Sweeney, a senior investment manager for the Multi-Asset Active fund range, said an increasing trend for employees to work from home or ‘hotdesk’ rather than sit in a dedicated office suite was a bad sign for the future of commercial property, echoing the cautious sentiment present in the market.
While London landmarks with a unique selling point such as The Shard will hold their value, investors should be wary that funds holding commercial property such as office blocks may have a limited life span, Sweeney added.
“People should be concerned because the way we are working has changed. The mind set has changed in management.
“It’s all about trimming down a little bit every year so they can say they are increasing profits but it’s not sustainable.
“The office is one of the biggest costs to a company, and a fixed cost. If you look at work places across the country, they are hot desking.”
This problem will see, in Sweeney’s view, commercial property dwindle in popularity as a viable investment as firms look to cut some of the last outstanding costs they can.
Fund manager Richard Kirby, who oversees F&C’s Commerical Property Trust, agreed that “the outlook for central London offices is still unclear”, noting Brexit as the key determinant of performance.
He said: “We continue to favour quality industrial and distribution, central London retail and alternative assets on a selective basis.
“In the short and medium term, the path of Brexit negotiations is expected to be a major determinant of performance but over the longer-term, the impact of any move towards the normalisation of interest rates also needs to be borne in mind.”
