2014 was a golden year for the London property market and this in turn was good news for commercial property lawyers. Furthermore, despite some short-term uncertainty, the weight of sentiment suggests that the good times will continue through 2015 and 2016. Given this market uptick now is the time, if you are a commercial property lawyer, to explore your career options further.
A number of landmark commercial property deals were completed in 2014. For instance, the Gherkin, one of central London’s most recognisable buildings, was sold to the billionaire Brazilian banker Joseph Safra in November for in excess of £700 million. Also, one of the towers owned by Songbird Estates in Canary Wharf was purchased by a Hong Kong investor for £153.5 million.
Improvements in London’s commercial property market
The headline grabbing deals are good for confidence in the industry and commercial property lawyers will be well tuned into the underlying drivers of London’s improved performance in the last year. The first (and somewhat obvious) reason for the improving picture is the gradual recovery of the global economy. Money is more readily available and investors too are increasing in confidence.
Allied to economic growth is the relatively low level of construction and development that has taken place in the last five years. This has meant that the market has begun to look particularly appealing from a landlord’s perspective; however, the relationship between supply and demand at the moment clearly makes it a seller’s market. Another factor is the large scale increase in people moving from rural areas to cities. It is estimated that there will be an additional 1.1 billion city dwellers worldwide in the next 15 years. This trend can be explained by the fact that large cities are significantly more productive than their regional counterparts; London outperforms the national economy by 72% (GDP per capita).
Thoughts for 2015
The continued prominence of London as a centre for finance, accountancy, law and technology has resulted in office vacancy rates being as low as they were pre-crisis in 2008. London has also experienced the highest rental growth in the UK for 2014 and this looks likely to continue into 2015.
This resurgence has occurred not only in the traditionally popular areas like the City of London and the West End, but also in less prominent areas such as Farringdon and Brixton. This all bodes well for 2015 with the latest IPF Consensus Forecast predicting commercial property returns to be in the region of 10-12% for the coming year.
Commercial property departments were particularly hard hit by the financial crisis and by the wider deflation of the property bubble. In the intervening period, far fewer trainee lawyers have been qualifying and specialising in commercial property but 2014 saw increases of nearly 200% in the numbers of roles available to those with residential, commercial and agricultural property expertise.
As the commercial and residential property market has returned to ruder health, it has become clear that there exists a shortage of well qualified commercial property lawyers. Although uncertainty around the forthcoming election has brought a slight cooling to real estate markets, the medium term outlook remains positive. Those looking for a new challenge or for a firm where commercial property is a core focus might find 2015 an ideal time to make their move. The job market is especially supportive of commercial property assistants at the junior and mid-level wanting to make a move from the regions to London or vice versa. You would do well to consider a move in this current market where demand is high and you can enjoy a wide choice of opportunities.
For more information speak to one of our experienced consultants in the private practice team to find out more about the specific and wide ranging opportunities that exist for you.