How do office occupiers feel with a year to go before Brexit?

It’s exactly a year since Theresa May opened negotiations on Brexit with the EU. So we’ve updated our advice to clients on Brexit. But, perhaps more importantly, we’ve been asking our clients what they now think about Brexit with how they felt a year ago.

Office occupiers are less concerned about Brexit than they were a year ago, according to a new survey we conducted of over 100 major occupiers across Europe, most of whom have pan-European or global operations. The full results are in our report, but here’s a taster. We find that, by the beginning of this year, when we did the survey:

• the proportion of European office occupiers worried about Brexit having a ‘very significant’ impact on their operations in the UK had dropped from 15% to 6% compared with a year earlier;
• the proportion of occupiers worried about Brexit having a ‘significant’ effect has also fallen, from 38% to 33%;
• so the proportion of occupiers worried about negative impacts from Brexit has fallen in total from 53% to 39%.

However, the proportion of occupiers who thought Brexit would have an ‘insignificant’ or ‘very insignificant’ effect has barely changed (23% to 22%) and those who are neutral about its impact in the UK have risen from 25% to 37%.
In other words, it looks like occupiers are reassured by the level of progress in negotiations so far, even if there is still a huge amount of work for the politicians to do. Note that we did not ask occupiers whether the impact they expected would be positive or negative for them. Some of them might be delighted by the prospect of leaving the EU. The point is the level of expected change in UK real estate operations one way or the other. Put very simply, about two-fifths of European occupiers expect to have to do something about Brexit, and three-fifths don’t.

Purely within the UK, levels of concern are understandably higher, but here too the 54 occupiers we surveyed are becoming more relaxed. While 65% of UK-based respondents had ‘significant’ or ‘very significant’ concerns about Brexit in 2016, by late 2017 only 38% of occupiers were taking that view – surprisingly the same than the pan-European sample which I refer to above. Even more surprisingly, the wider pan-European sample is actually more worried (6%) about ‘very significant’ impacts than UK-based respondents (3%) – maybe because they feel less informed about it.

The change in sentiment shown in this survey must at least partly reflects the fact that in late 2016 and early 2017 (the timing of our previous survey), the UK’s Article 50 notice had not yet been served and that there was much more uncertainty then about the path of UK economic growth than there is now. Economic growth since then has typically been higher than expectations, which has perhaps boosted confidence. We can only hope that the second year of Brexit negotiations secures progress more quickly than the first.