Some predictions had the UK commercial property market collapsing after the June 2016 Brexit vote. Other predictions painted a picture of economic boom. In reality, commercial property has neither crashed nor boomed. It has remained relatively consistent, with one exception: leasing of office space in London and the South East. An increase in short-term leasing deals is due to the economic uncertainty.
As a commercial property adviser, I routinely work with clients looking to protect their long-term positions by engaging in short-term leases of office property that can be highly flexible. In times of economic uncertainty, there is no wisdom in signing long-term lease deals or purchasing property without seriously weighing what that could mean for the future. Some companies are still better off buying or entering long-term leases, but others find a short-term lease deal a much better option.
London Doing Very Well
The data for commercial property in London, particularly office space, looks very promising. Demand for serviced offices has grown by more than 30% in the last nine years, and that trend is expected to continue throughout 2017. In terms of total sales, the market was off by 23% across the UK. But in London and the South East, property still did very well. Tai United Holdings purchased a Hammersmith property for more than £100 million while Spelthorne Capital spent in excess of £350 million on a Sunbury property.
Market data also seemed to suggest that investors will be purchasing commercial properties with the intention of offering them as serviced offices. The plan is to provide cost-effective, high-quality office space in London and the South East over the next several years while Brexit negotiation take place. Once we have a better handle on what the separation will look like, owners can make long-term plans for their properties.
Think Short Term
The best commercial property lease advice right now for London and the South East is to think in the short term. Leases from 2 to 5 years can procure the kind of office space companies need without forcing a long-term commitment of up to 10 years. Things will work out well as long as tenants continue to be willing to spend and property owners are content with offering serviced offices with shorter terms.
Is your company looking to expand office space in London or the South East? If so, we should talk. As a commercial property adviser with years of experience and access to a full range of leasing opportunities, I can help you figure out what best meets your needs. Please note that our first meeting is free of charge. We can use that as fact-finding time to set your goals for property acquisition.
It’s hard to argue that economic uncertainty is the new normal while we wait for Brexit negotiations to be completed. In the meantime, the uncertainty will continue driving the office space market in London and the South East. I expect 2017 to be a good year for property owners.
London Economic – http://www.thelondoneconomic.com/property/will-london-offices-fare-2017s-property-market/04/04/
By John Parkinson.
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