As the commercial property sector heaps pressure on the government to rethink its Empty Property Rates legislation, enacted earlier this year, the Business Centre Association (bca) continues to make its voice heard in the chorus, saying the sector is at risk of becoming stagnant, despite increasing enquiries from SMEs.
“Just when the business community is looking to the flexible space sector as a means of managing its risk in these tough economic times, our members are being forced to cancel projects and - in acute circumstances - demolishing empty buildings because the economics do not stack up under the new regime,” says executive director of the bca, Jennifer Brooke. “Whilst established centres around the country are receiving high levels of enquiries, operators are opting out of many new developments because of the penalty they face from Empty Property Rates. ”The Government must make a decision to reverse this legislation to arrest further damage to the whole of the property sector.
“We estimate the flexible space sector currently provides 40 million sq ft of office and industrial space in the UK, predominantly for the SME sector,” continues Brooke. “Research carried out in September for Q1 indicated a total anticipated bill to the sector this financial year in excess of £20m, known job creation opportunities for 2692 lost and investment of £13,830,000 deferred or cancelled.
“Our members are providing us daily with examples of developments being put on hold or – in extreme cases – buildings actually being demolished. This is a completely ludicrous situation: demand is understandably high for flexible space but the operators struggle to justify new developments because of the penalty they will suffer in the time the building takes to reach optimum occupancy, which is purely a reflection of the way flexible space locations operate in order to offer clients the flexibility they need.
Gareth Evans, managing director of Bizspace Ltd - which has a client base of more than 3,000 customers at more than 110 locations – is clear about the impact EPR is having on his business:
“The bald fact is that in areas which are struggling economically and where a new centre is likely to take some time to fill, the figures simply do not stack up to justify development. That means in places like Stockport and Hartlepool we are simply not developing a centre on land we own, and in Halifax, Rochdale and Skelton we are pursuing plans to demolish properties which could have been converted into thriving business communities. In all we estimate almost 200 job creation opportunities have been lost as a result.
“The government needs to wake up to the fact that companies like ours provide a vital lifeline by investing in development and providing space for small and medium sized businesses. Without that lifeline, the recession we are facing is going to be considerably worse, particularly in those areas which are already being hardest hit.”