This website uses cookies primarily for visitor analytics. Certain pages will ask you to fill in contact details to receive additional information. On these pages you have the option of having the site log your details for future visits. Indicating you want the site to remember your details will place a cookie on your device. To view our full cookie policy, please click here. You can also view it at any time by going to our Contact Us page.

Property holdings reduced, demolitions up

06 May 2009

Companies reduced their property holdings in the last six months and expect this to accelerate over the next six months, after two years of gradually slowing demand, according to the latest CBI/GVA Grimley Corporate Real Estate survey.

The twice-yearly survey, conducted between 19 February and 11 March 2009, reveals today that while 9% of firms increased the amount of space they occupied in the last six months, 26% reduced it, giving a balance of -17%. This was slightly less than the expected balance of -24%.

The survey also shows a sharper fall expected in property held over the next six months (a balance of -25%), reflecting widespread cuts planned to both output and headcount.

Extraction, chemicals & utilities, construction and transport firms saw the steepest falls in the past six months. The sharpest declines in the next six months will be in finance, business services and manufacturing, reflecting trends in the broader economy. Retail is the only sector to report an increase in property holdings in the last six months, and the only one to expect an increase in space occupied over the next six.

Cost reduction and cash flow are the most important issues now affecting property decisions, as business expansion slips down the agenda. Firms were again asked about the impact of the credit squeeze and the slowing economy on their business. This time, access to credit is having an effect on 88% and the economy on 98%, an increase from 80% last time for both measures.

Howard Cooke, Director at property consultants GVA Grimley said: “Firms reduced their property holdings over the past six months, and this looks set to continue as they cut costs to stay afloat. “The recession has been felt by almost every business, and most are seeing at least some impact from tighter lending conditions. Surplus property is on the increase, as is vacant space, and this can only exacerbate firms’ costs now empty property rate relief has reduced.”

Over half of firms (52%) in this survey report they have surplus property, a slight increase on last time. The sectors most affected are financial services (86%), extraction, chemicals & utilities (82%).

Of those firms with a surplus of space, 97% have vacant property, up from 80% last time. Since empty rate relief was reduced a year ago, occupiers must pay full business rates on empty property after a very short period. Two-thirds of respondents say paying vacant rates is having an effect on their business, with transport & storage and retail sectors the most affected.

Among firms with vacant space, nearly half (47%) report attempting to mitigate costs by incentivising others to occupy the property, a third (34%) are speeding up their surrender of leases to landlords, over a quarter (28%) are re-occupying space, and over one in ten (12%) have gone as far as demolishing the affected property.

Karen Dee, the CBI’s Head of Infrastructure said: "The only businesses likely to benefit from the government's changes to empty property rate relief are the demolition firms. In the past year alone at least five million square feet of buildings have been demolished, creating mini wastelands across the country. This £1 billion cost on businesses has done nothing to help firms reduce costs or survive the recession. Empty rate relief should be restored without delay."

The survey was carried out between 19 February and 11 March 2009 and covered private sector firms of all sizes and from all regions, but did not include those from the agricultural sector. 198 firms responded.


Contact Details and Archive...

Print this page | E-mail this page

http://www.fsifm.com
PFM


MOST VIEWED...

View more articles
Article image

Prevention better than cure where compliancy and PPM is concerned

Industry experts give their response to the question of whether compliance with legislation should be a focus of maintenance procedures....
Article image

Why the Law Says You Need a Nappy Bin Disposal Service

At home, parents are used to disposing of their babies’ used nappies the same way they do any other domestic waste - bagging it up and sticking it in the r...

Benchmarking maintenance

BSRIA has just published this year's operation and maintenance benchmarking report as a guide for building operators to evaluate their performance against ...
Article image

CSA Conference Secures Additional Industry Support

Scheduled for Tuesday 31st March at The Crystal in London, the first ‘Making Buildings Work’ conference has won the backing from two of the leading names i...
Article image

Court action against MoJ after "unfair" contract award

According to The Times, the Ministry of Justice (MoJ) is being sued by Mitie, following claims that it lost out on...
Article image

Real-time monitoring providing real-time benefits

When a medical diagnostics company required a new water treatment monitoring system to improve performance calculations and prevent unnecessary call-outs f...