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Due to recent political events, such as the Brexit referendum and election, only 1.15million sq ft of speculative development was announced in 2017, compared to 4.7million sq ft in 2016. This is a substantial drop.
“The market is changing, people don’t want to revert back to 2008”; explains Eugene O’Sullivan, Managing Director at Morgan Pryce. “Developers don’t want to take unnecessary risks; the UK market is sensitive and, at this stage, the future seems a little uncertain”.
The South East and West Midlands hold a large variety of stock, which accounted for a large proportion of development works proposed for commercial properties in the UK last year. Eugene O’Sullivan, Managing Director at Morgan Pryce, says; “Developers and investors are now taking their investment cases outside London due to the yields in London becoming more and more compressed”.
However, the developments in these regions eventually fell by 70% in 2016, arguably a direct outcome of Brexit: pre-vote, an influx of speculative opportunities (buildings) came on to the market; post vote, many of these developments remain unlet.
Although the market is starting to re-emerge, O’Sullivan admits; “the tide has turned, the market is struggling to shift stock, therefore I don’t anticipate a rise of speculative developments in the near future”.
This news was brought to you by Morgan Pryce, a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.