Business Confidence in the West End10 Jan 2019 // Insights
Rising cost of property is the biggest concern for West End Businesses, not Brexit.
A survey of key West End businesses has revealed that the greatest challenge to trading is not Brexit, but the high cost of property in the area. Of the 62 businesses surveyed by leading West End law firm Seddons, only 19% cited Brexit as a key concern. The cost of property and business rates were the two main issues the businesses surveyed were most concerned about, cited by 27% and 20% of respondents respectively.
Although the impact Brexit will ultimately have is still unclear, the findings from the survey demonstrate that West End businesses are confident that their workforce will remain international in make up. The international reputation of the West End was highly valued by the businesses surveyed, cited by 28% of respondents as one of the area’s biggest strengths. Of the businesses surveyed, 29% employed a significant number of EU nationals (i.e. a minimum of 30% of their employees). More than half of respondents (53%) expect the percentage of their workforce from outside the UK to increase or stay the same in the next five years, compared to 23% of respondents who expect it to decrease.
The survey reveals that Brexit has made accessing capital more challenging, with 47% of businesses reporting that accessing finance had become more difficult since the referendum vote in 2016. At present, the preferred sources of finance for West End businesses are bank lending (60%) and private equity (21%) but over a fifth of businesses (21%) said they were planning to access different sources of finance in the future. The source of funding most businesses were interested in using in the next five years was crowdfunding, cited by 38% of respondents, up from a base of only 2% of respondents who currently use it as a source of finance.
The cost of property in the West End was highlighted in the survey as the most significant concern, with 27% of businesses surveyed raising it as an issue. Indeed, of the 11% of businesses planning to leave the West End in the next five years, the cost of property was the most common reason, listed by 22% of respondents. Business rates is also a key driver for businesses planning to leave the area, also cited by 22% of respondents.
Despite these pressures, the level of business confidence in the area is very high – over three quarters (76%) of respondents plan to still be based in the West End in five years’ time. Furthermore, over a fifth (21%) were planning to increase their floorspace in the area in the next five years.
The interviews conducted with survey respondents showed that the West End is evolving into a thriving centre of commerce. Respondents highlighted the area’s excellent transport links, set to expand further on completion of the Elizabeth Line, the quality of amenities available to workers based there and increasingly flexible ways of working available to West End businesses, such as greater provision of short-term leases. These factors combined explain why the West End business community is so resilient. Almost a fifth (19%) of businesses surveyed had been based in the area for over 25 years, and a further 29% for over 11 years. The West End’s location was the most popular reason for staying based in the area, cited by a quarter of respondents (25%), followed by access to a broad client base (14%) and the variety and quality of amenities in the area (11%).
Simon Ross, Managing Partner of Seddons, says:
“It is reassuring to see that businesses in the West End are unfazed by the prospect of Brexit, and moreover that many are planning their long-term futures in the area. Beyond its famous tourist attractions, the West End is a thriving centre of commerce in London and it is very encouraging that businesses are demonstrating high levels of confidence and optimism for the future.
Seddons has been based in the West End for XX years. With this research we wanted to take the pulse on the issues that matter to the area’s business community and offer insight into what makes the West End a vibrant and attractive place to do business.”
Tim Haddon, Asset Manager at British Land, comments:
“This research shows that the West End contains businesses that are resilient to economic and political change and who plan to be here for the long term. The area has many strengths to offer businesses, including connectivity, footfall, well-sized retail units and the attractiveness of the public realm. It is an address that many aspire to have – seen as a badge of honour and a good place to do business.”
To read the full report, click here.
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