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Brexit – Editorial

While the immediate aftermath of the Referendum vote plays out, local occupiers will wish to know how the local commercial property market will be affected across Central Southern England.

Before the vote, a prolonged gentle rise in rents and prices was underway.  Fuelled by increasing demand for quality premises, we feel it’s important to note that lack of supply was just as much a factor in these movements – particularly for industrial property.  While the vote may provide an immediate checking of demand arising out of short term uncertainty, property is an illiquid asset and supply remains short.  Indeed, rental tone takes months to feed through to the market in most cases.  Consequently, we will see short term wobbles, but possibly no spectacular crash in rents and prices over six to twelve months unless true recession comes.  Forthcoming GDP figures will be crucial in predicting the extent of any subsequent price dip.

In my opinion, Retail remains an exception.  The sector has remained fragile with difficult trading conditions for years.  The underpinning reasons include structural changes as to the way goods are bought and sold – namely the challenges arising from online retail and need for dual-channel sales.  These are long term inevitable changes and that process will continue, but in addition, uncertainty always restrains high street spending.  The retail outlook is surely less rosy today than pre-referendum.  On the bright side, Retail generally has been under the cosh for so long, surviving retailers are already lean and adjusted to a tough climate.   My personal prediction – zero growth for two years, or a fall in rents in real terms.