Tel. +44 () Mobile +44 () fjagger@geraldeve.com Mark Lethbridge Office Agency Tel. +44 () Mobile +44 () mlethbridge@geraldeve.com WEST END Lloyd Davies Head of West End Transactions Tel. +44 () Mobile +44 () ldavies@geraldeve.com Paul Pride Office Agency Tel. +44 () Mobile +44 () ppride@geraldeve.com Graham Foster Lease Consultancy Tel. +44 () Mobile +44 () gfoster@geraldeve.com PLANNING & DEVELOPMENT Hugh Bullock Head of Planning and Development Tel. +44 () Mobile +44 () hbullock@geraldeve.com Lisa Webb Planning Tel. +44 () Mobile +44 () lwebb@geraldeve.com Jeremy Randall Planning Tel. +44 () Mobile +44 () jrandall@geraldeve.com GERALD EVE S UK OFFICE NETWORK London (City) 46 Bow Lane London EC4M 9DL Tel. +44 () London (West End) 72 Welbeck Street London W1G AY Tel. +44 () Birmingham Bank House 8 Cherry Street Birmingham B2 5AL Tel. +44 () Cardiff 32 Windsor Place Cardiff CF13BZ Tel. +44 () Glasgow 14 West George Street Glasgow G2 2HG Tel. +44 () Leeds 1 York Place Leeds LS1 2DR Tel. +44 () Manchester No1 Marsden Street Manchester M2 1HW Tel. +44 () Milton Keynes Avebury House Avebury Boulevard Milton Keynes MK9 1AU Tel. +44 () West Malling 35 Kings Hill Avenue West Malling Kent ME19 4DN Tel. +44 () For more information on any of the facts and figures in this publication, please contact: Steve Sharman Tel. +44 () Disclaimer & copyright This brochure is a short summary and is not intended to be definitive advice. No responsibility can be accepted for loss or damage caused by reliance on it. All rights reserved The reproduction of the whole or part of this publication is strictly prohibited without permission from Gerald Eve LLP. 1/16

WEST END FLOOR REVIEW. A floor-by-floor analysis of the West End office market Q4 2014

WEST END FLOOR REVIEW. A floor-by-floor analysis of the West End office market Q4 2014 WEST END FLOOR REVIEW A floor-by-floor analysis of the West End office market Q4 214 FOURTH QUARTER REVIEW THE QUARTER IN NUMBERS Q ON Q Y ON Y COMMENT 591, totalling 3m sq ft 351 taken-up during Q4, totalling