Docklands Office Market
Docklands & E1 Shaken But Not Stirred
Office take up in the Docklands & E1 market has seen a decline since the recorded highs of 2006. In 2008, CoStar Research observed that just 1.1 million sq ft was transacted, a 50% decrease from 2.3 million sq ft in 2007 and 2.6 million sq ft in 2006. This makes the Docklands & E1 market, the hardest hit market in Central London.
The Docklands & E1 postcodes have felt the pinch in 2008, the amount of space coming onto the market has continued to increase steadily to 3.4 million sq ft at the year end, a rise of 13% on the 2007 level of available space. 1.2 million sq ft of this is under construction, half of which is scheduled to be delivered in 2009. More worryingly, there is also 6.1 million sq ft in the development pipeline; supply is clearly set to outstrip demand over the coming years. The Docklands market has always been seen as a pressure valve for the City market, but when the EC postcodes are experiencing over supply, will lower rents attract occupiers into a market that is also burgeoning with space?
Key Deals
The largest single deal was in March 2008, 169,887 sq ft was let by Moody's Investors Service Ltd from the Canary Wharf Group plc on a 15-year lease at £7,729,858 pa, equating to £45.50 psf. In the second half of the year, the largest space taken was at 25 Canada Square, where the TFL Group leased 115,974 sq ft from Citigroup Ltd on a 10-year lease at £46.50 psf.
In November 2008, JP Morgan purchased the 999 year lease on the Riverside South development site for £237 million, to develop their new European HQ, providing approximately 1.9 million sq ft of office space. This commitment is good news for the Docklands but less so for the beleaguered City office market which will see JP Morgan vacate their space as the business consolidates its UK operations. Development has yet to commence.
