Still developing
TEESSIDE’S commercial property industry claims the abolition of rate relief on empty buildings has not put the brakes on development, despite reports elsewhere of half-finished schemes and buildings being demolished to cut costs.
Some feared that the legislation, which reduced the rates holiday on empty buildings enjoyed by landlords, would hold up regeneration projects by piling costs on developers. But they say there is no let up in the pace of development locally and they have not had to lower rates in order to fill empty buildings quickly.
Stephen Rose, commercial sales and lettings manager at Stockton’s Mandale, said he was against heavy discounting on rents as it ultimately de-valued the asset.
He said: “If we wanted to sell to an investor, the return would be much lower. We will still build and develop. Other smaller players may think twice because of the empty building rates but generally there is still good demand for office space.
Peter Broome of Middlesbrough-based Python Property, said he had “seen no real change” in the pace of developments as a result of the rate relief restrictions.
He said: “If anything is affecting the development market it’s the credit crunch, not void rates. On the commercial side of things we are doing very well.”
He added that Teesside was witnessing strong demand for premium space, particularly within the burgeoning petrochemical and engineer sectors.
“This is bolstering the market,” he said. “People on Teesside are more optimistic than those in Manchester, London and Leeds.”
The new legislation means that industrial property owners obtain 100% relief for only the first six months in which a building is vacant. All other empty commercial properties have three months’ relief before incurring the full amount.
Previously, industrial buildings were subject to 100% relief for the entire time they were unoccupied, while owners of other commercial property received 100% relief for the first three months and 50% thereafter.
But Stephen Forbes, partner at Middlesbrough-based chartered surveyors and property consultants Dodds Brown, said some of his clients were getting around the problem by signing up tenants on short-term agreements, while in the retail sector there is evidence that landlords are willing to forego rent for a limited period if it means they can avoid paying rates.
At Stockton’s Wellington Square letting two units to charitable organisations could save £80,000 a year.
Centre manager Rob Gildersleeve said it had reduced its exposure by allowing The George Hardwick Foundation to take space on a temporary basis.
“The foundation is not selling a product, so it won’t be in competition with the other retailers,” he said.
Occupancy levels at the Square are running at around 83%. Its latest tenant Body Shop will soon be joined by another retailer on a long-term lease.
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