20 Fenchurch Street, the ”Walkie Talkie”, an office building in London, has just sold for £1,280,250,000 – one billion, two hundred and eighty million, two hundred and fifty thousand pounds.
The stamp duty on that transaction? £64,002,000 – sixty-four million and two thousand pounds.
Just what’s going on out there?
London and the wider UK are still growing and money is still coming in from overseas
It’s fair to say that there’s a battle going on for all our hearts and minds at the moment regarding Brexit.
On the pro-Brexit side, supporters point to the recent decision by BMW that "it will build an all-electric version of the Mini in the UK...The news guarantees the future of the 4,500 staff at plant, who currently build the bulk of the 360,000 Minis of all models produced annually." (Telegraph Online, 25 July 2017).
Take-up of office space in London rose 6% over the 10-year average, according to CBRE. Speaking to BQ Live, Chris Vydra, executive director for city leasing at the firm said, “It is encouraging to see the Central London leasing market rallying following what has been a politically uncertain time for the UK. These latest take-up figures are testament to confidence amongst businesses about London’s significant advantages as a global business centre”.
The lure of London does not seem lost on overseas investors. The dominant financial sector attracted 99 foreign direct investment projects in 2016, up 5pc on the year before and the highest for a decade, according to a report by Ernst Young (EY). Speaking to the Telegraph, Omar Ali, UK financial services leader at EY stated, “Despite the referendum, UK financial services continued to attract record levels of investment last year...However, the outlook for 2017 and 2018 isn’t so certain".
So, there’s confidence out there but also uncertainty ahead of the final outcome of the Brexit talks. The country is still on course to leave the EU in March 2019 although some form of transitional arrangement (lasting two to three years) is gaining popularity in both the cabinet and shadow cabinet.
The Maxwell Stephens view – opportunity trumps uncertainty
As we reported in earlier blog posts, we’ve never had a busier three months than the first quarter of 2017. We’ve been one of the country’s leading facilities management recruitment companies for a long time now and our observations are reflected in informal discussions we have with clients and colleagues at other firms.
We hear all the time, and correctly so, that business requires stability and certainty before it will commit resources, time, and capital to growth.
That’s only half the story though. Stability and certainty are two things – opportunity is another.
All speculation on business growth is based upon an assessment of the chance of increased market share and profitability. BMW, the purchasers of the Walkie Talkie building, entrepreneurs taking out new office leases – they all have one thing in common. They can see more upside potential for their company than downside potential caused by the currently unclear outcome to the Brexit talks.
Growth in the UK economy has stalled over the last half-year. And it is true that growth in the EU has been quicker.
However, the UK economy has generally grown a lot faster the individual EU countries or the EU combined over the last ten years. The EU was starting from a much lower base than the UK and, as is the way of economics, it was bound to flip at some point. But how long before the next crisis in a member nation drags down the whole block again?
The Maxwell Stephens view – growing FM service providers, more and more in-house FM teams
In addition, more and more companies approach us looking to help them staff a new or an expanding FM department.
Someone once said that economics only exists to make astrology look respectable. And that person very likely had a point.
To us, the market is still in a multi-year growth cycle. We’ve never been this busy. We hear from colleagues at competing firms that they are experiencing something similar. No-one knows what the future holds but, at this moment and we’ve said this consistently in our blog over the last 2 or more years, we see no major black clouds in the horizon.