Post Brexit Britain - Boom or Doom?
‘It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness….’ how strangely apposite Dickens’ words seem.
News that eight companies are scouring the market for office space totalling over 500K sq ft in the City, coupled with the fact that Chinese and other Asian investors spent over £3bn on London office buildings last year and that the newly established Central London hot spots for small and medium sized offices are Kings Cross, Soho, Clerkenwell, Farringdon, Hoxton, all suggests that this could be the ‘best of times’.
But listen to Mark Field, CEO, Ford – the latest car manufacturer to rattle their ‘Brexit Bad’ sabre – as well as Scotland’s First Minister’s Brexit inspired threats and Lord Howard’s recent reference to the Falklands war (when questioned about the Gibraltar issue) and you could be forgiven for despairing at the thought that these are ‘the worst of times’. Our quarterly Market Watch supports this – it reports a drop in headline rents across all sub markets of 1.74% in the last quarter, as well as the fact that occupancy costs are also under pressure from the new rates now in force (occupiers are facing an average increase of around 9%).
The truth is we are a wonderfully pragmatic nation. Hard Brexit, Soft Brexit or general election … no matter what the headlines scream, now that Article 50 has been served and an election called, we just get on with it and face the consequences – something Central London is especially good at (in terms of maximising the benefits rather than theorising about what might have been). The chances of another electoral anomaly on June 8th appears remote because three profound and compelling factors will remain in play. This country (and Central London in particular) will continue to be an attractive proposition because the major uncertainties which bedevil every international investment decision making process remain:
- Will the EU unravel if the forthcoming European elections result in a ‘Frexit’, or an ‘Itzit’, perhaps even the unthinkable, a ‘Germzit’
- The constant and very real threat of terrorist induced economic uncertainty stalks the Western world
- The Donald’s new steroid fuelled international policy is destabilising all.
Contrast that with the fact that we have a stable and growing economy, with a mature and respected legislative system and a government which is highly international trade centric. This potent combination makes us a safe and smart country to invest in – as evidenced again by the recent announcement that ‘German fund manager Deka has confirmed its acquisition of Cannon Place’ (in the City) for a headline price of around £485m.
Don’t get me wrong. The Brexit referendum is a divisive moment in our history, and the ramifications will be profound and long lasting, but we live in a global community which is facing question marks and uncertainties far greater than our own. So, it is no wonder that Asian investors are heading for our shores, major companies are consolidating, growing and looking for larger office spaces in the City and SMEs are looking to areas with a healthy mix of co-working spaces, serviced offices and locations with like-minded, occupationally nimble and work-life balanced office environments.
To misquote Dickens a little, maybe ‘it is a far, far greater thing that we do now, than we have ever done; it is a far, far better place that we go to than we have ever known’.