Christina Sigliano Director of Programmes, CoreNet Global UK Chapter

Ann Lewis Research Analyst Drivers Jonas Nigel Grice Head of Occupier Advisory Drivers Jonas Paul Burgess Director, Head of London Leasing The British Land Company

SEPTEMBER 2009 LONDON CRANE SURVEY

NIGEL GRICE - Occupier Agency ANN LEWIS - Research

Source : DJ Crane Survey 18 MONTHS AGO 37 new starts – 4.2 m sq ft

Source : DJ Crane Survey 6 MONTHS AGO 17 new starts – 1.1 m sq ft

Source : DJ Crane Survey TODAY 6 new starts – 160,000 sq ft

Latest construction starts 32,000 sq ft49,000 sq ft80,000 sq ft – all pre-let 12,000 sq ft37,000 sq ft30,000 sq ft

Only one new significant start 390,000 sq ft

Headlines – Q2 Prime Headline Rent Take-up (Q1 & Q2) Availability £42.50 sq ft 1.2 m sq ft 10.2% CITY WEST END Take-up (2008) 3.0 m sq ft 9.2% 0.6 m sq ft 2.0 m sq ft £70.00 sq ft Source: Drivers Jonas Research

Falling rents… West End Prime Rents – Fall from peak -42%-36% City Source: Drivers Jonas Research

Take-up at a record low Q Take up lowest on record Source: Drivers Jonas Research M sq ft

Q2 better but not much Source: Drivers Jonas Research M sq ft Q2 09

Construction has fallen 35% YR on YR M sq ft Volume under construction Source: Drivers Jonas Research

Speculative space fallen 33% M sq ft Volume under construction Source: Drivers Jonas Research Available Let

Forecast jobs growth % Change Source: Experian Westminster City Lower job loses But weaker recovery

London pipeline is much smaller than 90s M sq ft CompletedAvailable u/cLet u/c Source: Drivers Jonas Research

Want 100,000 sq ft of new space? sq ft Source: Drivers Jonas Research 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000

Want 100,000 sq ft of new space? sq ft Source: Drivers Jonas Research 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000

Want 100,000 sq ft of new space? sq ft Source: Drivers Jonas Research 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000

Want 200,000 sq ft? Completed 395,000 sq ft 220,000 sq ft 370,000 sq ft 20 Gracechurch 200 Aldersgate Ropemaker ,000 sq ft Drapers Gardens ,000 sq ft 442,000 sq ft 205,000 sq ft The Walbrook St Botolphs One New Change ,000 sq ft 440,000 sq ft Cannon Place Heron Tower

So… Construction is down…. but spec space remains high Jobs growth is weak… but construction cycle is smaller 2009 is the maximum point of pessimism

Structural demand: it’s coming! Source: Drivers Jonas Research West End City

London pipeline: tenant’s dilemma M sq ft CompletedAvailable u/c Source: Drivers Jonas Research Let u/c

SEPTEMBER 2009 LONDON CRANE SURVEY

CoreNet Breakfast Forum Current State of the London real estate industry Tuesday 15 September Paul Burgess Head of London Leasing The British Land Company PLC

British Land’s Office Portfolio: - £3.563 BN* - £2.394 BN* in the City *Values as of March 2009

Office Outlook - Occupier Market London office vacancy 7.3% (long-term average 8.1% 1 )London office vacancy 7.3% (long-term average 8.1% 1 ) Development activity 48% less than early 90s across allDevelopment activity 48% less than early 90s across all London sub-markets 2 Speculative development unviable and made worseSpeculative development unviable and made worse by increasing tax burden Occupier market fragile with take-up on a rolling annualOccupier market fragile with take-up on a rolling annual basis low Increased signs of activity within BL’s prime, modernIncreased signs of activity within BL’s prime, modern and well located portfolio Increased viewingsIncreased viewings 210,000 sq ft of City lettings, 49% of Q1 total take- up210,000 sq ft of City lettings, 49% of Q1 total take- up Further 63,000 sq ft under offerFurther 63,000 sq ft under offer 1 Jones Lang LaSalle – based on last 20 yrs 2 PMA – 5 yr Rolling Annual from London Vacancy 1 Development Completions over Cycles 2

Lease now while stocks last

City Lease Events (20,000 sq ft+)

Build it and they will come

Securing Income From High Quality Modern Buildings Key Office Voids To Let Sq ft ‘ % Let / Un der Off er Le ase Le ngt h yrs 4 Assu med Inco me void mths 5 Ave rag e ER V £ psf 6 Investm ents 201 Bishop sgate Broadg ate Tower Ropem aker Sub- total Develop ments Regent s Place One & Two Total % occupancy 1 (90% pro forma for Ropemaker 2 )94% occupancy 1 (90% pro forma for Ropemaker 2 ) 93% of vacant accommodation brand new Grade A space93% of vacant accommodation brand new Grade A space 58% of recently completed developments let/under offer58% of recently completed developments let/under offer New lettings achieved at average £48 psf for 17 yrsNew lettings achieved at average £48 psf for 17 yrs Only 9% of rent subject to break/expiry over next 3 yrsOnly 9% of rent subject to break/expiry over next 3 yrs (compared to IPD 24%) Valuers’ build in assumptions on breaks/expiryValuers’ build in assumptions on breaks/expiry Average ERV £39 psfAverage ERV £39 psf Average void of 32 monthsAverage void of 32 months Capex of £40 psfCapex of £40 psf 1 Underlying occupancy rate including accommodation subject to asset management and under offer 2 PC achieved in May Office space only (excludes storage) 4 To first break 5 Valuers’ assumed combined letting void and tenant incentive package 6 Current estimated headline rent (excludes provision for tenants’ incentives) on space to let

Priorities for the Future Continually evolving, dynamic property portfolio Rigorous and analytical overlay to support core property skills Robust and flexible financial structure and balance sheet Sustainable dividend supported by long, strong income streams

City Office Demand known requirements of 10,000 sq ft+, Q Total: 4.12 million sq ft ActivePotential Total: 1.45 million sq ft Additional non-geographically specific demand = 2.20 million sq ft

Big Bang to Credit Crunch

The seminal 20 th Century development in London

Scenario 1 - Back to The Future

Scenario 2 - Back to Basics

Scenario 3 - Things have changed

Conundrums and Contradictions - Sustainability and Operational Requirements - Power - Density

Ropemaker A new benchmark

‘The modular design steps back at each level to reveal a series of enchanting gardens in the air. It is an accomplished example of a design approach which integrates energy efficiency, humane working conditions and technology to produce an alternative to the usual office block’ Gateway House Basingstoke Peter Murray - RIBA Guide to Modern British Architecture

Good Design Principles - Adaptability - Permeability - Sustainability

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