After a referendum blighted by misinformation and three bitter years of uncertainty, the UK has now officially left the EU, but in spite the celebrations on the banks of Westminster, the final impact of Brexit is still far from clear.
Despite proclamations to the contrary, Article 50’s signing was not the panacea that Farage and political Brexiteers have led the public to believe.
The UK must now begin a series of ‘protracted and uncertain’ trade negotiations to forge new deals with neighbouring and further afield countries alike.
In the context of the commercial property market, the 2016 EU referendum had a direct and undeniably significant impact on the sector, leading to a considerable slowdown in the leasing of offices across central London and major cities around the UK.
Over the following years, the market has rebounded, and leasing activity has proved somewhat robust in 2019. Figures from leading UK consultancy firm DeVono Cresa reveal that businesses were still cautious regarding the volume of space leased.
Shaun Dawson (pictured), Head of Insights at DeVono Cresa commented: “Brexit is of course only one-factor influencing decisions on space planning, with others including the steady increase in the use of technology, the need for more agile working, and an increasing focus on staff wellbeing.
“Another sign of previous economic and political uncertainty is the uplift in interest in short-term and flexible leasing.”
According to DeVono Cresa’s 2019 data, all major business sectors saw a downwards shift in terms of space leases, with the average size of leased office space down 15% (11,040 sq ft vs 9,338 sq ft) when compared to the long-term average.
As shown in the graph below, Legal, Professional and Corporate business sectors saw the largest drop in leased space, with deal sizes down by approximately a third.
The political and economic uncertainty that Britain faces has caused businesses to prefer to hedge their bets on fully-serviced offices as a way to mitigate short-term uncertainty whilst also gaining better facilities in the process.
Unlike traditional offices, many serviced offices come with additional meeting rooms and at the higher-end of the serviced office spectrum, also contain perks such as on-site gyms.
Dawson remarks: “This analysis highlights how Brexit occurred at a time when the traditional office leasing market was going through a number of important paradigm shifts.
“As a result, DeVono Cresa believes it makes more sense to engage a trusted real estate partner to ensure that the search and selection process delivers the best space for the business – whether this is a move to a smaller space, a different type of lease, or even a different location.”
Following the December 2019 UK general election and the sizable majority held by the Conservatives, businesses across the board expressed tepid positivity and began to hold hope that the next phase of the ‘Brexit divorce’ -trade talks, would reflect positively on the UK. However, the outcome of such negotiations is far from guaranteed amidst Donald Trump’s ongoing impeachment procedure and the global Coronavirus outbreak that has the hearts and minds of Asian trading partners pre-occupied.
Despite the post-Brexit horizon being murky, there are some streaks of positivity, with record employment levels reported.
A reflective and upbeat Luke Philpott Joint CEO of DeVono Cresa concludes: “Global investment into the UK, and London specifically, is expected to pick up over the course of 2020, as greater political clarity and direction on economic spend has boosted investor confidence. Since the election, client search requests have risen by 40%.”