The Central London Market Q2 2011

TMT sector belies Eurozone issues and drives demand growth

Overall requirement volumes increased for the second consecutive quarter, driven by a 20% increase in active demand. Take-up was dominated by Service Industries, particulary the TMT sub-sector. Growth in core Grade A rents continued to outperform prime, particulary in the West End increasing 7.1% compared with 2.7% while rents in the City relatively stable. Investment volumes are 36% ahead of the equivalent period last year driven by overseas purchasers investing 1.7 billion in the second quarter.

Summary of statistics
Sizes in 000 sq ft Units of 5,400 sq ft and above Take-Up TOTALS Grade A Off-plan Under construction New completed Second hand (incl. refurbished) 100,000+ 50,000 - 99,999 10,000 - 49,999 Sub 10,000 Banking & Finance Professional Services Service Industries Manufacturing Industries Public Admin. & Institutions Other Net Absorption TOTALS Prime Rents & Rent Free Prime Rent Rent Free (months) Net Effective1 Demand TOTALS 100,000+ 50,000 - 99,999 10,000 - 49,999 Sub 10,000 Banking & Finance Professional Services Service Industries Manufacturing Industries Public Admin. & Institutions Other Supply Total Current Supply VACANCY RATE (% of total stock) 100,000+ 50,000 - 99,999 10,000 - 49,999 Sub 10,000 Speculative Development TOTALS 2011 2012 2013 2014 Capital Transactions millions TOTALS UK Purchasers Overseas Purchasers Property Companies Institutions Privates & Other Investors Prime Yield *As at 30 June 2011 2010 3,728 2,393 340 43 781 2,563 465 785 1,633 844 25% 14% 35% 13% 8% 4% 2010 2,788 2010 88.43 16 76.64 Total 4,461 1,467 1,153 1,592 249 14% 7% 69% 8% 2% 0% Total 4,177 4.6% 134 352 2,637 1,054 Total 1,875 346 795 734 0 2010 West End 2011 Q1-Q2 1,481 1,011 0 131 455 895 269 87 687 438 12% 3% 62% 11% 6% 6% 2011 Q1 (YoY) 2,446 2011 Q1 92.50 16 80.17 Active 2,396 448 535 1,195 218 10% 13% 69% 7% 2% 0% Grade A 2,086 2.3% 135 220 1,218 513 Over 100,000 1,419 182 503 734 0 2011 Q1-Q2 2011 Q2 834 563 0 116 252 466 157 87 336 254 12% 1% 59% 10% 10% 8% 2011 Q2 (YoY) 2,213 2011 Q2 95.00 16 82.33 Potential 2,064 1,019 618 397 30 19% 0% 69% 9% 2% 0% Grade B 1,876 2.1% 0 62 1,324 490 50,00099,999 259 164 95 0 0 2011 Q2 1,097 706 390 500 168 428 80m+ 5.00% 2010 6,131 4,443 1,200 355 1,803 2,773 2,027 751 2,367 986 43% 18% 28% 4% 4% 3% 2010 5,024 2010 55.00 24 44.00 Total 10,437 5,338 2,170 2,353 576 29% 25% 39% 5% 3% 0% Total 7,505 6.9% 1,449 1,038 3,534 1,483 Total 3,000 415 1,182 789 614 2010 5,006 1,604 3,403 828 1,703 2,475 Sub 40m 5.25%City 2011 Q1-Q2 1,486 784 0 0 343 1,143 0 142 841 560 36% 17% 25% 5% 8% 9% 2011 Q1 (YoY) 2,837 2011 Q1 55.00 22 44.92 Active 5,335 1,986 1,165 1,659 525 22% 30% 36% 6% 6% 0% Grade A 4,188 3.9% 1,449 585 1,603 551 Over 100,000 2,345 389 699 644 613 2011 Q1-Q2 3,419 1,209 2,210 406 1,942 1071 40-125m 5.25% 2011 Q2 685 398 0 0 149 536 0 0 412 273 31% 22% 30% 5% 3% 9% 2011 Q2 (YoY) 3,228 2011 Q2 55.00 22 44.92 Potential 5,102 3,352 1,005 694 51 36% 19% 42% 3% 0% 0% Grade B 2,807 2.6% 0 390 1,570 847 50,00099,999 401 0 401 0 0 2011 Q2 2,021 739 1,282 190 911 920 125m+ 5.25% 2010 2,161 2,063 0 0 52 2,110 1,718 187 249 8 74% 2% 4% 9% 10% 2% 2010 1,070 2010 37.50 Docklands 2011 Q1-Q2 31 22 0 0 0 31 0 0 22 9 0% 0% 100% 0% 0% 0% 2011 Q1 (YoY) 895 2011 Q1 37.50 2011 Q2 22 22 0 0 0 22 0 0 22 0 0% 0% 100% 0% 0% 0% 2011 Q2 (YoY) 594 2011 Q2 38.50 2010 12,020 8,899 1,540 399 2,636 7,445 4,210 1,723 4,249 1,838 43% 14% 26% 8% 6% 3% 2010 8,848 Central London 2011 Q1-Q2 2,998 1,816 0 131 798 2,069 269 229 1,550 1,007 24% 10% 44% 8% 7% 7% 2011 Q1 (YoY) 6,168 2011 Q2 1,542 982 0 116 401 1,025 157 87 770 527 20% 11% 47% 7% 7% 9% 2011 Q2 (YoY) 5,965

Total 1,386 1,127 165 87 7 32% 0% 38% 21% 8% 0% Total 1,412 7.4% 654 507 181 70 Total 130 130 0 0 0 2010 749 23 726 17 231 501

Active 633 539 0 87 7 34% 1% 0% 47% 18% 0% Grade A 1,240 6.5% 654 367 166 53 Over 100,000 130 130 0 0 0 2011 Q1-Q2 30 0 30 0 0 30

Potential 752 587 165 0 0 30% 0% 70% 0% 0% 0% Grade B 172 0.9% 0 139 16 17 50,00099,999 0 0 0 0 0 2011 Q2 30 0 30 0 0 30

Total 13,330 6,046 2,839 3,621 824 26% 21% 43% 7% 3% 0% Total 13,093 6.0% 2,237 1,897 6,352 2,607 Total 5,005 891 1,977 1,523 614 2010 10,780 3,494 7,287 1,720 3,246 5,814

Active 7,382 2,674 1,394 2,570 744 21% 25% 40% 9% 5% 0% Grade A 7,514 3.4% 2,238 1,172 2,987 1,117 Over 100,000 3,894 701 1,202 1,378 613 2011 Q1-Q2 5,784 2,343 3,440 1,227 2,726 1,830

Potential 5,948 3,372 1,445 1,051 80 33% 16% 46% 3% 1% 0% Grade B 4,856 8.3% 0 591 2,910 1,354 50,00099,999 660 164 496 0 0 2011 Q2 3,148 1,445 1,702 691 1,079 1,378

5,025 2,335 1,867 1,135 3,159 1,200 875 821 1,312 784 2,838 730 Sub 10m 10-50m 4.00% 4.25%

On Point Central London Market Second Quarter 2011 3

The Central London Market

Summary of Statistics (QoQ) Take-up Supply Overall Vacancy Rate Grade A Vacancy Rate Prime Rent U/C West End F A A A F A City A A A A E F Docklands F F F F F E

The Economy The momentum of the global recovery weakened in the first half of 2011, reflecting the Japanese earthquake and tsunami, higher oil prices and the re-emergence of sovereign debt problems in the Eurozone. In the UK, activity has recovered from its end2010 dip, but the early indicators for Q2 suggest that GDP will at best match a disappointing Q1 outturn and so growth will remain below average. Speculation about looming UK interest rate increases has eased since the spring. Monthly RPI and CPI figures have remained at rates well in excess of the official 2% inflation target. In June, headline CPI inflation dipped to 4.2% from a rate of 4.5% in May. Interest rate expectations have shifted from a summer hike to an autumn move at the earliest. But much will depend on how quickly demand recovers. If activity indicators continue to disappoint, the first move will be pushed into next year. The most recent evidence on the London economy has also Business Sentiment: London vs UK been more downbeat. Business confidence in the capital had Source:CIPS/Markit led the upturn in the wider economy from late 2009. But in 70 recent months figures have moved into line with the weaker UK 65 services sector trend for the first time since the recession. Given the importance of global demand to London, this is perhaps to 60 be expected, but it raises further concerns about the pace of 55 recovery in the UK as a whole.
50 45 40 35 2007 2008 2009 2010 2011 Increasing output signalled by 50+ reading

In the UK, activity has recovered from its end-2010 dip.

Business Sentiment: London vs UK

Source:CIPS/Markit 70 65 60 55 50 45 40 35 2007 2008 2009 2010 2011 Increasing output signalled by 50+ reading

PMI* Business activity London PMI* Services activity UK

*Purchasing Managers Index

*Purchasing Managers Index

4 On Point Central London Market Second Quarter 2011

The Central London Market

Net absorption m sq ft

Central London: Net Absorption 2002-2011 Q2 Occupier Take-up and Net Absorption Source: Jones Lang LaSalle Occupier take-up remained below average with 1.5 million sq ft transacted across 111 deals. Although this was a 10% increase Absorption 2002-2011 Q2 10 Central London: Net on last quarter it was 40% behind the five year quarterly average. Source: Jones Lang LaSalle 8 The year to date total of 2.9 millionCentral 47% behind the sq ft is London: Net Absorption 2002-2011 Q2 6 10 Lang LaSalle Source: Jones equivalent period last year.

Volumes in the by the Service 8 4 Industry particularly the TMT sub-sector accounting for 15% 10 6 of the total. Activity was driven by the West End with the likes of 2 8 Google completing their 157,450 4sq ft acquisition at Central Saint 0 6 2 Giles, WC2 and Double Negative taking a -2 pre-let on 86,500 4 0 sq ft at 160 Great Portland Street, W1. Low levels of take-up were -4 2 recorded in the City, however, 1.3 million sq ft remained under -2 -6 offer at the end of 0June with a number of large requirements 2005 2002 2003 2004 -4 -2 likely to transact over the second half of the year. These include -6 2002 2003 2004 2005 2006 -4 Aon, CMS Cameron McKenna, Trowers & Hamlin and Mace. 2007
Net absorption m sq ft Net absorption m sq ft Net absorption m sq ft -6

10 Source: Jones were dominated second quarter Lang LaSalle 6

8 Central London: Net Absorption 2002-2011 Q2

4 2 0

West End West End

2002 2003 2004 2005

-2 -4 -6

City Docklands

West2006 End City

2007

City

2008

2009

2010

2011 yoy

West End
2006 2008 2007 2009 2008 2010 2009 2010

City
2011 yoy

2011 yoy

Docklands

Docklands

Total size m sq ft

Our expectations for 2002 full year 2011 are2006 take-up to 2009 2010 2011 the 2003 2004 2005 for 2007 2008 yoy 10 remain modest, running slightly below the long term average. 9 Positively, there have been some notable improvements in 8 requirement volumes, however we are yet to see this translate 7 into completed deals and thereDemand that weak economic 2011 Q2 Central London: is a risk and Supply Balance 6 Source: Jones Lang LaSalle Central London: Demand and Supply Balance 2011 Q2 activity and Eurozone fears will push decisionsLang LaSalle 5 Source: Jones into 2012.
10 9 3 Occupier Demand Jones Lang LaSalle Source: 9 8 2 Requirement volumes continued to8strengthen over the second 10 7 296 1 7 9 quarter, up 12% to 13.3 million sq ft. The relatively weak take-up 296 6 0 6 8 prevented erosion of requirement volumes, but even with average 5 5 7 16 volumes, demand would have increased by 3%. Occupier 296 4 16 6 demand is now at it highest level in418 months and only slightly 15 341 3 113 15 11 3 5 113 26 million behind the 10 year average of 13.820 11 sq ft. Encouragingly, 2 26 16 2 4 20 9 1 improvements were driven by active demand which recorded 9 92 10 1 15 341 3 0 113 10 0 11 a 28% increase in the City and 26 0 in the West End. Over the 21% 2 100,000 + 50-100,000 10-50,000 5-10,000 20 quarter, there were 48 new active requirements totalling 1.2 92 10-50,000 50-100,000 9 100,000 + 1 Size 10 0 million sq ft registered in the City and 37Band (sq ft) requirements in the Band (sq ft) Size 0 50-100,000 10-50,000 5-10,000 West End totalling 100,000 + sq ft. 1 million Total size mTotal size m sq ft sq ft Total size m sq ft 10 Central London: Demand and Supply Balance 2011 Q2 4 11 15 16

Central London: Demand and Supply Balance 2011 Q2 Docklands

Source: Jones Lang LaSalle

296

Total Exis
26 113 20 9 10
10-50,000

341 92
5-10,000

Active De
0

Speculat

100,000 +

Total Existing Supply

50-100,000

Total Existing Supply Size Band (sq ft) Active Demand Speculative Construction

341 Active Demand

Total Existing Supply

92 Speculative Construction 0 Active Demand

5-10,000

Speculative Construction

Demand from the Service Industry continued to dominate accounting for 43% of the total with the TMT and Advertising & Publishing subsectors accounting for 11% and 10% of total demand. Demand from the Service Industry increased 19% over the quarter driven by the likes of Google increasing their requirement from 400,000 sq ft to 500,000 700,000 sq ft

Size Band (sq ft)

There has been a notable improvement in requirement volumes.

On Point Central London Market Second Quarter 2011 5

and three new requirements seeking in excess of 100,000 sq ft coming to the market.
availability (%) of overall stock

Central London: Vacancy Rates 2002-2011 Q2

Source: Jones Lang LaSalle 18%

availability (%) of overall stock

availability (%) of overall stock

availability (%) of overall stock

16% Central London: Vacancy Rates 2002-2011 Q2 At the end of June, there were 36 requirements seeking in excess Source: 14% of 100,000 sq ft compared withCentralquarter and 27 Lang LaSalle 2002-2011 Q2 33 last London: Jones at the end Vacancy Rates 18% 12% of 2010. There were only 11 units of existing supply in excess Source: Jones Lang LaSalle 16% 10% of 100,000 sqCentral London: Vacancy Rates 2002-2011 Q2 ft and 16 units under construction speculatively, 18% Source: Jones Lang LaSalle 14% 8% compared with 15 active and 21 potential requirements. At the 16% 18% 12% 6% end of the quarter, 64% of demand seeking in excess of 100,000 14% 16% 10% 4% sq ft was driven by lease events with 10% expansion led 12% 8% compared14% 62% and 8% at the end of Q1 respectively. with 2% 10% 12% 10% 4% Oxford Economics forecasts a total of 3.5% growth in Central 6% 8% London employment over the next three years (2011-2013) 2% 4% compared 6% only 1% for the UK overall. Growth in Financial with 0% 2% 4% & Business Services jobs in central London are forecast to 0% 2% increase 7% over the same period, however we still remain 0% cautious surrounding future demand with lease events continuing to be the primary driver and the situation in the Eurozone has the potential to slow recent improvements.
June 02 June 04 June 07 June 03 June 05 June 08 June 04 June 06 June 09 June 05 June 07 June 10 June 02 June 05 June 03 June 06 June 02 June 03 June 04 June 02 June 03 June 04 June 05 June 06 June 07

West En

Docklands City
June 08 June 09 June 10

Docklands West End City West Docklands End

City

June 06 June 08 June 11

June 07 June 09

June 08 June 10

June 09 June 11

June 10

City

Docklands

the number of refurbishments) speculative development remains 7% below the 10 year average and there is still no volume of supplyMar-00Jun-01marketSep-03Dec-04Mar-06Jun-07 coming Sep-01Dec-02Mar-04Jun-05 to Mar-07 Mar-99Jun-00toDec-01Mar-03Jun-04Sep-05Dec-06Mar-08 Jun-99Sep-00 theJun-02 over theMar-05Jun-06Sep-07 Sep-99Dec-00Mar-02Jun-03Sep-04Dec-05threeDec-07 Dec-99Mar-01 Sep-02Dec-03 next two Sep-06 years Existing Supply and the Development Pipeline and this is unlikely to change, with commencement dates for Overall supply continued to decrease, down 7% to 13 million several schemes being pushed out by rights of light and other sq ft while Grade A supply decreased 5% Jun-99Sep-00Dec-01Mar-03Jun-04Sep-05Dec-06Mar-08annual completions 2011-2014 now to 7.4 millionJun-01Sep-02Dec-03Mar-05Jun-06Sep-07 Mar-99Jun-00sq ft. Jun-02Sep-03legacyDec-05Mar-07 Sep-99Dec-00Mar-02Jun-03Sep-04 issues. TheDec-07 Dec-99Mar-01 This Mar-00 Sep-01Dec-02Mar-04Jun-05Sep-06 average Dec-04Mar-06Jun-07 reflected an overall vacancy rate of 6.0% with Grade A vacancy at stands at 1.4 million sq ft per year compared with an average of Mar-99Jun-00Sep-01Dec-02Mar-04Jun-05Sep-06Dec-07 Jun-99Sep-00Dec-01Mar-03Jun-04Sep-05Dec-06Mar-08 Sep-99Dec-00Mar-02Jun-03Sep-04Dec-05Mar-07 Dec-99Mar-01Jun-02Sep-03Dec-04Mar-06Jun-07 Mar-00Jun-01Sep-02Dec-03Mar-05Jun-06Sep-07 3.4% compared with 6.4% and 3.6% respectively at the end of Q1. 2.5 million sq ft a shortfall below average of 1.1 million sq ft per Mar-99Jun-00Sep-01Dec-02Mar-04Jun-05Sep-06Dec-07 year or 4.4 million sq ft in total over the next four years. Jun-99Sep-00Dec-01Mar-03Jun-04Sep-05Dec-06Mar-08 Sep-99Dec-00Mar-02Jun-03Sep-04Dec-05Mar-07 Dec-99Mar-01Jun-02Sep-03Dec-04Mar-06Jun-07 Mar-00Jun-01Sep-02Dec-03Mar-05Jun-06Sep-07 The amount under construction speculatively across Central London increased 24% to 5 million sq ft. This was driven by the Rents and Rental Expectations City which saw the commencement of two new build schemes Prime rents increased 2.7% in the West End to end the quarter at Sixty London, EC1 and The Place, SE1. Speculative activity at 95.00 per sq ft. Prime rents in the City market remained at declined in the West End, down 5% quarter on quarter as there 55.00 per sq ft for the third consecutive quarter. However, we were more completions than starts. do anticipate further rental growth over the second half of the year primarily in tower buildings, although the annual growth will We have seen more movement in refurbishment this quarter be more modest compared to 2010. Rent free periods assuming with five notable schemes (i.e. we do not track light touches) a 10 year term remained stable at 16 months in the West End commencing. This follows the consistent message voiced over and 22 months in the City. For the first time since 2009, prime the last two years concerning the supply gap and opportunity to rents in Docklands increased 2.7% to 38.50 per sq ft driven by upgrade Grade B into Grade A to take advantage. Although the the resilience of demand. supply gap is arguably lengthening beyond 2014 there is, though, a sense that such opportunities are becoming expensive to invest Core Grade A rents continued to outperform prime, (particularly in now as acquisition competition strengthens. Although we are in the West End) increasing 7.1% in the West End to 72.90 per beginning to see an increase in development starts (particularly sq ft and 1% in the City to 46.50 per sq ft.

June 11

West End

City City Docklands West End

June 11

8%

6%

0%

West End

DocklandsCity West End

Docklan

6 On Point Central London Market Second Quarter 2011

The Central London Market

Over the year to date Core Grade A rents in the West End have Central London: Prime Headline Rents: 2002 to 2011 Q2 Source: Jones Lang LaSalle increased 12.3% compared with 7.3% for prime and in the City 120.00 have increased 2% while prime rents have remained stable. This has narrowed the historically high differential between the best Headline Rents: 2002 to 2011 Q2 Central London: Prime 100.00 Source: space and good quality Grade Central London: Jones Lang LaSalle Rents: 2002 to 2011 Q2 A. Prime Headline
Central London: Movements Investment Volumes 120.00 Prime Headline Rents: 2002 to 2011 Q2 and Yield
Source: Investment volumesJones Lang3.1 billion, up 19% on last quarter. totalled LaSalle 120.00 The year to date total of100.00 billion80.00 ahead of the equivalent 5.7 is 36% period last year. Volumes were dominated by overseas privates 100.00 80.00 60.00 accounting for 36% of the total. The 12 month rolling total of 12.3 60.00 40.00 billion is 80.00 ahead of the 10 year average. Seven significant 13% transactions took place over the quarter with 1.3 billion traded 60.00 40.00 20.00 in lot sizes over 100m 42% of the total. The most notable 40.00 20.00 transactions included Jubilee House, Oxford Street, W1, 1 0.00 Finsbury Circus, EC2, Leadenhall Triangle, EC3, MidCity Place, 20.00 0.00 WC1, 10 Aldermanbury, EC2 and Aviva Tower, EC3. per sq ft per sq ft per sq ft
June 02 June 04 June 03 June 05 June 04 June 06 June 05 June 07 June 02 June 03 June 02 June 03 June 04 June 05 June 06 June 07 June 08 June 09 June 10

100.00

per sq ft

120.00 Source: Jones Lang LaSalle

80.00 60.00 40.00 20.00 0.00

West En City
June 02 June 03 June 04 June 05 June 06 June 07 June 08 June 09 June 10 June 11

West End

Docklan

West End City City Docklands

June 06 June 08

June 07 June 09

June 08 June 10

June 09 June 11

June 10

Prime yields remained stable across both West End and City Source: Jones Lang LaSalle/Datastream submarkets. In the West End, prime benchmark yields for sub 10 8% Central London: Prime Yields and million lot sizes remained stable at 4.00% and have been at this the Cost of Money 2002-2011 Q2 level for 12 months. Yields for intermediate lot sizes (10mLondon: Jones Lang LaSalle/Datastream Central - 80m) Prime Yields and Source: 6% remained at 4.25%. In the City, yields for all lot sizes remainedMoney 2002-2011 Q2 the Cost of at 8% Central London: Prime Yields and Source: Jones 5.25%, however are coming under pressure for sub 40m lotLang LaSalle/Datastream sizes.
the Cost of Money 2002-2011 Q2 8% Central London: Prime Yields LaSalle/Datastream and Source: Jones Lang 6% the Costcompetition2002-2011Institutions, Far of Money between Q2 We are seeing strong 8%
Source: Jones Lang LaSalle/Datastream % 4%

June 11

0.00

Central London: Prime Yields and Docklands the Cost of Money 2002-2011 Q2

City

June 11

West End

Docklands

West E

June 02 June 07June 04 June 10

June 03 June 08June 05 June 11

June 04 June 09June 06

June 05 June 10June 07

June 06 June 11June 08

June 07 June 09

June 08 June 10

June 09 June 11

June 10

While receivership and workout sales will remain a key supply 0% driver in the investment market and we expect increased activity 0% from NAMA in the second half of the year there is a sense that the market has seen, or knows of, the more significant distressed assets. There is a belief that we are in the non-prime phase of real estate workout and while this will still have direct implications to investable opportunities we believe buy side activity will be dominated by specialist funds and private equity vehicles rather than more traditional physical real estate players.
June 05June 02 June 08 June 06June 03 June 09 June 02 June 05 June 03 June 06 June 04 June 07 June 02 June 03 June 04

2%

0%

5 Year Swap City

June 11

Eastern managed funds and private high net worth individuals 6% 8% 4% and investors are now willing to take on higher levels of risk 6% particularly in the West End driven by forecast4% rental growth 6% rather than any anticipated yield compression. This has made 2% 4% refurbishment and the more straightforward development 2% opportunities more expensive, while competition for development 4% 0% complexity is less strong. 2%
% % %

2%

5 Year S West End City LIBOR

0%
June 02 June 03 June 04 June 05 June 06 June 07 June 08

June 09

June 10

West End

5 Year Swap City City LIBOR

West End

5 Year Swap City

LIBOR

LIBOR

There is a belief that we are in the non-prime phase of real estate workout.

LIBOR

Residential developers are becoming more prevalent in the market seeking to convert office space. This has particularly been seen in the West End with a key example the purchase of 66 Chiltern Street W1 by Heron for a residential conversion on lease expiry in 2014. Looking ahead, this coupled with impact of the Heaney rights to light case may have a potential impact on the future pipeline of schemes that have been proposed for office refurbishment or development resulting in an even further delayed supply response.

June 11

West End

5 Year Swap

On Point Central London Market Second Quarter 2011 7

Issue to watch: who is driving occupier demand?

Over 2011, although sentiment has improved, we have seen average levels of take-up and concerns over the Eurozone increase. However, we have seen notable improvements in occupier demand which has recorded an 18% increase since the start of 2011. Last quarter we were less optimistic about the pick up in demand as levels still remained historically low, however, the second quarter has shown continued increases, and we are now more optimistic about future growth particularly, in key sub-sectors within the Service Industry. The Service Industry remains dominant in both the demand and take-up statistics, and the growing trend of the TMT (Technology, Media & Telecommunications) and Advertising & Publishing sector appears to be solidifying. Six to nine months ago, when these subsectors were dominating deals, there was too much caution to identify it as a start of a new trend, but the momentum has continued and this is the standout sub-sector from a market otherwise characterised by churn and lease events. Year to date, the TMT and Advertising & Publishing sub-sectors have accounted for 16% and 6% of total take-up across central London, particularly driven by the West End which has seen 26% of total take-up this year from the TMT sub-sector and 11% from the Advertising & Publishing sector. In terms of occupier demand, the TMT sector accounts for 11% of the total, with Advertising & Publishing accounting for 10%. There is a clear trend between these two sub-sectors, with the TMT sector (predominantly new media companies) driven by growth with the likes of Google, NBC Universal, Facebook and Skype, which was recently acquired by MSN. It is these new media companies who are breaking the mould - they will pay higher rents as they are location specific, better capitalised and in a growth phase. This has been seen in the recent deals at Central Saint Giles, WC2, 160 Great Portland Street, W1 and with Expedia vacating their space at Seven Dials Warehouse,WC2 to move to the Angel Building, EC1 while Facebook, who needed to be in the core, moved into Expedias space. Advertising & Publishing companies remain cost driven with the likes of Ogilvy and Mather, Publicis and Saatchi and Saatchi looking in lower cost locations.

Most business sectors will continue to be driven by structural events, however new media companies will be predominantly driven by growth.
Although future demand will continue to be driven by structural events, we feel that these new media companies from the TMT sector and Advertising & Publishing companies are positioning themselves to fulfil their business plans. We expect a ripple effect to flow through to other sectors such as Banking & Finance as companies position themselves to start to execute their new business plans but at a more cautious rate.

8 On Point Central London Market Second Quarter 2011

The West End Office Market

m sq ft

Source: Jones Over the year to date volumes have Lang LaSalle million reached 1.4 West the equivalent period last year. sq ft, down 24% onEnd:5 Take-Up 2001-20114Q2 Source: Jones Lang LaSalle 4 m sq ft 5 3

5 West End: Take-Up 2001-2011 Q2 4 3 2 1 0

m sq ft

Occupier Take-up and Net Absorption West End: Take-Up 2001-2011 Q2 Source: Jones Lang LaSalle Just over 830,000 sq ft was let across 53 deals in the 5 second quarter, a 29% increase on Q1 and driven by the West End: Take-Up 2001-2011 Q2 Source: Jones Lang LaSalle likes of Google completing their 157,450 sq ft acquisition 4 5 at Central Saint Giles, WC2 and Double Negative taking Take-Up 2001-2011 Q2 West End: Source: Jones Lang a pre-let on 86,500 sq ft at 160 Great Portland Street, W1. LaSalle 3
2 1 0

Off Pla Off Plan Off Plan Under

m sq ft

The Service Industry dominated take-up with 59% of floorspace taken across 23 deals. This was2particularly 3 4 driven by the TMT sub-sector which accounted for 23% of the total. 3 2 1
m sq ft

Second Under Construction New

2010 2011

2002

2003

2004

Off Plan
2005

2006

2007

2008

Under Construction Second hand

2009

Off Plan
2002 2005 2009 2003 2006 2010 2004 2007 2005 2006

Under Construction
2007 2008 2009 2010

Second hand
2011

New

Net absorption remained positive at 631,800 sq ft compared 1 0 2 2002 2003 2004 with 383,900 sq ft last quarter.
1 0
2002 2003 2004 2005 2006 2007 2008

West End: Demand 2002-2011 Q2

2008 2009 2010 Source: Jones Lang LaSalle 2011

Second hand Under Construction Second hand New New

New

12

Occupier Demand West End: Demand 2002-2011 Q2 10 0 Overall occupier demand increased by 5%Source: Jones Lang LaSalle 2011 to 4.4 million sq ft 2002 2003 2004 2005 2006 2007 2008 2009 2010 Improvements were driven by active demand which saw a 12 10 Demand 21% increase West End: Lang LaSalle2002-2011 Q2 to 2.3 million sq ft as 37 new requirements Source: Jones came to the market this was the first increase in active 10 8 12 demand since 2009.
m sq ft m sq ft 10 8 6

2011

West End: Demand 2002-2011 Q2 12

Source: Jones Lang LaSalle

8 6 4 2 0

m sq ft

Active

Poten Active
June 02 June 03 June 04 June 05 June 06 June 07 June 08 June 09 June 10

Potential demand decreased 9% which can be attributed to 6 4 8 a number of requirements becoming active and withdrawing 4 2 their search.6
m sq ft

Active

Potential

June 04 June 02

June 05 June 03

June 06 June 04

June 07 June 05

June 08 June 06

June 09 June 07

June 10 June 08

June 11 June 09

June 10

June 02

Existing Supply and the Development Pipeline Total supply fell 12% to 4.1 million sq ft while Grade A fell 10% to 2 million sq ft.

June 03

Overall vacancy rates fell from 5.2% to 4.6% and Grade A from 2.6% to 2.3%. Vacancy rates are now at their lowest levels since 2008.

Core Grade A rental growth exceeded the growth in prime.

June 11

Demand was dominated by the Service Industry, particularly 0 the TMT sub-sector which accounted for 21% of total 2 occupier demand.
June 02 June 03 June 04

June 05

June 06

June 07

June 08

June 09

June 10

Potential

Rolling 12 Month Take-Up

Rolling 12 Month Take-Up

June 11

Active

Potential

Rolling 12 Month Take-Up

June 11

Rollin

On Point Central London Market Second Quarter 2011 9

availability (%) of overall stock

availability (%) of overall stock

Only one9% scheme commenced construction in Q2 (25 Soho Square,W1) compared 7% four last quarter. with 8%
5% Rents 6% 4% Prime rents increased 2.7% to 95.00 per sq ft while rent-free 5% periods remained at 16 3% months, assuming a 10-year lease. We 4% 3% expect 100 per sq ft to2% reached comfortably by year end. be 0% 1% For the second consecutive quarter, Core Grade A rental 0% growth exceeded the growth in prime, increasing 7.1% to 72.90 per sq ft. 2% 1% 7% 6%

West End:9% Vacancy Rates 2002-2011 Q2

Source: Jones Lang LaSalle 8%

availability (%) of overall stock

After a 31% increase last quarter, speculative construction decreased 5% due to the completion of 11 Baker Street and the pre-let of 160 Great Portland Street W1 to end June at West End: Vacancy Rates 2002-2011 Q2 1.8 million sq ft. Source: Jones Lang LaSalle

West End: Vacancy Rates 2002-2011 Q2

Source: Jones Lang LaSalle 9% 8% 7% 6% 5% 4% 3% 2% 1% 0%

Over
June 02 June 03 June 04 June 05 June 06 June 07 June 08 June 09 June 10

Grad Overall Overall Grade A

June 11

June 04 June 02

June 05 June 03

June 06 June 04

June 07 June 05

June 08 June 06

June 09 June 07

June 10 June 08

June 11 June 09

June 10

West End: Prime Headline Rents and Net Effective Rents 2002-2011 Q2
Source: Jones Lang LaSalle

June 02

Over the year to date CoreWest End: Prime Headline Rents and Net Effective Rents Grade A rents have increased 120.00 12.3% compared with 7.3%2002-2011 Q2 for prime.
2002-2011 Q2 Investment Volumes 120.00 and Yields Source: Jones Lang LaSalle Just over 1 billion was traded over the second quarter, this 120.00 100.00 was an 11% decrease on Q1 and 7% behind the five year quarterly average. 80.00 100.00
100.00 West End: Prime Headline Rents and Net Effective Rents Source: Jones Lang LaSalle per sq ft 80.00 60.00 40.00 20.00 0.00
June 02

The year to date total of 2.3 billion was 5% behind the equivalent period last year however the 12 month rolling 60.00 40.00 total of 4.9 billion was 18% ahead of the 10 year annual 40.00 20.00 average.
per sq ft

80.00

per sq ft

June 03

60.00

June 11

Grade A

Prim
June 03 June 04 June 05 June 06 June 07 June 08 June 09 June 10 June 11

Net

Prime

June 02

June 03

June 04

June 05

June 06

June 07

June 08

June 09

June 10

June 11

Volumes were dominated by UK property companies and 0.00 overseas privates comprising 39% and 26% of the total, respectively.
June 02 June 03 June 04 June 05 June 06

20.00

0.00

June 07

June 08

June 09

June 10

West End: Investment Purchases 2002-2011 Q2

Source: Jones Lang LaSalle

Eight significant transactions took place over the quarter, West End: Investment Purchases 2002-2011 Q2 LaSalle with 699 million traded in lot sizes over 50 million. The Source: Jones Lang 6 7 West End: Investment Purchases 2002-2011 Q2 5 most notable deal was the sale of Jubilee House, 197-213 Source: Jones Lang LaSalle Oxford Street, W1, purchased by a private Spanish Investor 6 4 West Purchases 2002-2011 Q2 for 160 million. End: Investment 7 5
billion Source: Jones Lang LaSalle billion

June 11

Prime Net Effective

Net Effective

billion

Prime yields for lot sizes sub 10 million remained stable at 5 3 4.00% and 6 4.25% for 10 - 80 million. at
5 billion 4 3 2 4 3 2 1 0 2 1 0
2002 2003

3 2 1 0

Prope Property Companies

Institu

2002

2003

2004

2005

2006

2007

Property Companies Institutions

2008 2009 2010 2011

Othe

Property Companies
2004 2005 2006 2007 2008 2009 2010

Institutions
2011

Others

Institutions

Others

10 On Point Central London Market Second Quarter 2011

The City Office Market

City: Take-Up 2002-2011 Q2 Occupier Take-up and Net Absorption Source: Jones Lang LaSalle A relatively quiet quarter with just under 742,000 sq ft 10 transacted across 58 deals, a 14% decrease on last quarter West End: Take-Up 2001-2011 Q1 and 50% behind the quarterly average. Source: Jones Lang LaSalle
m sq ft

Year to date, 1.4 million sq ft has been let, almost half of Lang LaSalle Source: Jones what was transacted at the equivalent period 2001-2011 Q14 5 West End: Take-Up last year.
Source: Jones Lang LaSalle 5 However, justWest 1.3 million sq ft2001-20114 Q1 at the over End: Take-Up was under offer Source: Jones quarterly end of June, the highest Lang LaSalle total since 2008. m sq ft 5 4 3 m sq ft 3 2

5 West End: Take-Up 2001-2011 Q1 6 4 2 0

Off Plan Off Plan

2002 2003 2004

Off Pl

Under New

Under Construction Secon Second hand New

m sq ft

A number of large requirements (currently under offer) should 1 2 3 4 transact over the second half of the year such as Aon, CMS Cameron McKenna, Trowers & Hamlin and Mace. 0 1 2
m sq ft 3

Off2005 Plan
2008

2006

2007

Under Construction 2008 2009 2010 2011 Second hand

2011

Off Plan
2002 2005 2009 2003 2006 2010 2004 2007 2005 2008 2006 2009

Under Construction
2007 2010 2009 2010

The Banking & Finance1and Service Industries were the 0 2 2002 2003 most active during the second quarter both accounting for2004 31% of space let. 0 1
2002 2003 2004 2005 2006 2007

Under Construction City: Demand 2002-2011 Q2

Source: Jones Lang LaSalle
2011

Second hand

New

m sq ft

0 Source: Jones Lang LaSalle Net absorption remained positive at 428,500 sq ft compared 2002 2003 2004 2005 2006 2007 2008 2009 2010 18 with 166,300 sq ft at the end of Demand 2002-2011 Q2 Q1. City: 18 Occupier Demand Demand 2002-2011 Q2 14 City: Source: Jones16 Lang LaSalle Overall demand increased 24% to 10.4 million sq ft as a 12 14 number of 18 media occupiers launched tentative requirements 10 12 seeking in 16 excess of 100,000 sq ft; Occupier demand is 8 14 now 17% ahead of the 10 year average. 6 10 m sq ft m sq ft 12 10 Improvements were driven by 44 new active occupier 6 2 8 requirements registered,4totalling 1.2 million sq ft. 0 m sq ft
June 02 June 03

City: Demand 2002-2011 Q2

2011

2008

18 16 14 12 10 8 6 4 2 0

Second hand New New

2011

Source: Jones Lang LaSalle 16

Active

Poten Active
June 02 June 03 June 04 June 05 June 06 June 07 June 08 June 09 June 10 June 11

Rollin

Active
June 10 June 11

Potential

June 04

June 05

June 06

June 07

June 08

June availability (%) of overall stock 11

4 Over the past three months, we have seen an increase in 0 pre-letting activity with nearly half a million sq ft under offer 2 at the end of June; we expect this trend to continue over the 0 second half of the year with the likes of Schroders and JLT potentially transacting before year end. West End: Vacancy Rates 2002-2011 Q1
June 02 June 03 June 04 June 05 June 06 June 07 June 08 June 02 June 03 June 04 June 05 June 06 June 07 June 08 June 09 June 10
9% Demand from the Service Industry continued to dominate Source: Jones Lang LaSalle 8% accounting for 38% of the total; there were 10 requirements 9% 7% from this sector, seeking in excess of 100,000 sq ft 8% 6% compared7% seven last quarter. with

June 09

June 10

Source: Jones Lang LaSalle

14% 12% 10% 8% 6% 4% 2% 0%

West End: Vacancy Rates 2002-2011 Q1

availability (%) of overall stock

Source: Jones Lang LaSalle

availability (%) of overall stock

6% 5% 4% 3% 2% 1% 0%

5% 4% 3% 2% 1% 0%

June 11

Potential Rolling 12 Month Q2 City: Vacancy Rates 2002-2011 Take-Up Rolling 12 Month Take-Up

June 09

Active

Potential

Rolling 12 Month Take-Up

Gra
June 02 June 03 June 04 June 05 June 06 June 07 June 08 June 09 June 10 June 11

Ove

Overall

Overall
Mar 02 Mar 03 Mar 04 Mar 05 Mar 06 09 Man 07 10 Man 08 Mar 09 Mar 10 05 06 07 08 11 Mar 11

Grade A

02

03

04

Grade A

On Point Central London Market Second Quarter 2011 11

Existing Supply and the Development Pipeline City: Prime Headline and Net Effective Rents Total supply decreased 6% to end the quarter at 7.5 million sq 2002-2011 Q2 Source: Jones Lang LaSalle ft while Grade A fell by 3% to 4.1 million sq ft. City: Prime Headline and Net Effective Rents 70.00 2002-2011 Q2 Overall vacancy rates decreasedPrime7.4% to 6.9% and Grade 60.00 City: from Headline and Net Effective Rents Source: Jones Lang LaSalle A fell slightly from 4.0% to 3.9%. 2002-2011 Q2 70.00 50.00
60.00 70.00 Speculative construction increased 55% to end the quarter at 3 million sq ft. This was driven by the commencement of two 50.00 60.00 new build schemes - Sixty London, EC1 and The Place, SE1 40.00 50.00 totalling 644,450 sq ft. per sq ft per sq ft 30.00 40.00 per sq ft Source: Jones Lang LaSalle 40.00 30.00 20.00 10.00 0.00
June 02 June 03 June 04 June 05 June 06 June 07 June 08 June 09 June 10

Net Net Effective Prime

June 11

June 02

June 03

June 04 June 02

June 05 June 03

June 06 June 04

June 07 June 05

June 08 June 06

June 09 June 07

June 10 June 08

City: Investment Purchases 2002-2011 Q2 Rents Source: Jones Lang LaSalle For the third consecutive quarter, Prime rents remained 12 stable at 55.00 per sq ft and rent-free periods, assuming a End: Investment Purchases 2002-2011 Q1 West 10-year term remained at 22 months. Some tower buildings Jones Lang LaSalle Source: 10 have recently achieved rents in excessWest End: per 7 ft . Purchases 2002-2011 Q1 of 60.00 Investment sq
June 10

0.00

June 11 June 09

We have seen more activity in refurbishments over the 20.00 30.00 quarter10.00 three notable schemes totalling 307,800 sq ft with 20.00 commencing, the largest at 199 Bishopsgate, EC2 totalling 0.00 10.00 144,700 sq ft.

Prim

Net Effective Prime

billion

With the supply constraint and increasing demand, we do Q1 West End: Investment 7 Purchases 2002-2011 Source: Jones Lang LaSalle anticipate further rental growth towards the end of the5 year. 6
7

billion

Source: Jones Lang LaSalle 6

8 6 4 2 0

June 11

Property Co Institutions Property Companies

2002 2003 2004 2005 2006

billion

Investment Volumes and Yields 6 3 4 Investment volumes totalled 2 billion a 45% increase on 5 2 Q1, driven by 13 deals in lots sizes over 50 million. 3
billion 4 3 The year to date total of 3.4 billion is 105% ahead of 0 the 1 2002 equivalent 2 period last year and the 12 month rolling total of 0 6.7 billion is 16% ahead of the 10 year average. 1
2002 2003 2004 2005

Property 2009 2010 2011 2007 2008 CompaniesInstitutions Institutions

2010 2011

Others

Property Companies
2003 2006 2011 2004 2007 2005 2008 2006 2009 2007 2010 2008 2011 2009

Others

Institutions Others

Others

0 Volumes were driven by overseas purchasers investing 2002 2003 2004 2005 2006 2007 2008 2009 1.2 billion, 63% of the total, although UK Institutions were very active over the quarter, investing 528 million. The most significant transaction was the acquisition of Leadenhall Triangle, EC3 by Henderson and AIMCo (Canadian Pension Fund) for c.190 million.

2010

Over 1.3 million sq ft was under offer at the end of June, the highest quarterly total since 2008.

Prime yields for lot sizes under 40 million remained at 5.25% but with downward pressure; yields for larger lot sizes yields remained stable at 5.25%.

12 On Point Central London Market Second Quarter 2011

The Docklands & East London Office Markets

Docklands: Take-Up 2002-2011 Q2 Occupier Take-up and Net Absorption Source: Jones Lang LaSalle Only one deal completed during the second quarter - at 4 1 Canada Square, E14 where Met Life signed on the 50th West End: Take-Up 2001-2011 Q1 floor totalling 22,100 sq ft. Source: Jones Lang LaSalle
Source: Jones Lang LaSalle Occupier Demand 5 2001-2011 Occupier demand increased 9% over the quarter to Q1 4 West End: Take-Up Source: Jones Lang LaSalle 1.3 million sq ft. m sq ft Source: Jones Lang LaSalle Improvements were driven by active demand increasing 3 5 30% as two occupiers 4totalling 142,000 sq ft are now considering Docklands for their search. 2 m sq ft m sq ft 4 3 5 West End: Take-Up 2001-20114Q1 3 2 1 0
2002 2003 2004

5 3 West End: Take-Up 2001-2011 Q1 m sq ft 2

Off Pla Off Plan Off Plan Off2005 Plan

2006 2007 2008

Under

Under Construction

Secon New

Second hand Under Construction2011 2009 2010 Second hand New

2011

m sq ft

Potential demand remained relatively unchanged ending the 0 1 2 3 quarter at 752,000 sq ft.
2 1 0

Off Plan
2002 2003 2004 2005 2006

Under Construction
2007 2008 2009 2010

2002 Source: Jones Lang LaSalle Existing Supply and the Development Pipeline 2003 2004 2005 2006 2007 2008 2009 2010 2011 Second hand New 1 Total supply increased05% to end the quarter at 6 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 West End: Demand 2002-2011 Q1 1.4 million sq ft.

Under Construction Docklands: Demand 2002-2011 Q2

Second hand

New

June 02

June 03

June 04

June 05

June 06

June 07

June 08

June 09

June 10

Potential

2 0 Investment Volumes 4 30 million was traded in0the second quarter across one 2 deal at Chambers Wharf where an overseas investor purchased the 174,250 sq ft building. 0
Mar 02 Mar 03 Mar 04 Mar 02 Mar 03 Mar 04 Mar 05 Mar 06 Mar 02 Mar 03 Mar 04 Mar 05 Mar 06 Mar 07 Mar 08

Mar 05

Mar 06

Mar 07

Mar 08

Mar 09

Mar 10

Mar 07

Mar 08

Mar 09

Mar 10

Source: Jones Lang LaSalle

Mar 09

Mar 10

Mar 11

16% 14% 12% 10% 8% 6% 4% 2% 0%

June 02

Rolling 12 Month Take-Up

availability (%) of overall stock

availability (%) of overall stock

June 03

June 04

June 05

June 06

June 07

June 08

June 09

June 10

3% 2% 1% 0%

2% 1% 0%

Overall

Overall
Mar 02 Mar 03 Mar 04 Mar 05 Mar 06 ar 09 Man 07 ar 10 Man 08 Mar 09 Mar 10 ar 05 ar 06 an 07 an 08 ar 11

ar 02

ar 03

ar 04

Grade A

Mar 11

Grade A

June 11

Prime rents endedRates 2002-2011 Q1 West End: Vacancy the quarter at 38.50 per sq ft, the slight increase was driven by the resilience of demand.
Source: Jones Lang LaSalle 9% 8% 7% 6% 5% 4% 9% Source: Jones Lang LaSalle 8% 7% 6% 5% 4% 3%

West End: Vacancy Rates 2002-2011 Q1

availability (%) of overall stock

Mar 11

Potential Docklands: Vacancy Rates 2002-2011 Q2

Rolling 12 Month Take-Up

Mar 11

Active

Potential

Rolling 12 Month Take-Up

June 11

m sq ft

10 8 Rents 12 Prime rents ended the quarter at 38.506per sq ft, the slight 8 10 increase was driven by the resilience of demand, and the 4 attractive relative pricing 6differential between Canary Wharf 8 and the City and West End submarkets. 2 4 m sq ft m sq ft

Source: Jones Lang LaSalle

m sq ft

Overall vacancy rates increased Jones Lang LaSalle Source: from 7.0% to 7.3%, with Grade A slightly increasing from 6.4% to 6.5%. 10 West End: 12 Demand 2002-2011 Q1

2002

2003

2004 2005 2006 12 2007 2002-2011 Q1 West End: Demand 2008 2009 2010

Source: Jones Lang LaSalle

New

2011

Active

Active Active

Poten

Rollin

Ove

Gra

On Point Central London Market Second Quarter 2011 13

Headline Transactions

West End 160 Great Portland Street, W1 Area: 86,000 sq ft Tenant: Double Negative Reported Rent: 59.60 per sq ft Building Status: Under Refurbishment 1 Curzon Street, W1 Area: 42,250 sq ft Tenant: Rathbones Reported Rent: 75.00 per sq ft Building Status: Second Hand

Jubilee House, Oxford Street, W1 Area: 121,150 sq ft Purchaser: Private Spanish Reported Price: 160 m Est Initial Yield: 4.50%

10 Stratton Street, W1 Area: 41,660 sq ft Purchaser: Joint Treasure Holdings Reported Price: 60 m Est Initial Yield: 4.50%

City The Angel Building, EC1 Area:17,000 sq ft Tenant: NG Bailey Reported Rent: 40.00 per sq ft Building Status: New 30 St Mary Axe, EC3 Area: 19,550 sq ft Tenant: Ion Trading Reported Rent: 60.00 per sq ft Building Status: New

6-8 Bishopsgate, EC2 Area: 146,880 sq ft Purchaser: Mitsubishi Reported Price: 95 m Est Initial Yield: 7.04%

77 Gracechurch Street,EC3 Area: 49,200 sq ft Purchaser: IGNIS Reported Price: 43.5 m Est Initial Yield: 5.36%

Docklands & Canary Wharf 1 Canada Square, E14 Area: 22,100 sq ft Tenant: Metlife Reported Rent: Confidential Building Status:Second Hand

14 On Point Central London Market Second Quarter 2011

Rental Conditions across Central London

Q2 2011

West End Village

max min average % annual change (average)

Belgravia & Knightsbridge 65.00 37.50 50.79 1.6% Central Core 55.00 50.00 52.25 10.0%

Covent Garden 59.50 30.00 41.58 5.1% City Midtown 50.00 30.00 42.73 6.3%

Marylebone & Euston 53.50 27.50 35.32 1.6% Eastern 50.00 25.00 39.75 1.6%

Mayfair 95.00 45.00 70.28 2.8% Eastern Fringe 37.50 20.00 27.83 0.0%

North of Oxford Street 65.00 31.60 43.56 0.7% Northern 52.50 30.00 44.74 9.1%

City Village
max min average % annual change (average)

Up w ar Up ds 3 w 0 ar & Up ds 4 w 0 ar & Up ds 5 w 0 ar & Up ds 6 w 0 ar & Up ds 7 w 0 ar & Up ds 8 w 0 ar & Up ds 9 w 0 ar & d 1 Up s 00 wa rd & 1 Up s w 10 ar & d 1 Up s w 20 ar & Up ds w ar ds 2 0 &

&

Paddington 57.50 30.00 40.83 9.9% Northern Fringe 36.00 22.50 28.30 9.8%

Soho 50.00 32.50 38.50 0.7% Southbank 47.50 35.00 40.13 7.0%

St Jamess 82.50 37.50 59.13 2.1% Southern 52.50 40.00 46.00 7.1%

Victoria 65.00 32.50 45.11 1.1% Western 54.50 32.50 45.26 3.0%

On Point Central London Market Second Quarter 2011 15

Town Planning
LEGISLATIVE CHANGES HIGHLIGHTS Greater London Authority The Replacement London Plan published in October 2009 has been found sound following Examination in Public. The Mayor is now considering how to include the Panel Reports recommendations in the London Plan. A Draft Charging Schedule for the Community Infrastructure Levy was published for public consultation. It will part-fund Crossrail and sit alongside the Mayors S106 requirements, although developers will not be double-charged. The Levy will apply to commercial and non-commercial uses in all London boroughs. Boroughs Southwark Council has been selected by the governments department for Communities and Local Government as one of the neighbourhood planning front runner authorities, testing the principles of neighbourhood planning as set out in the governments Localism Bill. Westminster has granted ranted conditional permission to the residential-led mixed-use scheme for Chelsea Barracks, subject to referral to the Mayor. 123 affordable units will developed on-site out of the proposed 448 units, and a 78m payment will be made to the councils affordable housing fund. The City of London Core Strategy has been found sound following Examination in Public, and is expected to be adopted in September 2011. Tower Hamlets closed public consultations on the Site and Placemaking and the Development Management Policies Local Development Framework documents on 15 July 2011. To discuss how these changes may affect your development, contact Guy Bransby on 0207 399 5409 or Jeff Field on 020 7852 4742.

Definition of Terms
Floorspace Threshold Data refers to office floorspace in units of 5,380 sq ft and above. Grading A subjective assessment taking into account specification, floorplate efficiency and image. Take-Up Floorspace acquired for occupation by leasing, pre-leasing or purchasing a freehold or long leasehold interest. Supply Floorspace which is on the market and available for occupation. Floorspace which is under offer prior to a contractual commitment is included. Speculative development prior to practical completion is excluded. Speculative Development Floorspace under construction or comprehensive modernisation which will be available for speculative letting (or sale). The forecast of development completions relates only to developments currently under construction. Net Absorption a measure of the change in occupied stock between periods. Demand Some applicants search across two or three market areas. In such cases their demand appears in the total for each area. However, when calculating total Central London demand, duplicates are eliminated. Active Demand Organisations with a declared requirement for office accommodation which are actively in the market to acquire floorspace in the short term.
Stratford Camden
Regents Park

Potential Demand Organisations with a potential requirement for office accommodation, but without a finalised brief in terms of timing. Prime Rent An opinion of the highest rent (excluding incentives) achievable upon a letting agreed at the quarter-end of a notional 10,000 sq ft unit of the best quality office space in a prime location. Net effective rents are calculated against our prime headline rent values and assume a 10-year term, a notional three month fit-out period and amortisation over 10 years. In practice net effective rents are subject to far more variability related to the specific characteristics of the individual premises. Prime Yield An opinion of the net initial yield which would be appropriate for a freehold Grade A office investment in a prime location let at a current market rent to a tenant with a strong financial covenant. Investment Turnover Capital transactions comprising freehold and long leasehold acquisitions for investment, owner occupation or development. Corporate transactions are excluded.

Marylebone/Euston North of Oxford Street Mayfair Bloomsbury

Northern Fringe

City Covent Midtown Soho Garden

Central City

Eastern Fringe Wapping Royal Docks Canary Wharf Isle of Dogs Greenwich Peninsula

South Bank

Please note the Docklands and East London market now include Stratford.

Contacts Neil Prime Director Head of UK Office Agency +44(0)20 7399 5190 neil.prime@eu.jll.com Jonathan Evans Director West End Agency & Development +44(0)20 7399 5950 jonathan.evans@eu.jll.com Chris Brett Director International Desk, Capital Markets +44(0)20 7399 5883 chris.brett@eu.jll.com Julian Nairn Director City Investment +44(0)20 7399 5865 julian.nairn@eu.jll.com Damian Corbett Director Head of London Capital Markets +44(0)20 7399 5286 damian.corbett@eu.jll.com Julian Sandbach Director West End Investment +44 (0)020 7399 5973 julian.sandbach@eu.jll.com Bill Page Director Head of EMEA Office Research +44(0)20 3147 1212 bill.page@eu.jll.com Kimberley Paterson Senior Analyst EMEA Research +44(0)20 7852 4685 kimberley.paterson@eu.jll.com Angus Goswell Director City & Canary Wharf Agency +44 (0)20 7399 5508 angus.goswell@eu.jll.com Dan Burn Director City Agency +44 (0)20 7399 5966 dan.burn@eu.jll.com Bina Shah Senior Marketing Executive EMEA Marketing +44(0)20 3147 1526 bina.shah@eu.jll.com

OnPoint reports from Jones Lang LaSalle include quarterly and annual highlights of real estate activity, performance and specialised surveys and forecasts that uncover emerging trends. www.joneslanglasalle.co.uk

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