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16% Drop in commercial property value in London West End between Dec 19 and June 20


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Found this in CAPC Press release thought it was worth publishing

Ok a lagging indicator but interesting reading....

https://www.capitalandcounties.com/sites/default/files/reports/pdf/press_release_june_2020.pdf

Total property value of £2.3 billion, a decrease of 16.3 per cent (like-for-like) (Dec 2019: £2.8 billion)

Also:

https://www.rics.org/globalassets/rics-website/media/market-surveys/gcpm/rics-uk-commercial-property-market-survey---q3-2020.pdf

"Outlook deeply negative for retail and office rents,"

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My employer is an international consultant and in terms of the UK have probably 50+ offices. It has been said they will never go back to >50% of desks occupied within current office space and are considering significantly downsizing  across the world as leases end. I think that is probably the same for any firm.

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A family member works in CW and has not been his office since March.

Lived and worked in Canary Wharf for 4 years (City before that) both are pretty dead still. We closed our London office to all wfh (small start up only 4 of us anyway). All my ex-colleagues from big banks and clients/ex-clients from asset managers/hedge funds etc. all wfh pretty much, most I've heard is one ex-client/mate who's going back into the office 1 week on 1 week off from March next year.

Going to be so interesting to watch the next year play out, medium term though commercial property is toast yeah. Take all those new skyscrapers in the City (Bishopsgate etc.), spades first in the ground 2016 just before Brexit, they were building them on future anticipated growth in demand (so already over building height of the London 'bull market'), God knows who they'll flog 'em to or what they'll do with them now. 

Edited by CityLAD88888
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Lived and worked in Canary Wharf for 4 years (City before that) both are pretty dead still. We closed our London office to all wfh (small start up only 4 of us anyway). All my ex-colleagues from big banks and clients/ex-clients from asset managers/hedge funds etc. all wfh pretty much, most I've heard is one ex-client/mate who's going back into the office 1 week on 1 week off from March next year.

Going to be so interesting to watch the next year play out, medium term though commercial property is toast yeah. Take all those new skyscrapers in the City (Bishopsgate etc.), spades first in the ground 2016 just before Brexit, they were building them on future anticipated growth in demand (so already over building height of the London 'bull market'), God knows who they'll flog 'em to or what they'll do with them now. 

In London, I can possibly see companies that are currently located outside London, in places such as Reading, Croydon, Watford, Slough and possibly further afield taking advantage of the cheaper office rents and relocating their HQ’s to Central London. Therefore in the long term commercial property in Central London may recover. However if such a scenario plays out then it would be to the detriment of commercial property elsewhere in the country. 

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In London, I can possibly see companies that are currently located outside London, in places such as Reading, Croydon, Watford, Slough and possibly further afield taking advantage of the cheaper office rents and relocating their HQ’s to Central London. Therefore in the long term commercial property in Central London may recover. However if such a scenario plays out then it would be to the detriment of commercial property elsewhere in the country. 

Exactly. The reason why those floors in the city towers rent for £1m per annum per floor, is that someone else was willing to pay £950k per annum etc. 

 

In a small buisness park in Reading the reason they can be dirt cheap is there was only one taker. Name your price. 

 

Commercial property high end will fall in value but still be busy. 

Lower end might just collapse.

This is being seen in a rush to "quality" in asset valuations. 

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In London, I can possibly see companies that are currently located outside London, in places such as Reading, Croydon, Watford, Slough and possibly further afield taking advantage of the cheaper office rents and relocating their HQ’s to Central London. Therefore in the long term commercial property in Central London may recover. However if such a scenario plays out then it would be to the detriment of commercial property elsewhere in the country. 

For the sake of having a 'brass plate' 'London postcode' HQ you mean? Yeah potentially. 2 other pull factors come to mind too, a) the proximity to major international Airports, and partially related b) Meeting Room space. Always was a nightmare booking and arguing the toss with colleagues over meeting rooms, so in the immediate term more space will be able to be allocated to that at least, plus then more space for those clients/partners/vendors arriving for meetings from abroad. My firm is potentially going to look for on demand meeting room space even with everyone wfh for example.

Edited by CityLAD88888
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