I’ve made a concerted effort in this column over the last few months not to mention the TMT sector too much. The sector seems to receive more column inches than most other topics, so I have tried to give readers something different to think about. However, this month my hand has been forced and it is back.
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I’ve made a concerted effort in this column over the last few months not to mention the TMT sector too much. The sector seems to receive more column inches than most other topics, so I have tried to give readers something different to think about. However, this month my hand has been forced and it is back. TMT returns to this page because of a comment by Deloitte Real Estate partner Stephen Peers during the writing of our Q3 London Offices Market Analysis, when he noted that in Q3 there was a trend for space to be taken in buildings not yet ready for occupation. I decided to check whether that was the case – it was. Then I investigated what was driving this trend. Looking at data back to 2006, we see that preletting dropped off from 2007 to Q3 2011, with the exception of the final two quarters of 2010, with three deals responsible: Bloomberg at Bloomberg Place, UBS at 5 Broadgate and BNP Paribas at King’s Cross Central. From Q3 2011 to Q4 2012 there was a noticeable uptick in preletting, which averaged 368,000 sq ft per quarter for the period, but since the beginning of this year, the quarterly average has more than doubled to 914,000 sq ft per quarter. And the cause? TMT. The line on the chart below shows how much of the total preletting figure each quarter (demonstrated by the bars) can be attributed to the TMT sector. Over the last three quarters, 73% of preletting in the Central London office market is a result of take-up by TMT companies. Make no mistake, these are not the tech start-ups that may spring to mind when TMT is mentioned; these are global companies – the likes of Google, Amazon, Saatchi & Saatchi and Ogilvy & Mather – taking high-end space that makes a statement in London. The TMT sector is vacuuming up London’s new-build space before it is even complete, but at the same time the insatiable demand from the industry is just the stimulus that the capital needs ?to build more.
