The construction and fit out industries, and those that feed into them, initially appeared to be on course to ride out Brexit. It’s only really been in these more recent months, as chaos and confusion have taken over and no agreement has been reached, that the uncertainty has started to wear thin.
The same is true of the commercial property market. Having remained buoyant, overall, there is an expectation for the market to decline as a direct result of the drawn-out process to leave the EU.
Now, with the Prime Minister having tendered her resignation and a date set for her departure from Downing Street, it’s left to be seen, what happens next.
There are ten candidates in the bid for Conservative party leadership at the last count, with the official race set to get under way in early June, once the PM stands down.
One of these candidates will, therefore, be taking us through the next stage of withdrawal from the EU however, given that they all hold a differing stance from each other, there is certainly a high level of uncertainty regarding the future of the country and our long-term relationship with the EU. The situation is still overwhelmingly one of chaos and confusion.
Overcoming market uncertainty
Earlier in the year, the construction industry’s biggest trade bodies wrote to Theresa May warning against a no deal exit as this would likely have the worst impact on output, with companies of all sizes struggling to overcome the uncertainty that had hit the market.
The letter detailed companies preparing for the unknown by stockpiling materials, looking at alternative modes of transport and auditing their supply chains to ensure their strength and resilience.
For design and build companies and commercial fit out concerns, business uncertainty means that some companies will likely freeze plans and put off investments – a trend seen in the very early days of Brexit when nobody knew what to expect and whether activity would be imminent.
A temporary halt
For some businesses, a freeze on action is likely while people take stock and see what happens next. Economic forecasters are expecting the commercial property rent growth to slow and the annual rate of all property to decline in 2019. Brexit has undoubtedly weakened the market with activity and investment now subdued.
Inaction is not a long-term solution, however – far from it. Tenancy agreements run out, companies look for ways to remain buoyant, and to prosper, and recruitment and retainment remain key issues.
There will likely be a period of adjustment to any change at the top and it is in all our interests to be concerned about what will happen in October when the next deadline is reached however these changes will shake things and could even benefit some parties, depending on the size of their company and their specific trade.
Some smaller concerns may benefit from a drop in real estate value if a proportion of global investors choose to remove their investment from the UK property market. If commercial property is cheaper, we may hit a point when it becomes a highly advantageous period for companies to consider an office move.
And finally, there will be an ‘after’ that we can all move towards. It seems like we have been stuck in Brexit forever. It will be good to finally move on.