Despite the Article 50 of the Lisbon Treaty not being invoked as of yet, the past two months have been characterised by some uncertainty across the property market in the UK. The Royal Institution of Chartered Surveyors has reported three straight months of falling buyer enquiries and estate agents seem to be less optimistic. Moreover, according to The British Bankers’ Association (BBA), 37,622 mortgages were approved by high street banks in July, down around 5% from 39,763 in June.
What impact has this had on the corporate real estate sector?
The Brexit vote had an immediate impact on the UK’s commercial property market and several major deals fell. Also, according to the Royal Institute of Chartered Surveyors, investment slumped to its lowest level in two years and prices for commercial property began to drop during the period right around the country’s referendum on EU membership.
However, the president of the Chartered Institution of Building Services Engineers, John Field, believes, among many others, that there will be “life after Brexit”. He said: “We do not anticipate any significant alteration in the very positive engagement we maintain with members across the globe and suggest that the referendum result creates significant opportunities and commitments to increase engagement with regional, national and global interests.”
Leasing seems to have changed dramatically and, although the available office space has increased by 2% in July, people are now looking for smaller spaces and the interest into 10-20 thousand square foot spaces is much higher than for larger office space.
What about the critical facilities data centres and engineering?
It’s interesting to also take into consideration the impact Brexit has had on our critical facilities, including data centres. Leaving Europe means that more data will be required to be held locally impacting the need for space. However, in the short term following Brexit, data centre providers found that existing UK plans were still on track.
JLL have recently revealed their quarterly data centre market report and have reported a prodigious start to 2016 with no signs of slowing down for the end of the year. “£400 million is forecast to be invested in the data centre market in 2016, up from £180 million in 2015.The immediate impact of the Brexit vote on the EMEA data centre market has been limited and we predict will be modest for the remainder of 2016 with projects already underway.”
Amazon’s cloud computing division is still committed to opening a London data centre by early next year. "Demand for all our services is growing across all Europe. For us it’s business as usual," said Stephen Orban, Head of Enterprise Strategy at Amazon Web Services.
From a recruitment perspective the lead up to Brexit has caused some turbulence and reluctance to hire. International companies are looking into what they need to do with their UK property portfolios and there’s a high chance there will be a need for projects, relocation work as well as demand for more space elsewhere bringing more opportunities for property professionals. Even though it still might be too early to tell, we have been as busy as always particularly in the critical and technical services space.