The Office Gossip

Central London exempt from office to resi conversion law

2013-05-13T13:21:08Z

Back in January I blogged about the government's proposed law allowing office to residential conversion without planning permission. Many local authorities in London were concerned that the new law would have a negative impact on their office stock and so sought an exemption.

Last week the final list of exemptions was announced by Communities Secretary Eric Pickles. There are 17 English local authorities with exemptions, ranging from individual buildings and roads to entire designated zones.

In London the Central Activities Zone and Tech City are among the exempt areas. This covers parts of Camden, Islington, Hackney, Tower Hamlets, Southwark, Lambeth, Wandsworth, Westminster and the entire boroughs of Kensington & Chelsea and The City of London. An area known as the Royal Docks Enterprise Zone in LB of Newham is also to be exempt.

The news is welcomed by the central London boroughs that feared a rapid depletion of their office stock owing to exceptionally high residential values compared with commercial values in areas such as Mayfair and Clerkenwell.

This government website offers maps showing precisely the zones that are to be exempt when the new legislation comes into force at the end of May.

Skyscrapers: The A-Z

2013-05-09T11:34:17Z

London's buildings encompass such a wide range of uses, features and construction types that finding meaningful ways to describe them can feel difficult. Many new developments in architecture don't seem to fit into our existing categories. So it was perhaps inevitable that the world wide web would fill the niche...next time you are lost for words to describe a new or existing skyscraper, have a look at THIS new website.

Skyscraper Dictionary aims to compile the definitive dictionary to skyscrapers. The project is only a few months old but the hope is to add a new word once a week, so be sure to keep your eyes peeled.

My own favourites so far include:

- Pencil Tower: an "extremely slender skyscraper" where the height:width ratio is less than 10:1;

- Solitaire: "a stand-alone skyscraper...that does not belong to a series of buildings that make a classical city street, but one that is separately rearing in height, looking lonely";

Tour du Crédit Lyonnais, Lyon. Source: Jacmin, Wikimedia Commons

- Cherryscraper: "skyscraper with a proverbial cherry on top" designed for a function e.g. radomes which are according to the Oxford Dictionary: "a dome or other structure protecting radar equipment";

Etisalat Tower 2, Dubai. Source: www.dubai-architecture.info

- Twistscraper: "literally, a skyscraper with a twist"...maybe one day London if The Pinnacle ever completes (below).

Jan Klerks, director of the Dutch Council on Tall Buildings, who set up the website and related forum was kind enough to share some thoughts regarding his idea and aims. He revealed that he has over 100 new words to add and is constantly thinking about neologisms appropriate for new types of development/architecture, including many to describe London buildings. I don't want to give too much away, so keep checking back, but they include skyscrapers with features like those at Tower 42, The Shard, The Cheesegrater (below) and The Gherkin. Personally, I'd like a term for those with gardens, such as The Walkie Talkie.

In terms of how and why the project transpired, Jan explained how he noticed that both enthusiasts and professionals often talk about buildings from a visionary perspective, whilst he believes that "what makes a skyscraper stand out is in the details that only a craftsman will understand". Instead of using general terms when talking about skyscrapers, such as high-rise and urban, he believes the words in the dictionary "force you to really think about what it is you want to point out" therefore allowing one to "better express what they are talking about". You can read more details about this reasoning and motives here.

Jan also explains that in addition to this, much of the thought behind the idea is quite simply that it is fun. I'm sure I wasn't alone in thinking this when stumbling upon the website. It seems an innovative and different way of speaking about the topic, particularly for those of us not trained in traditional architectural vocabulary. Everyone has their own opinion on skyscrapers and the benefits or otherwise which they bring to skylines. For Jan, "the most important reasons to build skyscrapers, especially really tall ones, is just because of the fun involved". The need for high density in cities also supports the idea that the future is going to be vertical and this is sure to affect the commercial sector as well as the residential one.

By Claire Poole

Low tax rates entice firms to relocate

2013-05-07T09:04:24Z

George Osborne will be glad to hear that the centre piece of his budget, lower rates of corporation tax, is enticing as many as forty firms to consider relocating to the UK from countries including USA, Netherlands and Ireland according to Steve Varley, the UK Chairman of Ernst & Young.

The potential influx of companies to will also be music to the ears of the office agents who could see significant amounts of HQ standard office space in London being taken up. Several firms have already decided on a move to London. Last year, Aon announced that it would be relocating its global HQ from Chicago to the Cheesegrater. More recently the world's largest advertising and marketing group, WPP, announced that it would move back to the UK from its present HQ in Dublin, it currently has offices at 27 Farm Street, W1.

Konrad Kowalski

The full article is available here.

Africa House revealed

2013-05-01T13:50:22Z

So far we hadn't been able to see the progress of the works on this impressive building due to huge coverings obscuring the entirety of Freshwater's redevelopment of the site. But behind the majestic facade, which was revealed this week, the building has been comprehensively reconstructed to provide grade A office space, currently being marketed by Jones Lang LaSalle and Montagu Evans. It is great to have the building back on show, improving the look of Kingsway no end. Let's hope it proves as attractive to occupiers.

The view since 2011:

Revealed this week:

LOMA Q1: Key Transactions

2013-04-26T14:45:48Z

EGi London Offices Researcher, Konrad Kowalski, has been looking into which agents were more active in Q1 and the above chart displays the findings, whilst his commentary is below.

Before I begin I would like to point out that the data used for this came from last week's LOMA report and only takes into account the 16 largest transactions which range from Millennium Capital Management taking 22,000 sq ft at Mayfair Place A, 45-50 Berkeley Street to some deal at Kings Cross which is, apparently, going to "challenge" traditional office concepts.

Midtown was ruled by DTZ and Savills who acted on Google deal. Midtown was the only market to have one deal of any size in it (admittedly it was fairly big) but this shows the lack of available stock and the significance of the small-unit market in this area.

CBRE enjoyed success in the City Core as it acted on the three largest deals in the market. Along with Knight Frank it successfully let space to RSA and Liberty at the Walkie Talkie and, along with JLL, let 55,128 sq ft to Genesis Oil and Gas at One St Pauls.

CBRE also acted on the two largest deals in the West End which included: 43,249 sq ft to Creston at Warwick House and John Lewis signing at 123 Victoria Street. Knight Frank and Cluttons were the only other agents to act on key deals in the West End. Knight Frank acted on the deal to Millennium mentioned above and Cluttons were involved at 4 Carlton Gardens where LCF Rothschild took 25,008 sq ft.

Michael Elliot and Allsop acted on the largest deal in the City Fringe to the Royal College of Psychiatrists at 21 Prescott Street. There were 8 agents to acted on key deals in Q1, of these, Savills ranked the highest acting on 48,368 sq ft including 22,422 sq ft to Unilever at the Buckley Building alongside Cushman & Wakefield and Hatton Real Estate. The latter ended up top of the city fringe league tables when all deals were taken into account.

TMTs set occupier trends

2013-04-17T14:32:51Z

Last week an article was published in the Estates Gazette posing the question whether good office design can raise rents. Part of it was directed at the London office market's new best friend, the TMT sector. TMT's and their requirements have been done to death so I shall refrain from going into too much detail, however, what I am going to take from it is their demands of: low rents, flexible leases and shared space for ideas to blossom, demands that are not solely limited to start up companies...

The government is looking to cut its London estate by almost 90% from 213 buildings to 23 and the steps it is taking mirror that of a start up company. Firstly, the Department of Communities and Local Governments (DCLG) is to surrender its lease at Eland House and will relocate to 2 Marsham Street where it will sublet space from the Home Office. This will save around £8 million a year.

It may seem a little far-fetched to compare government demands to TMT start ups but according to DCLG director-general of finance and corporate services Sue Higgins added: "Our aim is to use our resources ... as efficiently and creatively as possible..." Helen Kilpatrick, director-general of finance and corporate services at the Home Office added, 'it will also allow ways of working flexibly and sharing resources and knowledge across departments.' Sound familiar?

TMTs are also not as reliant on location as other industries and, as they grow, become footloose and can leave the boundaries of Shoreditch, as Linkedin and Facebook have done. Now more established companies are adopting measures that reflect the demands of start up companies, such as having all employees under one roof and consolidate existing offices. For example, Puma, are looking to consolidate their offices and relocate from Soho, where rents are in the region of £65 - £70 psf, to the South Bank where rents are around £20 psf lower at around £47 psf. They currently have the Crane Building and Harlequin Building in their sights. They are not alone in this migration, PR firm Four Communications have signed a 10 year lease at 20 St Thomas Street for 14,000 sq ft as companies no longer see the advantage of paying high rents for prime location.

Maybe the next stage will be in a similar vein to the likes of Google's Kings Cross Development, the new HQ Goldman Sachs at 40 Shoelane and Skanska's office lead scheme at 11-19 Monument Street... maybe.

Konrad Kowalski

Views of tall buildings

2013-04-17T12:16:44Z

Assignment of the week on Guardian Witness is "views of tall buildings," inevitably such a task has resulted in some great pictures of London favourites that can be viewed here. Whether or not you think the craze for tall buildings detracts from the existing London skyline, these pictures clearly show some of our most striking commercial buildings at their best.

Bloomberg site unearths Roman treasures

2013-04-10T10:37:17Z

With so much building work having gone on in London over the centuries, it seems unlikely that there is much more to discover beneath the foundations of the city. However, the site of the new Bloomberg headquarters has yielding the largest collection of finds in London; 8,000 objects have so far been unearthed, including clothing, jewellery and pottery.

Bloomberg was given planning permission to build an 880,000 sq ft, ten storey, Foster & Partners-designed scheme in March 2012. It will also include a 1,757 sq m (18,910 sq ft) retail arcade lined with restaurants and shops.

For the full story and gallery see here.

London Office Boundaries' Update

2013-03-22T15:16:24Z

In the short two years I have been working in the London Offices team the landscape of the office market has changed, even more so since we started recording data some 17 years ago. So-called fringe areas are becoming ever more important, increasingly challenging the historical dominance of the West End and City; with new schemes making their own mark on the map. At the end of last year we launched a consultation to try and ascertain the best way to represent these changes in our boundaries and I am pleased to reveal the finished article.

The most striking changes are the inclusion of the King's Cross area into Midtown, making sure none of the action from the current re-development, and million square foot Google deal is missed; and the expansion of what we cover in South Bank, which is set to become even more important with the re-development of the Shell Centre, and controversial re-working of Elizabeth house. Please keep a copy of the map for your records and make sure to keep submitting your deals and availability for our reports and inclusion on the site.

The full map can be downloaded here. From Q1 2013 all deals and availability which fall into the mapped area will be counted towards our quarterly reports.

TMTs demonstrate importance of green credentials

2013-03-20T16:51:06Z

At the Estates Gazette and British Council for Offices summit in November, Martin Jepson, Vice President of Brookfield, presented findings of a question on 'how do you think the demand for different types of office developments will change in the next decade'. 89% of respondents thought a greater emphasis will be placed on zero and low carbon offices. So far, it looks like they might be right.

It's been pretty well documented that the TMT sector is the most active occupier currently and that they are not the same as the financial institutions in what they look for in a work space. They prefer environmentally friendly open spaces that encourage creativity. Thus, it comes as no surprise that these companies are increasingly working with architects, agents and developers to ensure that their requirements are met. Google has been at the forefront of this field as it's quirky offices and campus at Bonhill Street testify and I don't think anyone is in any doubt that its new HQ at Kings Cross will be equally as eccentric and incredibly eco friendly.

In California, the major players in the TMT industry including Apple, Google and Facebook are all in the early stages of building new headquarters in San Francisco. And guess what... being green is high on the agenda.

Apple's new HQ, which resembles a UFO, has been designed by Norman Foster Architects who also designed the Willis Building, Holborn Place, 50 Finsbury Square and The Gherkin.

In the past companies have been content with sticking a few solar panels on the roof. However, Apple is taking this to a whole new level and wants to install enough solar panels and fuel cells to become entirely self sufficient! It also wants to plant 6,000 trees, including fruit trees (no prizes for guessing what) and a further 108 trees that can cost between $50,000 - $100,000 to relocate (rather than rely on nursery bred specimens).

Facebook has hired Frank Gehry to build an extension to its Menlo Park Campus. The campus, due to start work this year, will look like a 'wooded hillside rather than a building' according to Katie Ferrick, Chairman of the Menlo Park Planning Commission.

Google is looking to restore 8 acres of wetland in Silicon Valley and is apparently looking to build it's own blackwater recycling system which would run all its sewage through treatment tanks so it would be clean enough to pipe to the San Francisco Bay Area. Ian MacClaren of Southland Industries said 'it's too expensive to make economical sense, it's a good citizenship story, more than anything else'. Furthermore, almost half the buildings on Google's campus will be fitted with landscaped green roofs which will lower heating and cooling costs.

These all sound like grand plans and it must be remembered that these are at the planning stage. However, it is evidence of how important having an environmentally friendly workspace is to these companies encouraging new talent and for the future of the company. Whether it is PR or actual economics remains to be seen.

To read the full article and see pictures of the planned buildings, visit: http://www.businessweek.com/articles/2013-03-14/silicon-valley-tech-giants-plan-super-green-campuses

By Konrad Kowalski

Shuttleworth to redesign Pinnacle

2013-03-13T10:11:09Z

World renowned architect Ken Shuttleworth has been identified as one of the leading contenders to redesign the stalled Pinnacle Tower in the City of London.

Ken's proposal would use much simpler geometry in order to cut build costs. He plans to reduce the height, but still create the tallest tower in the City.

The original 945 ft skyscraper, designed by Kohn Pedersen Fox (KPF), is currently stalled at the seventh floor and has failed to secure a pre-let or adequate finance. The swirling design, similar to a helter skelter, is highlighted as reason for spiralling costs. Shuttleworth told the Guardian "The geometry of the Pinnacle is impossible. It makes the Swiss Re (Gherkin) look simple. In short, it is too complicated to build because each piece of glass is a different size."

Below is an image of the current stalled scheme.

Here is what the KPF-designed tower was supposed to look like

The building's developers, Arab Investments, and the contactors, Brookfield Multiplex, are due to begin a three-month review of their options. The new designs will be considered as a way of getting the stalled scheme moving.

Best in show office to resi....

2013-03-13T10:05:50Z

Last night I stumbled across a good gallery on The Telegraph website looking at some of the best office to resi conversions around the country, a number of which were inevitably in London.

With it being such a hot topic at the moment, it got me thinking about what might be in this gallery five or ten years down the line if it were to be done again. So how about about an Oxford Street address? Not much of a looker at the moment, but in February permission was applied for to convert 76 Oxford Street to residential:

Right area but not tall enough I hear you say. Fair enough. Last week Almacantar submitted a scoping opinion to convert Centre Point to residential, having previously had an application refused last year.

Ok, only Victoria will do. How about 66 St James's Street then? An application was submitted in February to convert this one to four residential units:

Or if you're after something a little taller in the same neighbourhood, then how about Portland House where Land Securities have submitted a scoping opinion for conversion to 206 units.

Another option might be 190 Strand where Berkeley Group recently completed demolition of 200,000 sq ft of offices to make way for 200 residential units. This is how EGi's London Residential research team found the site when they visited in February:

One final consideration might be the conversion of Embassies to residential use. With the US Embassy moving to Nine Elms it is not hard to believe that others will follow. The Dutch are believed to be close to agreeing a move to the same site which will free up 38 Hyde Park Gate which would make for an extremely desirable address. Another Embassy, possibly the Icelandic, which sits next door to the Dutch, is also rumoured to be on the move.

Food for thought.....

Which way did the profits go? Derwent In The Right Direction

2013-03-06T14:23:47Z

Last week Derwent London announced its annual results for 2012. Derwent London is focussed on Real Estate investment and regeneration; it owns and manages a wide investment portfolio totalling 5.4 million sq ft, with primary focus being offices across central London.

The company announced a £52.5 million profit before tax for 2012, increasing its NAV per share by 11% to 1,886p. This was aided by £13.3 million of lettings across 340,000 sq ft and major developments and refurbishments rising by 14.1% in value. With overseas London investment thriving, it's interesting to see a company which is focused mainly on London commercial property attaining positive results.

The year saw Derwent obtain planning for six major consents, totalling 655,000 sq ft. This included 125,162 sq ft of office space at 1 Page Street, SW1, as well as a mixed use scheme comprising 275,000 sq ft in total at 1 Oxford Street, W1. The latter will be above Tottenham Court station, where Derwent intends to exercise its option to reacquire the site from Crossrail upon completion of the works.

To those of us who follow such things, this should all come as no surprise. The group ended 2011 with recognition in the form of Estates Gazette's Office Property Company of the Year, beating off strong and varied competition from the likes of Land Securities and British Land. The judges felt the group had "emerged from the recession in a strong position with an exciting pipeline of projects".

In similar fashion, at the end of 2012 Derwent was named the 'most admired company' in the commercial property sector Management Today awards.

Derwent attributes such recognition to its commitment in "investing in improving areas in the West End and City borders, offering tenants great space, in well-designed buildings at reasonable rents in the appealing locations of the future".

Derwent got off to an impressive start in 2012, with fourteen lettings in the first quarter. Interestingly, by income 55% of Derwent's transactions were pre-lets, including an impressive 125,162 sq ft at 1 Page Street, SW1, to Burberry in February, the largest West End pre-let of 2012. This was taken on a twenty year lease and Burberry will pay £5.3 million per annum with £50.00 per sq ft over the top three floors and £45.00 on a typical mid floor level.

Another large pre-let was the lower ground and ground floors at 1 Stephen Street, W1 in March; a total of 15,400 sq ft to BrandOpus LLP on a ten year lease, which therefore means the design agency has tripled its occupation in Derwent's porfolio.

Other major lettings include that of the refurbished 10-4 Pentonville Road, N1 in October, a total of 48,455 sq ft to Ticketmaster on a twelve year lease at £42.50 per sq ft and also a further 11,162 sq ft letting in November to existing tenant Grey Advertising Limited at £45.00 per sq ft at The Johnson Building, EC1.

On this note, you will not be surprised to hear that 27% of Derwent's 2012 lettings were to Technology Media and Telecommunications (TMT) companies, increasing to 68% if wider creative industries are also included. Indeed, Derwent makes special reference to a mid year visit to Silicon Valley to meet tenants considering expanding to the UK and to see the occupational requirements. This proactive engagement with the market and understanding of potential occupiers must surely by one of the factors that has seen their reputation soar.

Suggesting further confidence of the sector, Derwent has announced plans to bring forward the construction of the sixteen storey development at White Collar Factory, EC1 in the heart of Tech City, Old Street, on a purely speculative basis. This will comprise approximately 280,000 sq ft of space.

2013 sounds equally as bright then for Derwent in terms of both lettings and construction. This is highlighted by the proposed 323,00 sq ft of office space at Saatchi & Saatchi's current offices 80-84 Charlotte Street, W1, which will be Derwent's largest ever development and where construction is expected to begin in 2013.

You can view the full Annual Results here.

See below for a map of Derwent's major holdings!

By Claire Poole and Konrad Kowalski

Most Active Agents of 2012

2013-03-01T10:47:38Z

The most anticipated results of the year are in, deals across the length and breadth of the UK have been tabulated to reveal the winners and losers of 2012. A somewhat lacklustre year, whilst the wider economy stabilised, growth failed to follow suit. Still, there was enough action to break all previous records on deal submission and announce that the overall winner, based on the number of transition across all sectors and regions was Jones Lang LaSalle.

The full results can be accessed here

Six year reigning champions Lambert Smith Hampton were knocked of the top spot last year by the JLL and King Sturge merger, and it seems JLL show no signs of giving up the lead, with CBRE in second place. Our own research at London Offices reflects the same relationship, with the London Office Market Analysis report putting JLL at the top of the Cental London office leagues, followed by CBRE for number of transactions. Of course if we look at a more local level, the results become more interesting, out of twelve regions in the UK, only four of the most active agents are national players, with smaller, local companies, rising to the fore. Parallels can be drawn between this and the London sub-markets, with the City Fringe traditionally dominated by smaller agents, this years winner being Hatton Real Estate.

The most active agents can be viewed by region on the map below, click the dots for quotes.

75% of London boroughs seeks exemption from change of use proposals

2013-02-27T11:23:35Z

New rules allowing the conversion of office blocks to residential use without the need for planning permission have been met with hostility from London borough councils.

According to research by CBRE, only four London boroughs are not seeking an exemption. They are Greenwich, Croydon, Barking & Dagenham and Kingston. A further four boroughs (Redbridge, Sutton, Waltham Forest and Brent) were still in discussions by last Friday's deadline.

This means 25 councils have applied for an exemption. The Department for Communities and Local Government has warned that council's must demonstrate that the policy will cause 'substantial adverse economic consequences at the local level which are not offset by the positive benefits the new right would bring'.

London mayor Boris Johnson has also waded in to the debate with attempts to protect key business areas of the capital from change of use plans. The GLA has said it will seek an exemption for London's Central Activities Zone, the city's enterprise zones and the Tech City area around Shoreditch/Old Street.

The government believes the new permitted development rights will boost economic growth and help alleviate the shortage of housing. Therefore, they are unlikely to permit many exemptions, leaving a lot of local authorities very disappointed.

The new rules come into force this spring for an initial period of three years.