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Office Overload Beats Brexit Effects in the UK
A chock-full pipeline of office product is posing a larger threat to rent growth and asset values in London, than is the risk of companies leaving following the United Kingdom’s vote to depart the European Union. According to UBS Group AG, oversupply of office space was a problem long before Brexit. According to UBS’ Thomas Wels, the new buildings will come online in 2017 and 2018 “and isn’t priced into rents.”
Through March of this year, developers had begun work on 51 office buildings in central London , almost doubling space within 18 months. If Brexit has any impact on office rents, it will be due to the excess supply and slowing demand, especially as companies could shift as many as 100,000 jobs from London within two years of the UK’s beginning a process to leave the EU.
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