The commercial property market in the UK is showing promising signs of returning to a positive position akin to that before the UK decided to leave the EU, however, the same cannot be said for London and Scotland.
The rental and capital projections have improved, and the occupier market, along with the national tenant demand, all returned to growth at the all-property level following a slow second quarter. However, the industrial sector was the only part of the market that saw occupier demand increase, as the office and retail sectors show very little movement.
In the industrial sector, availability declined, where a net balance of 27% was seen with reports indicating that supply had also declined. The office sector also saw availability decline, while the retail sector was almost unchanged. Throughout the whole of the UK, the demand increased on the whole, while supply fell.
London is a slight exception to the rule as demand dropped for the second quarter, while the office sector experienced the sharpest decline. In contrast to this, there was a slight rise in availability in each sector except the industrial sector.
A survey regarding the third quarter asked members if they had come across any evidence where firms have considered moving away from the UK, following the referendum result.
The majority had not experienced any enquiries to leave, but some had reported that some firms had shown an interest in relocating. In Northern Ireland, 36% of respondents had seen an interest from firms considering relocating, while there was also an interest from the West Midlands and Central London.
Many of the respondents also felt that businesses would not look to move away from the UK over the next two years, however, a third did feel that some would consider relocating as a result of the Brexit vote.
Despite all of this, rents are expected to increase at a relatively slow pace but the projections are positive in both the retail and office sectors with the industrial sector posting solid increases. London and Scotland, however, were both unlikely to move into a positive position.
Foreign investors are taking advantage of the weak pound as it enables them to purchase property at an excellent price. The view taking on the value of property has also changed, as at the beginning of the year, almost 80% of those who took part in the survey believed that commercial real estate was overpriced in the centre of London. However, that figure dropped to just above 50% by the third quarter of the year.
In the main, all areas in the UK are expected to see gains in capital value over the next 12 months. Initially, it was believed that the market had hit a sticky patch and was heading towards a downturn, but this soon changed following the Brexit vote as the shock of the result faded away, leading to a sense of normality within the market.