Innovative measures to stimulate market

Jun 10 2009 by Peter McCusker, The Journal

A DESIRE to avoid empty property taxes and boost activity is seeing developers come up with an increasing number of imaginative packages – including rent-free periods and try before you buy incentives – to kick-start the market.

In recent weeks developers at Seaham’s Spectrum Business Park and Quorum Business Park on North Tyneside have offered rent-free periods of up to five years on some letting deals.

And now developer McGinnis Group and Halegrove has introduced an innovative approach for its Stockton development, based on a “try before you buy” incentive scheme.

Chris Pearson, partner at Gavin Black & Partners, joint agents with Sanderson Weatherall on the Halegrove Court@ Bowesfield office scheme, says this is the first time such an approach has been promoted in the North East.

Under the scheme occupiers will be allowed to lease an office building at Halegrove Court for a year with an option of purchasing the unit minus the rental cost. Alternatively the occupier can continue leasing the property.

The novel ‘try it then buy it’ approach means that the rental paid in the 12- month period will be used to reduce the amount of deposit required to buy a property at Halegrove Court@ Bowesfield.

“Based on a typical 1,283 sq ft, two- storey unit where the purchase price would be £225,000, a year’s rent of £16,000 per annum would reduce the deposit required by up to 40%. This is a significant reduction and will help occupiers raise a deposit allowing them to buy their own property,” said Mr Pearson.

Commercial Estates Group (CEG) is also breaking the property mould by bringing to the market traditional office space to lease at its All Saints, Newcastle, scheme based on an all inclusive package that includes rent, service charge and for the first time dilapidations.

Aidan Baker, associate director at BNP Paribas Real Estate’s Newcastle office and joint agent with GVA Grimley, said: “Dilapidations are the often unexpected costs to tenants at the end of a lease and are therefore difficult for tenants to budget for.

“Leasing space at All Saints on a rental package inclusive of dilapidations costs would provide tenants with certainty of cost over the whole lease term and would greatly assist tenants.”