It was just over a year ago that majority of British voters surprised the world and chosen to leave the European Union and just eight months since Donald Trump spoke in front of the historic crowd on the National Mall on his inauguration as the president of the United States. These two populist movements have sent shockwaves through the financial markets, and the commercial real estate was also affected.

Shortly after the Brexit vote last year and before the United States election, most of the real estate professionals commercial observer spoke that they were in a holding pattern. The beginning of Donald Trump’s tenure saw some measured optimism with some big leases at the beginning of the year and chatter surrounding a massive stimulus in the form of a nationwide infrastructure project, but still, the real estate community has remained in a holding pattern.

Immediate and concrete signs that the uncertainty and instability sparked by Brexit and Trump inauguration is beginning to wane seems to be nothing but veiled hope for the commercial real estate

“It’s just been boring. Nothing’s really happened, and nothing really seems like it’s going to happen,” Jay Rollins, the chief executive officer and managing principal of JCR Capital, told Commercial Observer. “People are waiting for a shoe to drop because they’ve been trained. It’s like, O.K., a real estate cycle is 10 years. Something bad should happen.

Impacts of Brexit and Trump on Commercial Real Estate

What is it? I don’t know. It’s out there somewhere like a boogeyman in a closet, but we don’t know. Everybody is nervous over what they don’t know. Very few people are saying they’re out and they’re done, but it’s hard to get enough conviction to [take risks]. There are no anomalies in the system that you can say will cause a screw-up.”

Throughout this year, there is certainly been a significant amount of optimism, particularly in equity markets, on the expectations of deregulation, changes in tax laws, spending on infrastructure,” he added. “Those things have led to investors picking up their investments, seeing the equity markets rise. If those policies are delayed or don’t happen, then I think there may be some reassessment by investors, and I think that might affect the market as well.

But, I think in terms of leasing fundamentals right now, they’re healthy, and they’re probably going to remain healthy, but Washington could play a role in determining how healthy they are.”

A lot of air left the optimists’ sails when one of the signature promises of the Trump administration a lavish trillion-dollar infrastructure package all but disappeared. A broad rollout of the plan in the spring stalled over the summer and the expected $1 trillion of federal investment was slimmed down to $200 billion with another $800 billion in private and local state investment.

The administration has not officially given up on the plan yet (last week the administration had briefings with state and local officials about the plan, according to The Hill), but it has been sidelined by legislative skirmishes over health care, taxes, Hurricane Harvey and the myriad other problems that have dogged the White House.

In New York, year-on-year property sales plummeted 58 percent to $4.3 billion in the first quarter, marking the lowest quarterly sales volume in six years, according to data from Cushman & Wakefield. Real Capital Analytics Inc. found that, overall, nationwide sales fell 18 percent.

“What’s driving the New York market [is] the safety,” said Herb Hirsch, who leads the Commercial Division of Berkshire Hathaway HomeServices. “I think if we can get this political situation under wraps and get the economy really moving with the tax benefits that everyone wants, I think we’ll be fine. Question is, Will that happen? That is a subject you could spend all day discussing.”

Uncertainty surrounding whether Trump’s industry-friendly policies will ever come to fruition, as well as how tax cuts and an increase in spending could raise inflation and spark an interest rate hike, has tamped down overly aggressive deals.

Many, including McCarthy and Rollins, agree that Brexit’s effect on the United States market, specifically New York City, was minimal, while others believe Trump’s Washington tactics and rhetoric, whether intended or improvised, may bring a positive, but bittersweet, influence on the commercial real estate market.

Rather than pass any blame on Brexit and Trump’s rise, specifically, industry leaders are focused on indicators such as jobs reports, the growth of debt funds, the pressure to raise the U.S. debt ceiling and the roles of the Federal Reserve and Yellen as the most plausible tinder that could light a fire under the market and spur more action.

In the United Kingdom, the first shock of its choice to become the first country to remove itself from the EU created a significant pause as former Prime Minister David Cameron resigned almost immediately and was replaced by Theresa May, the British pound plummeted to a 31-year low while the U.S. dollar surged and the stock market fell sharply.

In the weeks and months after the referendum, some of the country’s largest asset management firms, including Henderson Global Investors, Columbia Threadneedle Investments, and Canada Life, began freezing its commercial property funds.

“Basically every corporate boardroom is laying out Option A, Option B, and Option C, depending on how the negotiations [surrounding Article 50] go,” McCarthy told CO soon after Brexit. “The EU has cruised through this with no signs of anything negative in terms of economic performance.

But there is still this uncertainty around whether this could lead to other issues and more populist uprisings in other countries, leading to more pressure in the EU. So most corporations are setting up a number of scenarios given the potential different outcomes and developing a strategy for each one.”

Right now, investors and industry leaders in the commercial real estate are focusing on the progression of Brexit negotiations as a gauge for instability.

Some, though, aren’t frightened and would rather not lie in wait. Brookfield Asset Management, a New York-based alternative lender with a strong global footprint, continues to boast strong business in London, as shown by its second quarter earnings report.

“The full impact of Brexit on the U.K. is still unknown, but our view continues to be that the effect will be moderate and that London will remain one of the global centers of commerce for a long while. We see no other competitive center in Europe—and globally, few cities rival it as a welcoming market for global business.”

Commercial real estate investment volumes in the U.K. rose 13 percent on the year in the second quarter, and through the first half of this year, cross border investment climbed 24 percent compared to the first half of 2016, according to data provided by brokerage Savills Studley.

“Currency balancing out and being consistent has provided a better entry point for foreign investors to move into the U.K.,” said Savills Studley Chief Economist Heidi Learner.

“We wouldn’t expect, at this juncture, a dramatic move in the currency, or at least it won’t be as dramatic as last June,” she added. “Markets have considered the chance that Brexit negotiations will not favour the U.K., but that hasn’t dissuaded investors putting their capital to work. The activity partly reflects that.”

Last month, Reuters reported that Chinese investment in U.K. commercial property mostly channelled through Hong Kong, had reached record highs as the fall in the pound opened a door to more foreign investment.

Chinese investors poured in 3.96 billion pounds, or roughly $5.1 billion, on London commercial property in the first six months of the year, outpacing the 2.69 billion pounds ($3.49 billion) invested throughout all of 2016, according to data from CBRE real estate group.

“Asia, particularly China, had many years of strong economic growth, and they’ve built up a lot of reserves that needed to be deployed, and they began to deploy it around the world,” McCarthy said. “Investors are seeking to diversify their assets, and real estate is one they were underinvested in, so we started to see an increase in deployment of assets into real estate in the United States and London. That’s the first thing: There’s more cash available to invest, and New York and London have always been the premier locations globally. It’s not surprising that you’d see a significant increase in investment in these markets.”

In July, Business Insider reported that a fund, called First Property, backed by eight institutional investors had raised 182 million pounds with a goal to go after post-Brexit office properties and business parks around the country. First Property CEO Ben Habib told BI, “The U.K.’s decision to leave the EU has created opportunities on which we, as a niche fund manager, are well placed to capitalize.”

The uncertainty may not scare some foreign and domestic players, who are at home, navigating London’s commercial real estate market, but the instability has much racing stateside, searching for opportunity, including at Schuster’s Silverback Development.

“Weekly, [at Silverback] we’re meeting new faces and learning new names of people from groups that want to move capital from, say, London-based housing developers to New York-based ones,” Schuster said. “So, we’re luring a new capital that wasn’t necessarily there a year ago. I think the next two months are going to be critical in seeing what happens because we’re going to see both the U.S. debt ceiling issue unfold and the rate hike maybe by the end of October.”

It’s abundantly clear that this fall is going to be critical for policymakers as they navigate through the political jungle. Market players who are watching from a distance can only sit back, hold fast and wait for a clear sign to fully re-engage the market.

Culled from the Commercial Observers | After Shock: How Brexit and Trump Have Impacted Commercial Real Estate