Central London Offices MarketView - Q12010

CB RICHARD ELLIS
MarketView
Central London Offices
Q1 2010
OVERVIEW
•Central London take-up strengthened

Quick Stats Central London transaction levels were above average for the second quarter in
succession. At 4.4m sq ft, take-up for the first quarter was the highest in nearly
Changes from
three years. The City accounted for 50% of Central London take-up as transaction
Q4 09 Q1 09 levels reached a near record 2.2m sq ft, while take-up in the West End and the
Take-up Ï Ï
Docklands was above the long-term average.
Availability Ð Ð •Supply squeeze continued

With strong demand, supply conditions in Central London continued to ease and
Rental Values Ï Ð
ended the quarter at 16.7m sq ft. This pushed vacancy rates lower, the Central
Yields Ð Ð London rate was 6.7%, assisted by falls to the City and the West End rates. By
comparison, the vacancy rate in the other Central London markets edged up
Construction Starts Ð Ð
slightly.
•Prime rents continued to grow

The recovery in prime rents over the last year has been quite remarkable. Rents in
Central London are still 4% lower than a year ago, according to the CB Richard
Ellis prime rent index; however, on a quarterly basis the Central London prime rent
index was 6% higher. These trends are reflected in prime rents which rose over the
quarter to £47.00 per sq ft in the City and £85.00 per sq ft in the West End.
Quarter at a Glance
•Completion levels expected to decline
Near record levels of take-up in With 2009 marking the peak of the development cycle, development completions
the City and above average take- are expected to decline this year with only 4.1m sq ft of developments expected to
complete in 2010, compared with 6.5m sq ft last year. Only 1.3m sq ft of
up in the West End and the
completions are scheduled for 2011, which would make it the lowest level on
Docklands resulted in Central record.
London take-up racing past its
long-term average. Inevitably, the •Transactions total dipped but yield compressed continued
strong tenant demand produced Central London transaction levels at £1.2bn were lower in the first quarter of 2010
compared with the last quarter. However, it was the lack of stock that was the
sharp reductions in supply. As the
primary factor behind the weaker first quarter as strong investor interest pushed
market balance tips towards the yields lower. As a result, prime yields moved to 5.75% in the City and 4.5% in the
landlord, prime rents rose across West End.
all markets while rent free periods
were reduced.
Central London Rent Index Annual Growth
City
40 West End
Central London
30
% Year-on-Year Growth
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a ©2010, CB Richard Ellis, Inc.

Central London Central London Take-up
MarketView Central London Offices
Headlines
Secondhand New Completed Pre-let
•Take-up reached an above average 4.4m sq ft 6.0

•Vacancy rate fell to 6.7%
5.0
•Prime rent index rose 6% over the quarter
4.0
million sq ft
There has been a remarkable turnaround in the
3.0
Central London office market from a year ago.
Take-up for the first quarter was 4.4m which 2.0
compares with 1.1m sq ft for the same quarter last 1.0
year. Some 70% of take-up was of grade A space,
while 58% was secondhand with 37% newly 0.0
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completed space.
The City market has been the main driving force

behind this performance, although take-up in the
West End and Docklands was also above the long-
term average. Sector Structure of Central London Take-up, 2010
Q1
In total there were nine deals over 100,000 sq ft in
Central London in the first quarter. In the largest
3% 5%
deal, Barclays took 346,000 sq ft at 20 Cabot
Square, E14. In the City the largest deals were at Banking & Finance
Drapers Gardens, EC2 where BlackRock took
17% 40% Business Services
270,600 sq ft and Ropemaker, EC2 where
Macquarie took 212,400 sq ft. The largest deal in Manufacturing,
Industrial & Energy
the West End saw the Aegis Group lease 117,400 sq Insurance
ft at 1 Regent’s Place.
Public Sector
Banking and finance accounted for 40% of take-up Professional

12%
which is significantly higher than the long-term Consumer Services &
average of 29%. The next best performing sector Leisure
Computers / Hi-Tech
was professional services which accounted for 17% 3%
of take-up on a par with the sector’s long-term 6%
14%
average. At 14% business services was the third best
performing sector; however, this was below its long-
term average of 18%.
The high level of take-up, which has been a feature Central London Availability
of the market in recent months, has been fuelled by
a combination of pent up demand from the credit Secondhand New Completed New Under Construction
crunch as well as some opportunistic demand taking
advantage of low rents and generous incentives. 30
Looking further ahead, demand will be tied to 25
economic prospects. The outlook for 2010 is quite
mixed. Although the recession ended in the last 20
million sq ft
quarter of 2009 when output grew by 0.4%, the best 15

outlook for the year ahead is growth of around 2%.
The UK is expected to grow more rapidly thereafter. 10
Although it will be some time before the 5
improvement in the economy feeds through to
employment and eventually to occupational 0
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demand.
Q1 2010
Page 2
©2010, CB Richard Ellis, Inc. a
Vacancy Rate Annual: Ready-to-occupy Space The strong tenant demand has led to the absorption
of space, particularly of new space, resulting in
significant reductions in availability. Central London
Central London 6.7 availability fell to 16.7m sq ft from 18.5m. The
18 City 7.3
majority of the space on the market (69%) is
West End 6.4
16
secondhand, while only 8% is early marketed space
14 under construction, which is the lowest since 2005.
12
10 Supply levels translate into a Central London
%
8 vacancy rate of 6.7% and compares with a recent

6 peak of 7.7%. The Docklands has the highest rate at
4 8.6%. These rates are some way off the peaks set
2 during previous market downturns, particularly
0 during the 1990s recession.
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There are currently 15 units available over 100,000
sq ft in Central London. The largest unit is Central St
Giles at 385,200 sq ft which is due to complete in
the second quarter and The Walbrook is the largest
Central London Offices Under Construction
completed building at 381,000 sq ft.
There is currently 4.4m sq ft under construction in

Under Construction Available Committed
Central London which is the lowest total since 2004
16 – 2.9m sq ft of which is available. In the first quarter,
14 1.3m sq ft completed of which 52% was speculative.
12 The largest of these completed buildings was The
m illio n sq ft
10 Walbrook (381,000 sq ft) and the second largest

8 was 2 Kingdom Street (247,900 sq ft).
6
4 The development pipeline peaked last year with
2 6.5m sq ft of completions in Central London and this
0 year completion levels are expected to reach 4.1m
sq ft, before falling to 1.3m sq ft in 2011, which will
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be the lowest recorded level.
As the supply and demand imbalance has intensified

over the last few months, landlords have reacted by
increasing rents. This has been reflected in rises in
Key Transactions, 2010 Q1
prime rents across Central London. City prime rents
rose to £47.00 per sq ft and West End prime rents to
Occupier Sq ft Address £85.00 per sq ft.
On a broader level, Central London prime rents rose

Barclays Bank 346,000 20 Cabot Square,
6.0% over the quarter, according to the CB Richard
E14
Ellis prime rent index, although prime rents were still
BlackRock 270,600 Drapers Gardens 4.0% lower compared with a year ago. City prime
EC2 rents registered the largest quarterly increase with a
7.7% rise. Midtown and Southbank were the only
Macquarie 212,400 Ropemaker, EC2 markets to record annual increases in prime rents –
each market saw a 1.4% increase compared with a
Pinsent Masons 181,700 30 Crown Place, year ago.
EC2
LOCOG 135,300 10 Upper Bank Rent-free periods on a 10-year lease in the City
Street, E14 decreased to 27 months from 30-33 months last
quarter, while rent frees in the West End moved to
18-21 months from 21 months.
Q1 2010
Page 3
©2010, CB Richard Ellis, Inc.
City City Take-up
Headlines
•Take-up hit 2.2m sq ft
2.5
•Availability continued to tighten
•Prime rents rose to £47.00 per sq ft 2.0
City take-up for the quarter reached 2.2m sq ft,
million sq ft
1.5
which was the second highest total on record,
1.0
bettered only by the third quarter of 2000 when
take-up was only 43,000 sq ft higher. Take-up was 0.5
30% higher than last quarter and nearly six times
higher than the same quarter last year which was the 0.0
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worst on record. Take-up has been above the long-
term average of 1.2m sq ft for the last three
quarters.
Demand for newly completed space accounted for

Sector Structure of City Take-up, 2010 Q1
the majority of take-up in the first quarter,
representing 57% of take-up while secondhand
space accounted for 36%, with pre-lets accounting
for the remainder. Reflecting this, grade A space 2% 2%
Banking & Finance
accounted for 80% of the quarter’s take-up.
Business Services
There were 10 deals over 50,000 sq ft during the 25%
Manufacturing, Industrial
first quarter, of which two were over 200,000 sq ft. & Energy
In the largest deal of the quarter, BlackRock took Insurance
270,600 sq ft at Drapers Gardens, EC2, this was
Public Sector
followed by Macquarie leasing 212,400 sq ft at 55%
Ropemaker, EC2. There were three additional deals 2% Professional
which were over 100,000 sq ft.
6% Consumer Services &
Leisure
As a number of large deals dominated take-up, this 2% Computers / Hi-Tech
translated through to take-up by sector. Banking and 6%
finance accounted for 55% of take-up, which was
well ahead of the long-term average of 35%. This
was followed by the professional sector with 25%
City Availability
compared with a long-term average of 20%. Take-
up from other business sectors was relatively weak.
One consequence of the very much higher level of

Secondhand New Completed New Under Construction
demand over the last three quarters and the very
14
strong last quarter is that the amount of space under
offer at the end of March fell to 0.9m sq ft, the 12
corresponding figure last quarter was 1.6m sq ft. 10
Evidence that the second quarter will be significantly
million sq ft
8
weaker than the first.
6
4
Strong demand and a limited amount of new space
coming on to the market has pushed supply lower 2
for the third quarter in succession. Availability was 0
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6.6m sq ft at the end of the first quarter, which was

2.5m sq ft lower than the peak set in the second
quarter of last year. The availability of all types of
space fell, particularly secondhand. One of the most
striking features of recent trends is the small amount
of available space currently under construction. This
fell to 758,300 sq ft, its lowest level since the second
quarter of 2006.
Q1 2010
Page 4
City Development Pipeline The City availability rate has fallen in line with the
drop in supply. At its peak, the rate was 12.9% in the
Completed Under Construction Let/Under Offer
first quarter of 2009, but it had declined to 10.2% by
last quarter and ended the first quarter of 2010 at
Under Construction Available Proposed Available 8.9%. The last time availability reached this rate was
two years ago. The vacancy rate stood at 7.3% at
7
the end of quarter which was down significantly on
6
5
the 8.5% recorded last quarter.
million sq ft
4
3
There were eight units over 100,000 sq ft available
2
at the end of March, of which four were newly
1 completed and the rest were under construction. The
0 Walbrook, EC4 (381,200 sq ft), which completed in
February, is the largest available unit on the market
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and 200 Aldersgate, EC1 (354,400 sq ft) is the only
other unit over 300,000 sq ft. There are two other
buildings over 200,000 sq ft: New Change, EC4
(207,200 sq ft) and St Botolphs, EC3 (237,700 sq
ft).
Three schemes completed during the first quarter,

Prime City Rent Index (May 1988 = 100) totalling 523,000 sq ft, which accounts for 24% of
the development pipeline expected to complete in
2010. With development completions peaking last
120 year at 3.2m sq ft, only 2.2m sq ft is scheduled to
110 complete this year. However, completions will reduce
100 rapidly thereafter with only 0.9m sq ft expected to
90
complete in 2011. There is currently 2.5m sq ft
under construction in the City with 0.9m committed.
80
70
In a sign of the market’s strength, rents have
60 increased and incentives have become less generous
50 over the quarter. At the end of 2009, City prime
40 rents were £43.50 per sq ft, rising to £47.00 per sq
ft during the quarter.
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At the broader level, rents also strengthened over the

quarter according to the CB Richard Ellis City prime
Key City Transactions, 2010 Q1
rent index which recorded a 7.7% quarterly increase,
although the rent index was still 0.6% lower on a
Occupier Sq ft Address annual basis.
BlackRock 270,600 Drapers Gardens, At the end of the first quarter, the rent free period on
EC2 a 10-year lease was 27 months compared with 30-
33 months the previous quarter.
Macquarie 212,400 Ropemaker, EC2
Pinsent Masons 181,700 30 Crown Place,

EC2
Stephenson 128,500 1 Finsbury Circus,
Harwood EC2
Royal Bank of 101,900 Riverbank House,

Canada EC4
Q1 2010
Page 5
West End West End Take-up
Headlines
• Take-up reached highest level since 2007
• Availability now 24% lower than 2009 peak Secondhand New Completed Pre-let
• Prime rental values showed 5% rise over quarter 1.6
1.4
The strong momentum in take-up seen in the final 1.2
quarter of last year continued in the first three 1.0
million sq ft
months of 2010. West End take-up reached more 0.8
than 1.3m sq ft in quarter one, 28% higher than the
0.6
long-term quarterly average and nearly three times
0.4
more than the level recorded in the same period last
0.2
year.
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Take-up in the North of Oxford Street East, Euston
and Bloomsbury markets was the strongest relative
to the long-term trend this quarter. In contrast,
transactions in North of Oxford Street and
Knightsbridge were relatively muted.
Sector Structure of West End Take-up, 2010 Q1
The proportion of space acquired this quarter that
was secondhand was in line with trend levels while
the amount of newly completed space was very high 7% Banking & Finance
11%
at 324,500 sq ft. These transactions for new space 8%
Business Services
were comprised of two of the quarter’s biggest deals
32%
at 1&2 Regent’s Place. While the demand for early 6% Manufacturing,
marketed space remains very weak, there was one Industrial & Energy
key deal where much of the St Martin’s Courtyard Public Sector
scheme, due for completion in the third quarter, was
acquired. Professional
19%
The presence of larger deals was also important this Consumer Services &
quarter with 10 deals in excess of 20,000 sq ft; Leisure
compared to nine in the first three quarters of 2009. Computers / Hi-Tech
Business services were the largest driver of demand 17%
this quarter with a third of transactions deriving from
this sector. However, the banking and finance
sector, traditionally a key driver of demand, was West End Availability
relatively weak with just 11% of transactions. Both
the public sector and manufacturing, industrial &
energy accounted for high levels of take-up
compared to their long-term averages.
9
There remains a very high level of space under offer 8
in the West End at 981,500 sq ft; compared to a 7
long-term average of 781,000 sq ft, which points 6

million sq ft
towards a strong second quarter. This includes a 5

4
further 240,500 sq ft of newly completed space.
3
2
The supply of available space in the West End
1
continued its sharp descent in the first three months
0
of the year, falling almost 10% to 6.3m sq ft. This
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represents a 24% decline since the market peak in

quarter two 2009 and brings availability back to the
levels seen in 2008. West End supply levels are now
just 15% above the long-term average – with much
of this located in non-core markets.
Q1 2010
Page 6
West End Development Pipeline At 4.8m sq ft, the supply of secondhand space
remains elevated relative to the long-term trend of
Completed Under Construction Let/Under Offer 3.9m sq ft; however, this has fallen sharply since
Under Construction Available Proposed Available quarter two last year and the amount of
secondhand space returning to the market is below
average.
2.5
The amount of newly completed space has started

2
to fall back with 881,000 sq ft currently available,
although there are a number of large schemes still
million sq ft
1.5
to complete in coming months. It is the supply of
1 space currently under construction where levels are
very tight. The 576,000 sq ft of early marketed
0.5 space is already 26% below trend, and there is very
little development anticipated in 2011 meaning this
0
will continue to fall sharply as schemes complete.
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Reflecting the falling supply, and despite more than
300,000 sq ft of completions this quarter, the West
End vacancy rate fell marginally to 6.4% from 6.8%.
Prime West End Rent Index (May 1988 = 100) With a large amount of space due for completion
by the end of the year, this rate is unlikely to fall
significantly until the end of the year. However,
from this point, it will likely start to decline rapidly
200
as development completions all but cease.
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160 Development completions are expected to reach

140 1.1m sq ft in 2010, although 30% of this is already
120 committed. Three new schemes completed in the
100 first quarter of 2010, the largest being Two
80 Kingdom Street, which was partially let, where
60 172,400 sq ft remains available.
40
By the end of the year a further seven schemes are
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due for completion. The largest is Central St Giles

with 385,200 sq ft for delivery in the second
quarter. By 2011 however, development
completions will be very limited, there is currently
Key West End Transactions, 2010 Q1 nothing under construction and just 110,000 sq ft is
confirmed to proceed. From 2012 it is expected
Occupier Sq ft Address that development completions will start to rise
slowly.
Aegis Group 117,400 1 Regent’s Place
After the marginal increase recorded on the West
End prime rent index in the final three months of
Royal College of 107,600 Euston Xchange 2009, there was a much stronger 4.9% rise
General Practitioners recorded this quarter. While overall, the rent index
Gazprom 89,400 2 Regent’s Place remains 7.3% lower than this time last year, the
rebound has been much stronger and quicker than
Robert Walters 42,900 St Martin’s Courtyard previously anticipated.
Following four consecutive quarters at £80.00 per

Carpmaels & Ransford 34,000 1 Southampton Row
sq ft, the West End top prime rent increased to
£85.00 per sq ft in the first quarter. Similar rises
were recorded across all West End submarkets.
Also reflecting the improved market sentiment, rent
free incentives on a 10-year lease came in slightly
to 18/21 months in the Mayfair & St James’s core
and 21/24 months elsewhere.
Q1 2010
Page 7
Midtown / King’s Cross Midtown Take-up
Take-up for the first quarter of 2010 totalled

218,400 sq ft – a 43% decline from the end of
2009. As a result, demand was below the long term
800
average of 326,000 sq ft. The majority of space let
700
during the quarter was secondhand accounting for
600
87% of total transactions whilst the remainder was
thousand sq ft
newly completed. The amount of space under offer 500
has increased over the first three months of the year 400
to reach 287,000 sq ft – a 47% uplift from last 300
quarter 2009. 200
100
Law firm Lovells achieved the largest deal of the first 0
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quarter taking 42,000 sq ft at Meridian House,
34/35 Farringdon Street, EC4. This was followed by
the charity Absolute Return for Kids which acquired
14,000 sq ft at 65 Kingsway, WC2. The professional
sector recorded the highest proportion of lettings for
the first quarter with 54% of all deals done. Business
Midtown Availability
services and the public sector each accounted for
16% of total take-up.
Availability in Midtown continued to contract further, 3.0
albeit gradually, to 1.7m sq ft at the end of March
2.5
from 1.8m sq ft the previous quarter. Supply is
edging closer to the long term average of 1.6 million 2.0
million sq ft
sq ft. The majority of space available is secondhand 1.5

with 17% newly completed and 3% early marketed.
1.0
The largest unit of available space is at Nexus Place, 0.5

Farringdon Street, EC4 where 86,000 sq ft is on the 0.0
market from Scottish Widows/ Teachers Assurance
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Society. No schemes completed during the first
quarter, however, looking ahead there is 292,000
sq ft set to complete this year, although 83% is
already committed.
Southbank Take-up
Over the quarter, the vacancy rate increased to 7.0%
from 6.8% at the end of 2009.
The Midtown top prime rent increased to £47.00 per Secondhand New Completed Pre-let
1,200
sq ft – level with the City market – from £42.50 per
sq ft with rent free periods reducing. The CB Richard 1,000
Ellis Prime Rent Index showed an increase of 7.1%

thousand sq ft
800
quarter on quarter and 1.4% annually. 600
400
Southbank
200
Take-up increased to just under 100,000 sq ft for 0

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the first quarter of 2010 – a two-fold increase from

the previous quarter. There was a lack of pre-lets
during the quarter whilst secondhand space
accounted for the majority of deals at 72% and
lettings for newly completed space totalled 28%. The
largest deal of the quarter was by Comic Relief at
Camelford House, 87/90 Albert Embankment, SE1.
Under offers have increased incrementally to 72,400
sq ft from 62,300 sq ft at the end of 2009.
Q1 2010
Page 8
Southbank Availability
Availability in the Southbank increased to 568,700

sq ft from 478,400 sq ft at the end of 2009. The
Secondhand New Completed New Under Construction majority of space available is secondhand. During
1.6 the first quarter of 2010 PriceWaterhouseCoopers’
1.4 committed scheme at 7 More London Riverside, SE1
1.2 (450,000 sq ft) completed. Beyond this, the
1.0 development pipeline is empty over the next couple
million sq ft
0.8 of years apart from ‘The Shard’ which is currently

0.6 under construction and due to complete in 2012 –
0.4 total size 586,500 sq ft, of which 193,000 sq ft is
0.2 pre-let.
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The vacancy rate increased to 3.2% at the end of the
first quarter from 2.7% in December 2009 as the
level of ready-to-occupy space increased over the
first three months of the year.
Southbank prime rents have increased to £42.50 per

Docklands Take-up sq ft from a steady £40.00 per sq ft in 2009 and
incentive periods have declined. The CB Richard Ellis
prime rent index showed a 5.5% quarterly increase
and a 1.4% rise annually.
3,000
Docklands
2,500
thousand sq ft
2,000 Following very weak take-up through 2009,

1,500 transactions in the Docklands reached an above
trend 522,300 sq ft in the first quarter of the year.
1,000
Driven largely by Barclays Bank’s acquisition of
500 346,000 sq ft at 20 Cabot Square. In another major
0 deal, LOCOG acquired more space in the
Docklands, with 135,300 sq ft at 10 Upper Bank
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Street. Secondhand space accounted for all leasing

activity.
Despite the strong quarter, under offers remained at

Docklands Availability an above trend 361,800 sq ft which includes
309,100 sq ft of newly completed space.
For the first time this cycle, total availability declined

Secondhand New Completed New Under Construction to 1.6m sq ft – down 14% on the quarter. The
2.5 supply of secondhand space is very high at 1.1m sq
ft. In contrast, the amount of newly completed
2.0
space is only marginally above the long-term
average and there is no space under construction
million sq ft
1.5
compared to a long-term average of 188,100 sq ft.
1.0
0.5 With the shift of some secondhand space becoming

available for immediate occupation, there was a rise
0.0 in the Docklands vacancy rate to 8.6% from 8.0% at
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2007 Q3
2008 Q1
2008 Q3
2009 Q1
2009 Q3
2010 Q1
the end of 2009. This remains significantly lower

than the levels of vacancy reached during the
dot.com downturn when rates were over 10% for
three years.
There was a slight rise in the Canary Wharf prime

rent to £36.50 per sq ft from £35.00 per sq ft in
2009. Similarly, the Docklands prime rent index
Q1 2010
recorded a 4.2% increase over the quarter –

although it remains 4.4% lower than last year.
Page 9
Investment Central London Investment Transactions
Headlines
Total 4 Quarter Average
7
•Investment levels reached £1.2bn
•Overseas investors still dominate market 6
•Prime yield continued to compress 5

4
£ Billion
Despite strong investor demand, a lack of stock 3
restricted investment volumes in the first quarter to 2
£1.2bn. This is the lowest total since the first quarter 1
of last year and is 42% lower than last quarter. With 0
substantially more stock having come on to the
2000 Q3
2001 Q1
2001 Q3
2002 Q1
2002 Q3
2003 Q1
2003 Q3
2004 Q1
2004 Q3
2005 Q1
2005 Q3
2006 Q1
2006 Q3
2007 Q1
2007 Q3
2008 Q1
2008 Q3
2009 Q1
2009 Q3
2010 Q1
market in the last few months, transactions levels are
expected to increase in the second quarter.
In the largest deal of the quarter, 5 Churchill Place,

E14 was sold to an overseas investor by the Canary
Wharf Group for £208m, reflecting a yield of 5.85%. City and West End Prime Yields vs Swap Rates
There were two other deals over £100m: M1 Real
Estate acquired Victoria House, 37-63 Southampton
Row, WC1 for £175m, off a yield of 6.5% and HIH,
the German open-ended fund, bought 100 New City West End 5 Year Swap Rate
Bridge Street, EC4 from DEGI for £110m, reflecting 7
6.5
a yield of 6.15%. 6
5.5
Overseas buyers are still very active in the market, 5
encouraged by the weakness of sterling and low % 4.5

4
interest rates. Foreign buyers accounted for 60% of 3.5
the first quarter’s transactions, compared with 73% 3
2.5
during 2009. Overseas investors have been most 2
active in the acquisition of buildings in excess of
2001 Q1
2001 Q3
2002 Q1
2002 Q3
2003 Q1
2003 Q3
2004 Q1
2004 Q3
2005 Q1
2005 Q3
2006 Q1
2006 Q3
2007 Q1
2007 Q3
2008 Q1
2008 Q3
2009 Q1
2009 Q3
2010 Q1
£100m. Middle Eastern and North African, and
German investors maintained their strong interest in
the Central London market – they accounted for
40% and 12% of total investments respectively. By
contrast, domestic investors were more active in the
smaller lot sizes and accounted for 40% of all
transactions.
Investment Transactions By Purchasers, 2010 Q1
Prime yields continued to recompress. Having started
the quarter at 5.0%, West End prime yields ended
the quarter at 4.5%, while City yields moved to 5%
18%
UK Property Companies
5.75% from 6.0% over the same period. 12% UK Institutions
Investment trends in the City mirrored those in the UK Other

3%
Central London market. Investment transactions UK Private
totalled £330m in the City, which like Central 9%
London was 42% lower than the previous quarter. USA/Canada
HIH’s purchase of 100 New Bridge Street, EC4 was Middle East/Africa
2%
the largest single transaction and this pushed
German investors share of total City transaction by China
volume to 48%. 10%
German
40% 1% European Other
In the West End, investment transactions totalled
£531m for the first quarter which was only 6% down
on the previous quarter. The largest West End deal
was the £175m purchase of Victoria House, 37-63
Southampton Row, WC1. This deal took the share of
West End investments made by overseas investors to
Q1 2010
61%.
Page 10
AVAILABILITY TAKE-UP DEVELOPMENT SUPPLY PIPELINE
Total Expected
Q1 Q4 Vacancy Q1 Q4 Completions Under Completions
2010 2009 Rate 2010 2009 2009 Construction 2010
m sq ft m sq ft % m sq ft m sq ft m sq ft m sq ft m sq ft
City New 2.83 3.24 1.42 0.77 Available 0.88 1.62 1.27
Secondhand 3.78 4.23 0.78 0.91 Let/Under Offer 2.28 0.85 0.90
Total 6.61 7.47 7.30 2.19 1.68 3.16 2.47 2.17
West End New 1.46 1.88 0.37 0.28 Available 0.65 0.76 0.77
Total 6.23 6.89 6.40 1.32 1.18 1.44 0.96 1.10
Midtown New 0.33 0.50 0.03 0.20 Available 0.24 0.15 0.05
Total 1.68 1.78 7.00 0.22 0.38 0.38 0.39 0.29
Southbank New 0.04 0.04 0.03 0.02 Available 0.00 0.39 0.00
Total 0.57 0.48 3.20 0.10 0.05 0.09 0.58 0.45

Docklands New 0.54 0.69 0.00 0.00 Available 0.00 0.00 0.00
Total 1.60 1.86 8.60 0.52 0.27 1.35 0.00 0.00

Central London New 5.20 6.34 1.84 1.27 Available 1.77 2.92 2.09
Total 16.69 18.49 6.70 4.36 3.56 6.42 4.40 4.01
CENTRAL LONDON: MAJOR INVESTMENT DEALS INVESTMENT TRANSACTIONS

Purchaser £ billion £ billion
Q1 2010 Q4 2009
City UK Purchasers 0.10 0.38

5 Churchill Place, E14 Private Investor 0.208
Overseas 0.20 0.14

Victoria House, Southampton
M1 Real Estate 0.175 Total 0.30 0.52
Row, WC1
West End UK Purchasers 0.38 0.33

100 New Bridge Street, EC4 HIH 0.110
Overseas 0.15 0.24

CENTRAL LONDON: NEW UNDER CONSTRUCTIONS
Total 0.53 0.57
Status Sq ft
Midtown UK Purchasers 0.15 0.00
No. 3 Savile Row, W1 Speculative 15,000
Overseas 0.00 0.05
Edison House, Old Marylebone Road, W1 Speculative 24,000 Total 0.15 0.05
Southbank UK Purchasers 0.01 0.03

CBRE RENTAL INDEX GROWTH
Overseas 0.00 0.00
Q-on-Q Y-on-Y Prime Rent
Total 0.01 0.03
City 7.7% -0.6% £47.00 Central London UK Purchasers 0.66 0.73
West End 4.9% -7.3% £85.00
Overseas 0.56 1.35
Midtown 7.1% 1.4% £47.00
Southbank 5.5% 1.4% £42.50 Total 1.22 2.08

Q1 2010
Page 11
© 2010 CB Richard Ellis Limited
CENTRAL LONDON BUSINESS TEAM RESEARCH & CONSULTING TEAM
For more information regarding the

MarketView, please contact:
MANAGING Adam Hetherington PETER DAMESICK
DIRECTOR Peter.Damesick@cbre.com
Central London Research
OFFICE Digby Flower – Central London KEVIN McCAULEY
AGENCY Mark Slim – City Kevin.McCauley@cbre.com
Emma Crawford – West End
Dan Roberts – Canary Wharf/City IAN KISSANE Kevin McCauley
Ian.Kissane@cbre.com
Director, Central London Research
INVESTMENT Mike Edwards – Central London
Rob Silvester – City GARY MARTIN CB Richard Ellis
David Green – West End Gary.Martin@cbre.com
St Martin’s Court
PROFESSIONAL Colin Manders – Central London ANNA AMIN-KEOGH
10 Paternoster Row
SERVICES Geoffrey Dale – City Anna.Amin-Keogh@cbre.com
Mark Penson – City London EC4M 7HP
Ben Coffin – West End
t: +44 20 7182 3620
DEVELOPMENT Adam Hetherington – Central London
e: kevin.mccauley@cbre.com
SERVICES Adrian Bunnis – City
Peter Burns – West End
Matthew Black – East London
TENANT ADVISORY Stewart Smith
RESIDENTIAL Jonathan Seal
Submarkets Map
© Crown Copyright. All rights reserved. CBRE licence number: 100019184. Ordnance Survey.
Disclaimer 2010 CB Richard Ellis

Information herein has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have
not verified it and make no guarantee, warranty or representation about it. It is your responsibility to independently
confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only
and do not represent the current or future performance of the market. This information is designed exclusively for use by
CB Richard Ellis clients, and cannot be reproduced without prior written permission of CB Richard Ellis.© Copyright 2010
CB Richard Ellis
CB Richard Ellis is the market leading commercial real estate adviser worldwide - an adviser strategically dedicated to
providing cross-border advice to corporates and investment clients immediately and at the highest level. We have 400
offices in 58 countries across the globe, and employ 24,000 people worldwide. Our network of local expertise, combined
Q1 2010
with our international perspective, ensures that we are able to offer a consistently high standard of service across the
world. For full list of CB Richard Ellis offices and details of services, visit www.cbre.com
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CB RICHARD ELLIS

•Central London take-up strengthened

Availability Ð Ð •Supply squeeze continued

•Prime rents continued to grow

a ©2010, CB Richard Ellis, Inc.

•Take-up reached an above average 4.4m sq ft 6.0

The City market has been the main driving force

Banking and finance accounted for 40% of take-up Professional

quarter of 2009 when output grew by 0.4%, the best 15

8 vacancy rate of 6.7% and compares with a recent

There is currently 4.4m sq ft under construction in

10 Walbrook (381,000 sq ft) and the second largest

be the lowest recorded level.

As the supply and demand imbalance has intensified

On a broader level, Central London prime rents rose

City take-up for the quarter reached 2.2m sq ft,

Demand for newly completed space accounted for

One consequence of the very much higher level of

6.6m sq ft at the end of the first quarter, which was

Three schemes completed during the first quarter,

At the broader level, rents also strengthened over the

Pinsent Masons 181,700 30 Crown Place,

Royal Bank of 101,900 Riverbank House,

long-term average of 781,000 sq ft, which points 6

towards a strong second quarter. This includes a 5

represents a 24% decline since the market peak in

The amount of newly completed space has started

160 Development completions are expected to reach

due for completion. The largest is Central St Giles

Following four consecutive quarters at £80.00 per

Take-up for the first quarter of 2010 totalled

sq ft. The majority of space available is secondhand 1.5

The largest unit of available space is at Nexus Place, 0.5

Ellis Prime Rent Index showed an increase of 7.1%

Take-up increased to just under 100,000 sq ft for 0

the first quarter of 2010 – a two-fold increase from

MarketView Central London Offices

0.8 of years apart from ‘The Shard’ which is currently

Southbank prime rents have increased to £42.50 per

2,000 Following very weak take-up through 2009,

Street. Secondhand space accounted for all leasing

Despite the strong quarter, under offers remained at

For the first time this cycle, total availability declined

0.5 With the shift of some secondhand space becoming

the end of 2009. This remains significantly lower

There was a slight rise in the Canary Wharf prime

recorded a 4.2% increase over the quarter –

•Prime yield continued to compress 5

In the largest deal of the quarter, 5 Churchill Place,

encouraged by the weakness of sterling and low % 4.5

Investment trends in the City mirrored those in the UK Other

AVAILABILITY TAKE-UP DEVELOPMENT SUPPLY PIPELINE

Total 6.61 7.47 7.30 2.19 1.68 3.16 2.47 2.17

Total 1.68 1.78 7.00 0.22 0.38 0.38 0.39 0.29

Total 0.57 0.48 3.20 0.10 0.05 0.09 0.58 0.45

Total 1.60 1.86 8.60 0.52 0.27 1.35 0.00 0.00

Total 16.69 18.49 6.70 4.36 3.56 6.42 4.40 4.01

CENTRAL LONDON: MAJOR INVESTMENT DEALS INVESTMENT TRANSACTIONS

City UK Purchasers 0.10 0.38

Overseas 0.20 0.14

West End UK Purchasers 0.38 0.33

Overseas 0.15 0.24