2013 Could See More Speculative Development in Nottingham
1st February 2013
Sunny Landa, newly appointed junior partner at NG Chartered Surveyors, says that Nottingham could see more speculative building in 2013 thanks to a new Government policy.
Industrial property has remained more resilient than other sectors of the property market in the current economic climate. However, although demand has remained strong, there is still a lack of good quality, modern stock because of the lack of new development.
Developers have been reluctant to commit to new building projects because they fear that if they can’t sell or let the space straight away, they’ll be hit by costly business rates on vacant properties. This would see their profit margins rapidly decline.
But there is a glimmer of hope on the horizon. Chancellor George Osborne announced last month that newly built industrial property completed between 1 October this year and 30 September 2016 will be exempt from empty property rates for the first 18 months.
This is just the kind of thing we need in Nottingham to boost development and get the local economy moving, and I think we’ll start to see some positive effects in the next few months as developers fast forward projects that had previously been put on hold in preparation for October – when the change kicks in.
It’s a policy that is long overdue. The empty property rate was a hindrance to industrial property building. Some businesses are reluctant to expand and take on larger space in the current economic climate, and others simply can’t find anything that’s up to scratch. In turn, developers have feared that they won’t be able to find tenants or buyers for completed projects and will then be saddled with the burden of high empty property rates.
By giving developers a ‘grace period’, the Government is helping to reduce the cost of new industrial buildings, making investment less risky for speculators, and more likely to get projects off the ground.
An increase in industrial property development will not only provide a better stock of space that will encourage Nottingham’s businesses to take on new property, but it will bring wider investment to the city, including more construction jobs.
Over the past year, I’ve spoken with a number of clients who already have planning permission for sites but are nervous about starting to build. I’m sure that now they have some of the pressure taken off they’ll reconsider.
However, although it’s a welcome initiative from the Government, I’d like to see them do more. The relief for new builds does not remove the problem of vacancy rates for existing property. I’d like to see more action and ideas from Government and industry on how this can be reformed.
In the meantime I’m looking forward to seeing latent projects get going as we move into October and working with clients to securing tenants for new builds.