The first quarter of 2016 has seen the continuing lack of available office and industrial space across the South Coast and Portsmouth is just as affected as other cities along the M27. However, The Chancellor’s March Budget statement has delivered a long awaited business rates review and an immediate recalculation of stamp duty for commercial property transactions, which for small businesses across the region is good news. Holloway Iliffe & Mitchell Director, Tom Holloway gives his views:
The acute shortage, particularly in office space, has been brought about as much because of permitted development rights taking previously redundant office stock, as increased occupier demand. With little or no development this situation is unlikely be resolved any time soon. One route to any resolution would be a speedier release of local authority held land for development which would also improve the prospects for employment.
Both 2000 and 3000 Lakeside North Harbour, which equate to over 110,000+sq ft are in the final stages of a major refurbishment programme which has seen plenty of interest from occupiers, the first of which is likely to be on site in the coming weeks. This is adding to the popularity of larger out of town space, but smaller space is proving difficult to find, particularly in the city centre – the knock on effect is that those looking to move within the city centre can’t as the options just aren’t there.
That said, 20,000 sq ft at Enterprise House in the City Centre is scheduled to become available later in the summer and we are already getting interested occupiers coming to us to discuss their requirements. As a result, we expect to see a rise in off market deals as competition for available space hots up.
With competition for space increasing and as a reflection of the lack of availability, prime rents for both office and industrial space have seen some significant improvements over recent months, having been behind the national recovery curve for quite a while.
There was some good news for small businesses in the Chancellor’s Budget statement. The decision to more than double the threshold for business rates from £6,000 to £15,000 from April 2017 is a significant boost for regional occupiers – including us. It will result in over 600,000 businesses in England not having to pay any business rates at and will cut the burden on ratepayers by £6.7bn overall. The Government’s decision to use CPI rather RPI indexation as the way to determine rateable values going forward is certainly a positive step as is the proposal to introduce three year revaluation cycle, albeit that these are some way off.
The immediate and unforeseen changes to stamp duty have been seen by some as a ‘commercial property tax grab’, but for the vast majority of our clients, this as a positive move. With a range of office and industrial properties on our books for sale at around £250,000-350,000 purchasers would have had to find an additional £7,500-£10,500 before the Budget; this is now reduced to £2,000-£4,500 under the new legislation, a significant saving as many of our transactions are to owner occupiers.