Business News Service
Empty rates legislation could kill off speculative development
The impending introduction of full rates on empty industrial property will put the brake on speculative building in the South West.
This is the view of international property consultants King Sturge, who say there is likely to be a move towards more demolition of existing buildings and the development of bespoke projects.
Robert Cleeves, partner in the industrial agency team at King Sturge in Bristol, said the empty rates liability coming into force in April would encourage developers acquiring sites to look immediately at wholesale redevelopment rather than keeping and upgrading the buildings already in place.
Under the Rating (Empty Properties) Act 2007, industrial properties will have to pay full rates after an initial six-month exemption period.
“Fewer developers will commit to speculative development due to the potential increased holding costs and may prefer to offer bespoke solutions only. This could lead to the destruction of buildings capable of being upgraded,” Mr Cleeves said.
He said the decision to introduce ‘empty rates’ represented an additional burden on both occupiers and landlords that would cause delays and complications to the whole transaction process.
“The costs of holding empty property from a landlord’s perspective will be increased and as such it will undoubtedly be reflected in the rents and incentives on offer. Occupiers looking to expand or consolidate operations will also be wary of the potential of the additional costs of leaving their existing space.”
The annual King Sturge review of industrial property trends expects a continued improvement in demand for developments such as data storage centres.
“This will be for either industrial units capable of conversion or bespoke centres on greenfield sites that will be run by operators on behalf of clients who are mainly financial institutions.
“Even if the economy were to deteriorate, we believe this market will continue to move forward as many of the requirements represent consolidation and cost saving exercises,” Mr Cleeves said.
The King Sturge research also forecasts that the growth in the logistics market is expected to be heavily reliant on suppliers with contracts for retail customers.
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