London Office Space Is Surprisingly Popular

London Office Space Is Surprisingly Popular

over 4 years ago2 mins

Mentioned in story

Despite prolonged political uncertainty in the UK, recent data suggests that the commercial property market in the nation’s capital isn’t doing too shabbily… ☺️

What does this mean?

A looming election that offers voters the choice between backing a bolshy Brexit or avowedly “Bolshy” renationalization has left many big London landlords cautious about the future. And so too their investors: after all, the Bank of England’s worst-case scenario for Britain’s departure from the European Union envisages UK commercial real estate values falling by nearly 50%.

Article Image

Construction of new office blocks remains subdued: the number of London developments begun between April and September was the smallest since 2014, according to a report on Monday from professional services firm Deloitte. But demand for existing space is high 🖐

Big international businesses that wouldn’t be so badly affected by a messy Brexit – including tech giants Apple andFacebook – have taken out big leases on suitably flashy workspaces recently. Indeed, the lack of new buildings means London office take-up may record its busiest year since 2014: in the city’s West End, vacancy rates are currently as low as 2.9%.

Article Image

Why should I care?

A business-friendly resolution to the present uncertainty could see listed London landlords like Great Portland Estates significantly overshoot conservative profit predictions – and their share prices rise to better reflect the nominal values of their real estate portfolios 📈

Those construction companies which carried on building in London after the 2016 Brexit vote are now enjoying the fruits of their labor. And if you think investors are being similarly over-pessimistic at present, an investment in British commercial real estate could benefit you too. Check out our pack on UK Property for more on investing in the sector.

Still, there are reasons to be cautious. As central London’s biggest office occupier, a WeWork meltdown could lead to rents – and real estate values – plummeting. After all, it’s happened before

Enjoyed this subscriber-only story? We’d love some feedback 🙏

Finimize

BECOME A SMARTER INVESTOR

All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

Finimize
© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG