One of the consequences of Brexit is that companies and organisations – which have head offices in the UK – are now looking to relocate their business premises to other European countries. Brexit is all about risk because the UK will be giving up the safety of the European Single Market, when the country finally leaves the EU in March 2019. The UK on its own will pay high tariffs to access global markets including the markets of non EU countries as the UK loses its protection of the European trading block. Life is going to become very difficult for any company located in the UK, which depends on trade in goods and services with clients outside of the UK.
One organisation that understands risks is Lloyd’s of London, which intends to set up an insurance subsidiary in Brussels in 2019. Lloyd’s of London came into existance in a London coffee house in the 17th century, where men used to meet as brokers and underwriters in the business of shipping insurance. Today as well as marine insurance Lloyds of London sells insurance policies that cover some of the following areas: accident & health, crime, cargo, casualty, employers liability, energy, fine art, motor, space, and terrorism. Although the Lloyds insurance market has done business from London for well over 300 years, the prospect of Brexit has made it take out its own insurance by opening a Brussels branch, against being excluded from European insurance markets. This is hardly surprising as according to the Lloyd’s of London’s website under the question: “How much of Lloyd’s business comes from European markets?” it said: “In 2015, the EEA accounted for £2.93 bn or 11% of Lloyd’s Gross Wrtten Premium.”
Organisations located in London that belong to or work for the EU will have to move because of Brexit. According to reports in the media, both the European Banking Authority (EBA) and the European Medicines Agency (EMA) will be moved from the UK to another EU member state. This will result in around 1000 jobs being lost in London. Both EBA and EMA at present occupy office space at Canary Wharf in London. How much office space in Canary Wharf will become vacant when EBA and EMA move out?
The EBA has offices on “Level 46” of the office building at One Canada Square. According to the website of the Canary Wharf Group, the 50 storey building at One Canada Square has a floor area of around 27,583 sq ft (2,563 sq m) per level or storey. The amount that the EBA pays for its office space each year is not in the public domain, but if one considers that the rental of a square foot of office space including rates and services charges could be as much as £66 per annum, then the rent for the entire space used by EBA could be around £1,820,600 per annum.
The EMA which has a postal address at 30 Churchill Place in Canary Wharf: is located in the office building referred to on the Canary Wharf Group’s website as 25 & 30 Churchill Place. The amount of office space that EMA rents at this location can only be estimated, but according to media reports the EMA employs around 900 people in London. Therefore if the EBA is employing 100 people at a nearby location in Canary Wharf, by multiplying EBA’s estimated floor area by 9 one could guess that the EMA uses at least 248,265 sq ft (23,064 sq m) of office space at Churchill Place. If we use the figure of £66 per square foot, then it could be estimated that the EMA pays £16,385,490 per annum for the use of office space in London.
Making an estimation from the above figures, then the joint loss of EBA and EMA from Canary Wharf would cause 275,850 sq ft (25,626 sq m) of office space to become vacant. This would represent a gross loss of more than £18.2 million per annum for the Canary Wharf Group caused by Brexit. While business moves out of London because the UK is leaving the EU, then there will be great demand for office space in the towns and cities of other European countries.
Düsseldorf in Germany is one city that could benefit from the Brexit business exodus, as international companies leave the UK, in order to maintain their place in the European Single Market. Düsseldorf has its own version of Canary Wharf in the form of the MedienHafen. Both Canary Wharf and the MedienHafen are similar in that they were developed on former dockland, and now provide office space for financial and media industries. At the time of writing a new office development is being built at the MediaHafen, which could become a safe haven for business exiles from the UK.