The exit vote in the European Union referendum created financial uncertainty in the commercial property market, but office rents are now steady.
According to an August 2016 article by the commercial property business Lambert Smith Hampton, rental levels of office property are holding firm. Rent values have been driven by the lack of good quality office space in many British regions.
Some areas have seen large rent rises. Hemel Hempstead rents have risen by 25%, and those in Watford have gone up by 20%. The only areas where rents have fallen are parts of central London. The average rent in Mayfair has dropped from £125 per square foot to £120 per square foot.
The head of Lambert Smith Hampton’s office agency, Tony Fisher, said:
“Despite uncertainty, deals, interest and headline rents have remained healthy outside of London so far.
“A big plus is that supply is relatively tight, which should help to support headlines.”
According to a July 2016 BridgingandCommercial.co.uk article, the Royal Institute of Chartered Surveyors Commercial Property Survey has found that the commercial property market suffered a loss of confidence immediately following the Brexit decision. The view of Ezra Nahome, chief executive of Lambert Smith Hampton, is that investors are now beginning to return to the commercial property market, with much interest being shown by overseas investors. He said:
“It’s a stretch to say that the market is returning to normal, but cooler heads have begun to return. Values for well-located properties with long leases will hold up well, perhaps even increasing if monetary policy is loosened further.”
Several lenders offering commercial mortgages at attractive rates report healthy lending volumes.