Aerial view of the City of London London’s City district, among a handful of global financial capitals

LONDON—The United Kingdom’s 43-year membership in what today is known as the European Union may be coming to an end. In accordance with a promise made by Prime Minister David Cameron, who promised to hold a referendum on EU membership if he won re-election, Britons will vote Thursday on whether to stay or go.

As the referendum on a so-called “Brexit” has drawn nearer, Cameron himself has pleaded with the electorate to maintain the nation’s membership in the EU. Positions on both sides of the question have been sounded, arguing on the one hand that leaving the 28-nation EU would allow the UKL to chart its own economic destiny and on the other that a Brexit would lead to chaos in the global markets and backfire on the UK.

By Friday morning, the results of the vote should be clear, although the longer-term implications—however the voting turns out—will be less so. SIOR has provided with insights from seven of its members, including global president-elect Geoffrey Kasselman, on what a Brexit could mean, for both the global economy generally and commercial real estate in particular.

Paul Danks, Bsc., FRICS, SIOR; executive managing director, EMEA, Newmark Grubb Knight Frank, London: The overall sentiment amongst business leaders and a majority of leading economists, both within the UK and across Europe, is that the Brexit debate has hit business confidence and added to the considerable uncertainty that already exists in the global marketplace. Given this uncertainty, businesses are being far more conservative, not least as we still live within the shadow of a global recession—this impacts directly upon sentiment across the commercial real estate market.

Immigration and the flow of people into Europe from East to West have put significant pressure upon the infrastructure in host countries leading, across Europe, once again to “restricting” the free movement of people with the re-application of border controls. Across the UK and the other more affluent EU countries, such as Germany, there are concerns about an influx of immigrants coming and taking jobs (driving down wages as the labour supply increases), especially in countries such as Greece and Spain, when there are already excessively high levels of unemployment.

From a real estate perspective, businesses are putting major decisions on hold until the outcome of the Brexit vote is revealed. However, during uncertain times like these, brokers are seeking to reassure clients and support them with insight.

Despite the concerns, certain markets, such as the City of London office market, remain robust with office take up in the first quarter of 2016 up over 30% since Q4 2015. Though, it has to be said, that this is most likely as a result of the conclusion of deals negotiated in the last two quarters of ’15. Certainly though, since the beginning of 2016, it is taking longer to secure commitments from occupiers. This will inevitably lead to a slowdown in the marketplace across all property sectors until we have more certainty on the future direction of the UK—it is a real concern.

A majority of distinguished economic commentators—including evidence from the UK Treasury, IMF, OECD, The Bank of England and nine out of 10 economists in the UK—suggest that there will be both a short-term economic shock and longer term economic damage should the UK exit the EU. Overall, across the world, we are not fully out of recession and with interest rates at historic lows, the ‘tools’ available to Central Banks and Governments to “manage” market shocks are restricted.

There is additional concern within the EU that Brexit could trigger a domino effect of Eurosceptic rebellion across Europe with other nations wanting to also leave the EU for a whole host of unconnected reasons. Countries such as Germany need the UK (the fifth largest economy in the world) to remain in the EU.

If the UK were to leave, there will be considerable uncertainty across the markets as long established trade agreements are renegotiated, possibly leading to higher prices in the UK both for imported and exported goods.

Solly Gubbay, BSc (Econ) Hons, MRICS, SIOR, managing partner, Associé Gérant, Paris: Should there be a Brexit, the remaining EU members would immediately have a summit with an aim to steer the members towards ever closer federal political union. Given the general and prevailing apathy with the Union in the major states—Germany, France, Benelux, Italy and Spain—it is not clear to me how successful such a summit would be.

However, if there were closer political, economic and fiscal ties, then major commercial capital city hubs such as Paris, with its very large inventory of commercial offices (some 53 million m?) would benefit as large international corporates would accelerate their development plans to consolidate in “fortress Europe.” A less successful move towards closer Union could result in a “closer tied” European core of France, Germany, Benelux and maybe eastern states such as Poland. In any case, a Brexit and any further successful move towards closer union could move the European Union focal point to Germany, and a market like Paris may benefit less than say Frankfurt, Berlin or even Warsaw.

Regional hubs such as Lyons (France) could also benefit in such a scenario, as closer political union dilutes the importance of some capital cities. Similarly, the industrial market would consolidate across the Union as economic and fiscal barriers between member states disappear further.

In a Brexit scenario there could be some transfer of headquarter offices from London to Paris, especially as Paris and its region possesses a remarkably well qualified engineering / scientific recruitment pool (most of the nation’s top universities and business schools are in the Paris Region) and of course a large office market to absorb large headquarters. Although, in the financial markets, a hub such as Frankfurt could benefit more, given its existing pool of financial expertise, corporate friendly tax regime, and strong economy.

Patricia J. LeMarechal, SIOR, BSc (Hons), MRICS, partner, GeraldEve, London: In general terms, there is very little that indicates there would be anything other than a negative outcome for the UK if the vote was in favor of a withdrawal from the EU. Immediately following the referendum, the political turmoil would likely affect the UK’s economic outlook—particularly as a result of a depreciation of the pound—and would likely cast the UK into a period of uncertainty at a time of global economic fragility. This is already evident from the fluctuations in the pound / euro exchange rate over the past few months, reflecting whatever the polls state in or out.

Longer term, the impact on the UK will depend largely on the trade agreements that will be made, as the ability to move goods and services easily is highly important to the UK economy. Whilst these agreements are likely to be sophisticated, there would still be costs to deal with our European neighbors under any arrangements. The UK may also find itself at a disadvantage in terms of negotiating trade deals with non-EU countries without the benefit of the bloc agreements with countries such as the U.S., China, and India.

Another important impact of an exit from the EU would potentially be on the labor market: the UK attracts talented people from all over the world who contribute to the country’s economy in different ways. A Brexit could mean not only some of these people leaving, but some who might have otherwise come to the UK being put off, which could affect the possible labor pool, wages, wealth and economic development.

Outside the UK, the political stability of the EU and wider Europe could be threatened by a Brexit: a fractured EU could lead to further divisions within the Union or even other states leaving, all of which will no doubt have an economic impact on the fortunes of all of Europe and even globally.

A withdrawal from the EU would have the greatest impact on occupier demand from businesses for which the UK is an effective location within the EU, but outside the Eurozone. These businesses may look to locate or relocate elsewhere to make sure their trading conditions remain consistent which could most significantly affect the hugely-important financial services sector.

If a Brexit happened, the property market most threatened by this would be London offices as a leading financial centre: new barriers and costs to trade and loss of access to the single market could trigger international banks—of which there are over 250 in the City of London—to consider relocating to other European cities, potentially effecting the City office occupier demand, vacancy levels and employment. Clearly, there are a number of US companies and banks in this position and this could have an impact on the costs of doing business in the UK.

Geoffrey Kasselman, SIOR, LEED AP, executive managing director, national industrial practice leader, Newmark Grubb Knight Frank; 2015-2016 SIOR Global president-elect, Chicago: If Brexit were to pass, the UK would potentially plunge into a period of isolationism and currency devaluation, plus there could be transition turbulence of some length. The combined effect would only serve to injure the entire Western European economy for some time to come, as imports become more expensive and exports go the other direction. Plus, UK consumers would have their buying power diminished and their cost of capital would go up.

The timing of it all could hasten the near-term decline of an increasingly global economy. No geo-political or socio-economic policy is perfect, and it is fair game for the power of the people to demand change. But this is not the change the folks in the UK want to bargain for any time soon, if ever.

Steven H. Podolsky, SIOR, principal, Podolsky|Circle CORFAC International Commercial Real Estate Advisors, Chicago: A strong argument could be made for or against Brexit. From the European Union standpoint, my take is that leaving the Union is very negative. I’m not certain, even from Britain’s perspective, that one country could achieve by itself what the European Union was formed to do. Is it working in the way that it was intended? Not entirely. There are too many nations in economic disarray supporting those that are struggling, so I can understand why Britain might not want to be one of those nations supporting the others.

A Brexit would likely result in the rest of the EU sliding into a weakened state, both from an economic and safety standpoint. From the U.S. point of view, the European Union is supported by NATO, such that the exit of one country from the EU—even Britain—should not have a great impact on US foreign policy.

Economically, I don’t think a Brexit would have any effect on the US real estate market. London would continue to be a financial leader. Following a Brexit, I believe the UK and US would then enter into direct trade agreements, with British outward investment still going to seek global investment opportunities, and particularly into the U.S. Our real estate market will not be impacted. If anything, a direct trade agreement with the U.S. could have a positive effect for us.

The US dollar is strengthening against the British pound and may continue to do so if UK follows through with the Brexit. But even so, the UK will continue to invest in U.S real estate because of both its inherent and perceived value.

Thorsten Wolf, SIOR, Prokurist, Berendes & Partner Consulting GmbH, Hamburg, Germany: I do believe that the Brexit will come to a YES vote, yet the vote is not actually a vote about the Brexit anymore, but about other factors that influence the Brexit. Fundamentally, it’s about Britain vs. the rest of Europe. In the majority, the people who will vote to “opt out” do not necessarily understand the implications of a Brexit.

The impact will extend to other markets, but it will impact the UK far more than other European markets. The European Union is primarily a single-border free market. After a Brexit, the U.K. would be decoupled from this market, an economic model they may come to regret. For example, the UK now exports over 50% by value to the rest of the EU as part of a single-free market, an advantage they will to some extent lose if they vote to leave the European Union.

The advocates of the Brexit believe that Britain may be in a position to negotiate a better deal after they opt out, but that is highly unlikely. What will ultimately happen is that other countries will also likely ‘opt out’ of the EU, which is a huge risk for all.

If there is a Brexit, the UK will lose out, but here in Germany, I believe we will not feel a significant impact. There are various other nations that would quickly fill the investment and trade void left by the United Kingdom if they do in fact opt out of the EU.

Dipl.-oec. Hans-Ulrich Berendes, FRICS, SIOR, CRE; Berendes & Partner Consulting GmbH, Hamburg, Germany: The discussion about a Brexit and its impact on the EU and the economy is on both sides in the media every day.

I think in Germany we would love to keep the UK in the EU, but all of the special treatments they have received since the “Iron Lady” (Margaret Thatcher) started it are more and more becoming a nuisance. So I would guess that most people in Germany will have the view, “let them go if they don’t want to be a fair part of the EU anymore.”

Following a Brexit, Britain will experience more damages than they foresee at the moment. From a weaker British currency to the loss of employment, the price they are going to pay for a “splendid isolation” will be bigger than the populists are telling their nation. I still believe that the UK will stay in the EU, but if not, let’s wait for Scotland, who has said that if the Brexit happens, they would want a new referendum themselves to leave the UK.