The credit crunch has had a deep impact on the office market across the UK and especially in London as it is the financial capital. A huge drop in real estate investment became a trend as people tightened their purse strings. However, many researchers say that the UK has a knack for rapid repricing and hence won’t face a huge loss. The newly built swanky offices throughout London, speak for themselves. A few of the snazzy modern office buildings that came up in the last few years lay half empty as businesses were unsure whether a pretty building with a fancy atrium was a better choice over saving that extra bit. Cutting corners seemed the logical thing to do when the future of your business was at risk.
London, being the financial sector has been more vulnerable as the estate market relies on financial and business sector for leases. Leasing levels in 2008 and 2009 fell by 15% to 50% in London itself but more recent reports show a small growth in the office leasing industry. An average increase of 6.9% was seen in the value of offices. Several construction sites were put on hold which in turn led to a rise in the demand for office spaces and a hike in their prices.
Still, all is not well in the office leasing industry. Severe and fast budget cuts may mean that many new office spaces lie empty as employers throughout the country may be forced to make redundancies. The full effect of the situation will be evident once the effects of the budget cuts set in late this year or early next.
» Read more: Has the Office Market Been Affected by the Credit Crunch?