Rate plea as £100m milestone achieved

Nov 12 2009 by Jez Davison, Evening Gazette

TEES consultancy Sanderson Weatherall has claimed controversial empty property rates are hindering development as it revealed its North-east offices had completed £100m of property transactions in the last three years.

The firm’s Teesside office has contributed around one half of that value due in part to half a dozen freehold transactions in the last few months.

The consultancy, involved in the £5m Halegrove Court office park at Bowesfield, said it was seeing “a healthy turnover of space” in the local industrial market, despite falling rents and capital values.

But the firm warned that the burden of empty property rates remained a millstone around the industry’s neck, stunting development and regeneration.

Under rules introduced by the Government this year, industrial property owners obtain 100% relief for just the first six months that a building is vacant, with most other empty commercial properties granted three months’ relief before incurring the full amount.

Jonathan Simpson, associate director in Sanderson Weatherall’s Teesside office, said: “Empty property rates are not helping anybody. They’re hurting companies down the chain, not just property developers.”

He said there was a shortage of available stock on the market because developers were holding on to their assets in the hope that capital values would rise.

The region’s commercial property sector was broadly flat in the three months to September, according to the latest report from the Royal Institution of Chartered Surveyors.

Local chartered surveyors reported that enquiries for office space declined to -25% from 0, the study said, with enquiries for industrial and retail space remaining at 0.

On a more positive note, the survey revealed demand for retail space in the region increased by 39%, although demand for industrial space has remained at a constant reading of 0.

Mr Simpson said much of the current activity was driven by freehold sales, with speculative development set to remain depressed as the country emerged from recession.

But he said sale and letting volumes would continue “at a steady pace” in the next few months as tenants and buyers looked to capitalise on bargain prices.