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1 Ask a question Go to slido.com, enter #london

2 THE BIG PICTURE Kevin McCauley EXECUTIVE DIRECTOR HEAD OF LONDON RESEARCH

3 MARKET BACKGROUND LOW GROWTH, UNCERTAINTY BUT STRONG GLOBAL ECONOMY Slowing UK economic growth low unemployment rate, low inflation, higher earnings Brexit uncertainty lots of noise as the end-game plays out Global economy growing strong but facing more headwinds

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5 OFFICE TAKE-UP OFFICE AVAILABILITY RENTS 13.8m sq ft 10-year average:12.6m sq ft 13.7m sq ft 8% below 10 year average Stable over the quarter with some increases Likely to be just down on 2017 Only 7.1m sq ft of spec space under construction Resilience in short-term

6 per sq ft SHORT-TERM RESILIENCE FOLLOWED BY MODEST RISES RECENT MARKET STRENGTH SUPPORTING RENTS MAYFAIR / ST JAMES KING S CROSS CITY SOUTHBANK DOCKLANDS Source: CBRE Research

7 Annualised rental growth % SECONDARY STOCK MOST EXPOSED TO RENTAL FALLS 10% 5% 0% -5% 6% 5% 1% -2% Prime -10% Secondary -15% -13% -15% -20% Source: CBRE Research, MSCI 2007 / / / 2022

8 Thousands of jobs OFFICE-BASED EMPLOYMENT STRONGER IN SHORT TERM SUPPORTING RENTAL OUTLOOK May October 10 0 Source: CBRE Research

9 Million sq ft % New and Prelet TAKE-UP REMAINS ROBUST, MORE NEW AND PRELET STOCK CENTRAL LONDON ANNUAL TAKE-UP % 45% 40% 35% 30% 25% 20% 15% 10% Secondhand New Prelet 10-year average % New and Prelet 2 5% 0 0% Source: CBRE Research Q1-Q3

10 Million sq ft 20 CURRENT MARKET DYNAMIC DIVERGING PERFORMANCE BETWEEN NEW AND SECONDHAND SPACE NEW Supply Rolling 12 month take-up 15 SECONDHAND

11 Million sq ft c.13.8 M SQ FT UNDER CONSTRUCTION, HALF SPECULATIVE CENTRAL LONDON DEVELOPMENTS UNCERTAINTY & COMPLEXITY Completed U/C Let / Under Offer U/C Available Proposed Let / Under Offer Proposed Available Source: CBRE Research

12 We ve seen very constrained supply conditions in the City of London and across central London. The two schemes will complete at a time when the economy is strong, demand for office space is strong and supply is tight October 2010

13 ASIAN INVESTORS LIKELY TO CONTINUE TO DOMINATE GLOBAL EQUITY TARGETING LONDON OFFICES North America 7.8bn Europe 6.5bn Middle East 4.0bn Asia 16.8bn TOTAL 35.0bn Source: CBRE Research

14 HAVE UK OFFICES RE-PRICED ALREADY? 7.5% 7.0% 6.5% 6.0% PRIME OFFICE YIELDS: THE UK & THE EURO AREA COMPARED 5.5% 5.0% EU Referendum Eurozone UK 4.5% 4.0% 3.5% 3.0% 2001 Q Source: CBRE Research

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17 TECH CLUSTERS ARE GROWING FASTER AND LONDON IS LEADING THE PACK Scale City Super City High Tech Location Quotient High Tech Employment Growth % 15% GDP per head 39,900 34,990 Normal City % 35,430 Growth City % 17,220 London % 67,500 Source: EMEA Tech Cities, CBRE Research, 2018

18 INNOVATION GOVERNANCE CULTURE

19 Crossrail NEW LINEAR CBD Date of delivery Dec 2019 Cost 16bn Scale 118km

20 HEATHROW TOTTENHAM COURT RD WHITECHAPEL CROSSRAIL ACCELERATING THE PACE OF CHANGE CANARY WHARF

21 WHAT DOES THIS MEAN FOR YOU? SHORT/ MEDIUM TERM LONGER TERM Heightened levels of global uncertainty will this translate through to occupier and investor sentiment? Shortage of new space development or refurbishment opportunities Investor demand remains high but more cautious less competition especially for non-core assets Are Crossrail benefits fully priced? some locations will benefit from a post-completion uplift What s behind successful cities? investors and occupiers believe in London s competitive advantages Scale tech economies outperforming London is diverse and resilient

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