Occupiers have given mixed responses to a survey as concerns over a slowing UK economy persist.
Finance and insurance firms expect to reduce their space requirements in the first half of this year, claims the bi-annual Confederation of British Industry and GVA Grimley corporate real estate survey, conducted between 24 October and 14 November last year.
The industrial sector has, according to the survey, undergone an overall contraction in property holdings over the last half year. Occupiers expect to continue reducing their property space in the next six months.
“The desire in the finance and manufacturing sectors to reduce property space can be attributed both to concerns about the impact from the credit squeeze over the next six months and the surplus space that these sectors traditionally carry,” says GVA Grimley director, Howard Cooke.
Cooke – who does not support speculation about a crisis in commercial property – does advise a “watchful eye” on how changes to the rate relief on empty property affects occupier behaviour. In April, the UK government will scrap the 50% relief on business rates from which all non-industrial firms benefit three months after a property has become empty. “These are likely to have some negative consequences,” says Cooke.
The survey found that 82% of firms believe this change will have a negative impact. Relief now given to manufacturers of 100% in perpetuity will now last just six months.
Despite worries over the UK economy, 43% of respondents planned to expand their requirements in the first half of 2008. Some 22% planned to cut space. That means that, overall, close to twice as many respondents plan to expand rather than reduce their occupied space.
A fifth of companies said they would consider relocating their business outside the UK. “Political issues”, “skills availability” and “regulatory regime” were the main reasons for moving operations abroad.
