Uncertainty over what Brexit means for business remains a central topic to news reports, with a split between optimistic and pessimistic outlooks being argued for most property markets in 2018, according to Avison Young as part of its North America and Europe Commercial Real Estate Investment Review.
Jason Sibthorpe, Avison Young Principal and Managing Director, UK, comments: “Views on how Brexit and political uncertainty have affected business confidence in the Central London office market can be argued in different ways.
“For the optimist, Deutsche Bank’s decision to commit to at least 469,000 sq ft at LandSec’s 21 Moorfields scheme; positive market updates from two London-focused property companies, Derwent London and Great Portland Estates; and third-quarter 2017 showing the highest level of letting activity since 2006 all point to a market with robust levels of demand.
“For the pessimist, the number in 2017 of sub-20,000 sq ft transactions – which represent around 90% to 95% of all transactions – was around 80% of 2015 levels. Going forward, office occupiers are likely going to become more discerning and, outside of large space requirements, drive harder bargains with landlords. “
2017 also saw a decline in the level of industrial take-up across London and the South East region due to weaker business confidence, with an expectation that this picture will remain the same in 2018. While supply has increased, it remains constrained in many locations – a result of the continuing repurposing of industrial space to uses such as residential.
Jason adds “The conundrum for many logistics companies and retailers is how to provide last-mile delivery service, particularly as the benchmark performance is moving from same-day to four-hour delivery in London. This situation is likely to result in rent increases in the central area.”
