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25mnb's blog Commercial property is big business in the UK and nowhere more-so than in England’s city of London. Now, however, Brexit has turned the tables on negotiations with tenants the ones with the power as property funds, investors and the companies who own great swathes of London’s commercial buildings struggle with rising uncertainty.

For the tenants whose agreements are soon due for re-negotiation, they may well be able to secure the best deals for the next 5-to-25 year contracts. Amid the possibility that so much could change once Parliament invokes article 50 and begins renegotiations, landlords and owners need to do all they can to ensure they can keep their buildings occupied. And that could well mean agreeing to a 2016 rent freeze for at least the next five years.

“This is a great opportunity for businesses to secure a new rental agreement that could potentially reduce their projected costs significantly,” said Denhan Guaranteed Rent specialists. “It’s less good news for commercial property investors though, who might need to make fresh projections based on this recent turn of events.”

Research from big data analytics firm DealX shows that around 9% of London’s office space is at risk from relocation if the UK can’t secure a favourable agreement with the European Union. While the number of firms who say they ‘may’ move is large, the final decision is of course dependent on the exact details of the final agreement – and that is likely to take years of discussions and proposals.

In the meantime, uncertainty is likely to remain with both business and consumers struggling with the unknown. And, when uncertainty is high and confidence is low, people and businesses tend to worry about finances and limit spending. For the UK’s commercial property sector this could prove disastrous, even if the eventual agreement does give international businesses everything they want.

“What is already certain is that the political uncertainty is causing investment decisions to be delayed, which has a knock-on effect for pricing,” said Joseph Kelly, chief executive office and co-founder of DealX. “London’s financial services industry is a crucial part of our economy and underpins a huge proportion of commercial real estate.”

For UK property funds, this is an additional concern for them and their investors. However, at least two funds took the decision to cut the value of their property Funds in the first week or so following the referendum result.

Kames and Aberdeen Asset Management took the early decision to reduce between 5% and 17% from the value of their property funds. This means that even before the fallout from Brexit has fully played out, any investors who recalled their investment would receive a lower amount than they would have been able to achieve pre-Brexit. It’s a move that’s proving to be in line with how things have already changed since the end of the first week in July.

“UK property funds who haven’t already made value adjustment will be left reeling as uncertainty deepens,” said West Hampstead Estate Agent, Paramount Properties. “Things will settle and find their new levels once more is known about how Brexit will impact businesses.”

Unfortunately for some, that’s still potentially years away.