COMMENT The clocks go back on Sunday, signalling, for many, the business end of the year. For some of the biggest advisers, Q4 activity accounts for a third of their revenues.
Anecdotal evidence suggests activity is holding up, especially on the investment side. On leasing shortlists are thinner, incentives necessarily more generous.
Perhaps, though, a flurry of recent statistics suggest we can afford to be a little more upbeat.
This week’s RICS Commercial Market Survey shows pockets picking up. In line with better than expected GDP figures, the poll shows a rise in net occupier demand, from -2% in Q2 to 5% in Q3.
Meanwhile, an uptick in investment demand brings “modestly positive capital value expectations”. Rental expectations are firm for industrial space, neutral on offices, and marginally negative for retail – unsurprising given Thursday’s news that high street sales are falling at their fastest rate since 2009.
And in terms of confidence, the regions are propping up the capital: “London continues to display more cautious sentiment relative to the national average.”
It is never wise to draw too much comfort from a single survey, but there is a weight of evidence supporting the case for cautious optimism.
Thomson Reuters’ September asset allocation poll did show that investor allocations to UK property have edged down recently. Yet the more comprehensive Weill/Cornell University Institutional Real Estate Allocations Monitor (to which 244 institutions managing $11.5tn of assets contributed, compared to Thomson Reuters’ 14) was more upbeat.
It showed institutional investors’ target allocation to real estate has topped 10% for the first time. Moreover, it showed healthy demand for UK property, with 64% of respondents looking at UK assets, unchanged on 2016 and up from 51% in 2015.
None of this points to a strong recovery. But none of it points to a precipitous decline either.
And this week saw a highly visible statement of confidence in London and the UK: the opening of Bloomberg’s £1bn HQ in the City.
It is a fabulous, no-expense-spared building developed by a financial services business and designed with space to grow. It is a testament to underlying confidence in the economy, our skill base and our ability to remain at the heart of the global financial services and tech industries.
Speaking to EG this week, company founder Michael Bloomberg said it was London and New York which still mattered most in the global economy.
He had just used the opening ceremony to present Sadiq Kahn with an employee badge which would allow London’s mayor to move freely around the building. He should take advantage.
The building acknowledges the past but is all about the future. A museum may be opening in the vaults showing artefacts from the Roman temple of Mithras on which it was built, but Kahn will be more interested in the heating, cooling and water systems that make it the world’s most sustainable office.
The HQ also much to say about tech – among its 4,000 finance-facing staff are 800 software engineers who will working be on applying machine learning.
And it speaks to London and the UK as much as it does the EU – it is after all Bloomberg’s European HQ.
The application of those principles may just provide Kahn (and hopefully other politicians) with a post-Brexit recipe for success.
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