Brexit will lead to uncertainty and anxiety in London’s commercial property market in 2017, according to the latest office market bulletin by real estate consultancy Cluttons.
The firm explained that the market is slow but steady, adding that it faces challenges as Brexit negotiations continue.
Cluttons added that although total take up in the central London office market during 2016 was down by close to a fifth on the 2015 figures, Q4 of 2016 saw occupiers moving forward with plans that were previously stalled, representing something of a reversal.
Rise in London office take-up
The report revealed that total take up volumes in Q4 of 2016 across central London rose to nearly 3,520,000 square feet. This was an increase of 72 per cent from the third quarter, which represented the biggest rise in over two years.
Head of research at Cluttons Faisal Durrani said: “It would appear that the economy’s resilience in the face of an unclear future has helped to bolster activity in the capital’s commercial office market.”
It was also revealed that the pound’s weakness has attracted a great deal of international investment, particularly from those based in China.
Cluttons highlighted that investors are less likely to want to face any risk at present, which would result in vacant assets and those with short-term income are not as popular.
Ralph Pearson, head of commercial agency at Cluttons, said: “The London office market is slow but steady, with positive and negative indicators finely balanced.”
Interest in regional office investment
The impact of Brexit will be far less prominent in the other regions of the UK, however, which will likely see more growth in the commercial market moving forward, especially as investors start to see London as a less attractive proposition.
Northern Powerhouse cities including Manchester, Leeds and Liverpool may witness an increased volume of commercial office investment activity in the near future.
Mr Durrani highlighted that it was a good sign that prime minister Theresa May has plans to arrange trade deals with countries such as the US, Canada and Australia.