London’s office market in for a fall?
A recent article on the Financial Review website takes a look at the current situation for London offices and the forthcoming decision on Brexit – Expectations by some analysts see a fall in the market due.
“We see a number of red flags that signal the start of a cyclical correction” Berenberg analysts led by Kieran Lee said. “the balance of risk is weighted firmly to the downside“.
With the atmosphere fully focused on Brexit be it that we are staying in, leaving with a poor deal or simply leaving as per the referendum of 2016 and with the vulnerability of the sterling and that a leave situation could bring an air of less attractiveness for having office space in London it points to some downward trends.
Rents falling, immigration falling, sterling falling / rising, England acting like a weak member of the EU can mean that what are already highly priced floor spaces across London will see rents falling, landlord profits falling and the likes of WeWork and similar easy to use office space solutions growing so that some kind of correction / adjustment may be due or at least a serious review of the situation needed.
An interesting point brought up were ‘millennial needs’ and the cost of keeping tenants / clients happy could be where a solution can be found such as investing in the likes of new ‘break-out areas’, cycle storage and more to keep in line with current trends and needs. Many offices across London are dated and no more is it simply putting them out to rent in whatever basic state will be enough, refurbishments / conversions / extra facilities and more will be needed to stay ahead of the game.
Is there a solution by the current trend of investments by local councils to snap up some lesser performing office space locations and turning them in to long term attractive hubs / work spaces that will show a long term ROI which is what many are looking for with their residential and commercial purchases across the country – Some councils purchasing property outside of their own zone.