The Role of Pre-letting in Office Property Development in the UK

Abstract

The paper reports on research on the role of pre-letting within office property development in the UK. Pre-letting is defined legally and the causes and consequences of pre-letting are examined. Pre-letting is discussed from the perspectives of risk, marketing, the occupiers' view and the property cycle. Senior executives from property development companies and occupier organizations were interviewed. Three detailed case studies are reported. Before construction, pre-letting can be a pivotal event effecting feasibility, subsequent events, ‘actors’ behaviour, the local economy and the urban environment. The results highlight the occupier's viewpoint and deepen understanding of the role of pre-letting within the wider property development process.

Acknowledgements

The author is very grateful to GVA Grimley LLP who funded the first stage of this project and especially to the Research Department, led by Stuart Morley, who were equal partners in that work.

Notes

The research was conducted in England although one case study was in Scotland.

The original web model is available at http://propdev.jimdo.com/

A low yield implies a high capital value. Pre-letting success on phase one may cause a reduction in the yield applied to phase two.

A reverse premium is a capital payment by the developer to the tenant.

Within the European Union, public contracts over certain thresholds must be let in accordance with a legal process that includes advertising in the Official Journal of the European Union.

The British Council of Offices, a UK body whose members represent many types of organizations and interest groups, publishes office design standards that are widely adopted.

Some of the land at Manchester was acquired from private landowners such as the Guardian Media Group.