How can we tackle the recession?

Dec 1 2009 By Sarah Green, The Journal

THIS morning, more than 100 of the North East’s business leaders are meeting to discuss the impact of the recession on the local economy, and in particular the future demand for business space across the region.

This year Newcastle has experienced more office take-up activity than any large regional UK centre, including Birmingham, Manchester and Glasgow.

Newcastle’s take-up figure for the year 2009 to date has so far meant more than 100,000 sq ft of offices has been leased in the city centre, and its out-of-town market has already exceeded last year’s take-up of 390,000 sq ft by 130,000 sq ft.

The latest CBI/GVA Grimley Corporate Real Estate survey has revealed further interesting figures regarding business property holdings during the past six months.

The twice-yearly survey shows that while 12% of firms increased their occupied space in the last six months, 25% reduced it, which is less than expected. A similar fall is expected in the coming half-year.

Firms were asked about the impact of the credit squeeze and the slowing economy on their business. Access to credit was having at least a noticeable effect on 68% of firms and the economy on 85%, both up from last time.

Significantly, the survey also shows an increase in the number of companies that would consider moving at least part of their business abroad. Almost a third said there were issues that would make them relocate away from the UK, a significant rise on 15% a year ago.

This time the two most important reasons given by firms for considering relocating are the tax system and the economic environment.

Since empty property rate relief was cut 18 months ago occupiers must pay full business rates on empty property after a very short period, and the CBI has lobbied for the relief to be re-instated. In the recession, firms are looking to cut their property costs wherever possible, but the Government’s failure to restrict next year’s rate rises to 7.5%, as we proposed, together with the loss of empty property rate relief risk is making a difficult situation even worse.

Sarah Green is regional director of CBI North East