Brexit Vote – where next?

Its not difficult to find the negatives in the wake of the EU referendum vote.

For example: financial firms occupying large offices in the UK are key drivers of the UK office market. Analysts calculate that around 10 million sq ft of floorspace occupied by the finance sector in Central London is approaching either a lease break or a lease expiry before 2021 – over 20% of the financial services occupiers in London. A significant proportion of those occupiers could make partial or wholesale moves out of the UK – particularly those with significant Eurozone business.

However, there are some positives that should be borne in mind: “the UK is competitive, innovative and highly-skilled economy and an attractive place for business”. (David Sproul, at Deloitte).

“For property markets, the initial correction may be most severe but should be followed by an upturn as opportunities re-emerge in UK core markets and benefits of weak sterling are recognised.” (Chris Ireland, JLL)

“We should not lose sight of the fact that the UK is an incredibly resilient and adaptable economy and it is difficult to see how the City of London will not continue to remain as one of the leading financial centres of the world. The UK is also a major focal point for the technology industry and companies exposed to this sector are much less likely to be affected by the implications of Brexit.” (Rob Thompson Irwin Mitchell).

Office rents could fall, which would enable some tenants to move to better offices, which wouldn’t have been possible at higher levels. (Metropolis).

The highly active technology and media sectors are less affected by the EU referendum result than financial services (Metropolis)

In general, it is to be hoped that after an initial period of uncertainty, that occupiers begin to gain confidence that business will resume and normal relocation and refurbishment decisions can be resurrected. The starting position is one in which Metropolis is tracking over 800 occupiers which have ‘identified requirements’ for office space in 2016 and 2017, so even a softening of demand in the short term, will still leave a lot of business to be won over the next 12 months.

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