Brexit uncertainty has once again caused concern in the commercial property market, as Newcastle saw its occupier market slowdown in Q1 2016 and leasing activity fall dramatically, Lambert Smith Hampton research reveals.
The firms latest Newcastle Office Market Pulse has shown that occupier deals in the city’s central office market saw a decrease to 29,250 sq ft, which represents a 39% fall compared to Q1 2015. While out-of-town take-up fell by 43%.
Research also revealed that there were 16% fewer deals across the region, with the average transaction size falling from 6,799 sq ft to 4,668 sq ft.
Newcastle’s investment market has also seen a slow start to 2016, with investors taking a more cautious approach due to Brexit. Volumes of investment slowed down in Q1 to £35 million, compared to the previous quarter which was £62 million.
High volumes traded in the previous quarter have reduced the number of tradable assets available to investors and as a limited supply of new stock is coming, investor appetite in Q2 will continue to slack.
Director of Agency and Investment at LSH’s Newcastle Office, Neil Osborne, said regarding Q1’s results: “A perceived lack of certainty ahead of the EU referendum on 23 June is clearly beginning to impact commercial property levels in Newcastle and the surrounding region.
“Our Q1 report indicates that both occupiers and investors are keeping their cards close to their chest until it is clear what the possible impact of a Brexit might mean for them. We believe that as more clarity emerges, we should see more deals taking place towards the tail end of the second quarter.”
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