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Little sign of slowdown in commercial property market ahead of Brexit

Interest in commercial property continues to be strong, but experts have warned of challenges ahead.

An analysis of take-up in central London’s commercial property market shows that take up reached 2.4 million square feet in the first three months of the year.

This is lower than the quarterly average, but still up over the equivalent period in 2017.

Real estate firm JLL, which published the report, said the West End has the strongest market at 932,000 square feet – putting it ahead of the equivalent period in 2017.

Certain areas, however, have suffered in terms of interest. East London recorded a below-average dip in take-up, as well as the West End.

The latter saw a fall in supply of around eight per cent over the first three months of the year compared to the same period a year previous.

The report says: “The low levels of speculative supply being brought to market has kept the new build vacancy rate severely limited at just 0.4 per cent of total stock, less than a third of the 10 year average of 1.3 per cent. This has been a major factor in keeping prime rents unchanged in the first quarter at £110 per square feet in the West End, and £70 per square feet in the City.”

Appetite for inwards investment has failed to subside however, with interest still strong overseas.

“The market continues to be dominated by strong cross-border capital inflows, with 78 per cent of the quarter’s transactions involving overseas buyers, and the UK share only inflated by two major owner occupier sales,” the report adds.

Experts have warned that investors should be wary of future challenges, including the impact of cultural shifts (more people working from home) and international changes (including what effect Brexit will have on the commercial property market).

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ELS Legal is an international law firm based in London with more than 50 partner offices across the world. As part of the Cathay Associates global legal network, we are the first choice law firm for a number of British businesses and overseas clients.

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