West London Property – Market Update Q3 2018

Market Update Q3 2018 - Commercial Property West London - Frost Meadowcroft

Welcome to the third update of 2018, giving you an up-to-date view of commercial property in West London. Featured in this issue: Take-Up; Planning granted for Newcombe House, Notting Hill; Market Summary & Conventional Leasing’s response to Co-Working

MARKET SUMMARY – West London Property

TAKE-UP

WEST LONDON PROPERTY Q3
This quarter Pernod Ricard signed for a huge 85,000 sq ft section of Building 7 at Chiswick Park. This is the newest building at the back of the park overlooking the railway. A new pedestrian walkway linking the office Park to Chiswick Park Station will provide access for Pernod employees enabling them to use the Ealing Broadway branch of the District Line and walk from Chiswick Park Station in 4 minutes rather than having to use Gunnersbury Station on the Richmond line in front of Chiswick Park. This will also allow access to the Elizabeth Line (Crossrail) when it is finished at the end of 2019 as Ealing will be a station on that line.

Market Summary, Lettings to Pernod Richard, Building 7, Chiswick Park and Notting Hill to Ove Energy
Market Summary, Lettings to Pernod Richard, Building 7, Chiswick Park and Notting Hill to Ove Energy

There has been an increase in pre-lets this quarter as Ovo Energy agreed to lease 21,000 sq ft for £65 per sq ft in Frost Meadowcroft client Frogmore’s scheme at 69 Notting Hill Gate on the south side of the road. Designed by Squire & Partners architects the new refurbishment will be completed in March 2019. Hellman & Friedman have also pre-let the 20,500 sq ft top two floors of Derwent’s Brunel Building in Paddington Basin, W2, following on from Sony Picture’s pre-let there last quarter.

Kier & Investec's Kings House, letting to Oracle Racing
Kier & Investec’s Kings House, letting to Oracle Racing

In Hammersmith Frost Meadowcroft client Kier and Investec have secured two lettings at King’s House, 174 Hammersmith Road to consultancy 4C Associates and Oracle Racing for the top floor at £55 per sq ft. Oracle Racing is a yacht racing team supported by Oracle founder Larry Ellison.
Further north in White City, Autolus, the biotech company and Attention Seekers, a creative agency took 33,000 sq ft and 4,000 sq ft respectively at West Works, joining Arts Alliance, Jellycat and ITV at the Stanhope, AIMCo and Mitsui Building. Nearby, Workspace purchased the 150,000 sq ft Shepherd’s Building from Frost Meadowcroft client Helical for £125m (£833 per sq ft), giving an initial yield of 4.8%.

AT A GLANCE SUPPLY & RENT – West London Property

OFFICE SUPPLY
COMPARING Q1 to Q3 2018

  • Hammersmith & Fulham
    down from 9.9% to 7.4%
  • RBK&C down from 2.5% to 2.4%
  • Chiswick down from 11.3% to 9.3%
  • Paddington up from 3.4% to 8.4%
  • Wandsworth up from 2.2% to 2.6%

London generally
down from 7.3% to 6.9%

OFFICE RENTS

  • Hammersmith & Fulham
    range from £40 to £56 per sq ft
  • Chiswick
    range from £35 to £52.50 per sq ft
  • Nine Elms (LB Wandsworth)
    best rent £55 per sq ft
  • Paddington
    range from £60 to £75 per sq ft
  • Notting Hill
    range from £59 to £65 per sq ft

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in NOTTING HILL – West London Property

Planning Granted for Newcombe House, Notting Hill
CGi’s of Newcombe House, Notting Hill scheme

 

Sadiq Khan has approved the replacement of Newcombe House on the junction of Notting Hill Gate and Kensington Church Street with a new residential-led but mixed-use scheme designed by Urban Sense Consultant Architects for Brockton Capital and Landid.
The Mayor of London gave consent to the redevelopment which was twice turned down by councillors at the Royal Borough of Kensington and Chelsea.
Khan called in the proposals earlier this year and secured an increase from 46 to 55 homes, of which 23 will now be affordable, rather than the 9 under the previous proposal.
In addition to housing, the development will include two new office properties, a medical centre, step-free access to the nearby Notting Hill Gate Tube station and a public square with pedestrian and cycle access.

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CONVENTIONAL LEASING responds to CO-WORKING – West London Property

In the last 2 years, more and more co-working companies have entered the west London office property market to compete with the existing serviced offices and conventional landlords. Brands such as WeWork, The Office Group, Work.Life, Huckletree, Workspace and Spaces have all acquired buildings in RBK&C, Hammersmith & Fulham and Chiswick.

co-working Office comparisons Logos
However perhaps due to the prevalence of estates already suited to the creative and media sector, such as Great Western Studios, Coda Studios and now Charlotte Terrace, conventional leasing seems to be responding to the challenge, mainly by offering more flexible leases and fixing costs without the need for profit or slogans in reception! Tenants are now in a very good position to obtain improved access to conventional leases without the long commitment they would have needed, say 5 years ago and can still have their own identity, pay less rent and obtain the privacy not available in co-working. See the below tables setting out the advantages and disadvantages of co-working and conventional leasing’s response locally.

 

Co-Working Offices Compared to Leased Offices