The snap General Election was a disaster.  Far from providing the promised ‘strong and stable’ circumstances for a great Brexit deal, we are left with political turmoil.

And we all know turmoil is bad for business.  As indeed, I believe, would be the remote prospect of a Labour government, with Jeremy Corbyn still saying ‘we are ready to serve’.

OK, he did pull tens of thousands incredibly as he gave his ‘build bridges, not walls’ speech on the main Pyramid stage at Glastonbury – and he seems to be warming to his new rock star status among the young and disaffected.  

But with the festival, holiday and hospitality seasons upon us – and a sustained hot spell to boot – I still see plenty of reasons to be cheerful, as Ian Dury and the Blockheads once said!

Firstly, the lack of an overall Conservative majority means Theresa May has to build a consensus – or she will fail.   

We have seen this already with the concessions to the DUP to secure a confidence and supply agreement, then last minute policy changes on NHS-funded abortions for Northern Irish women ahead of the vote on the Queen’s Speech in order to avoid a backbench defeat.

It’s not commercial property or even business, but it points to an outbreak of common sense which may also prevail in the Brexit negotiations.  We can but hope!

Secondly, it seems clear to me that Germany and France want a deal with the UK, whatever the politicians say.

I spent time in Germany recently and there I sensed a deep sadness that we are leaving: mainly for the loss of a politically stable democracy, but also a defender of liberal values and strong trading partner.

Thirdly, the weak pound since we voted in the referendum to leave Europe has made UK products and services more competitive so our manufacturing exports are on the rise.

Fourthly, investment demand is very strong, with the fact that foreign currency is worth more in sterling only serving to increase that pressure further.

So, on the ground, in commercial property, we are still taking lots of calls, receiving loads more internet and email enquiries and seeing deals trundling along nicely.

Activity is further aided by the lack of supply, especially of industrial units, voids are not rising significantly and the fact that interest rates are set to remain low.  All of which keeps property people happy.

So, I pronounce commercial property prospects as pretty damn fine, on the whole – and I would even say excellent, but for the games politicians play.

Much like Glastonbury, it could be said.  After all, Jezzer really should leave Glasto to the likes of the Foo Fighters!  They’re all together more entertaining!

The business rates regime is in a right old pickle.  I wrote three months ago about the chaos and confusion created by the delay of the 2015 revaluation to this year – and the apparent last-minute U-turn in the March Budget under pressure from business groups to grant certain reliefs.

Since then, the 2017 rates year has commenced.  We’ve also had the small matter of last month’s inconclusive snap General Election returning a minority Conservative government.

That has created further political and economic uncertainty with the consequent impact on the Brexit negotiations which are just beginning in earnest.

But, as the politicians dither and tinker, I wonder if broader business and social trends might force a more radical overhaul of the ratings system and its place in the wider tax raising puzzle all governments must grapple with.

First, a bit of context. The Office of Budget Responsibility reported that &28.1 billion in business rates was collected in 2014-5, representing 4.33% of the total UK tax income achieved at an average in-year collection rate of 98.1%.  

In 2015-6, that figure had risen to &29.1 billion, while forecasts for the following years start at &28.8 billion for 2016-7, while the next five years under the new regime and revaluations start at &29.6 billion and climb to &33.7 billion by 2021-2.  

Essentially, business rates are calculated by multiplying your property’s ‘rateable value’ – in the 2017 list a reflection of the Market Rent as at 1 April 2015, based on an estimate by the Valuation Office Agency – by a ‘multiplier’ set by central government.

This year, contrary to predictions, saw a 1.8p reduction in the standard business rates multiplier to 47.9p – or 46.6p for small businesses.  But in 1990-1, the standard rate was just 34.9p!

Online retailers have applied growing pressure on the traditional high street, with town centres historically attracting higher rents – and consequently higher business rates.

Retail government adviser and guru Mary Portas predicted that a third of independent shops could be killed off by the latest revaluation and rates regime.

M&S, one of Britain’s largest retailers, said last year that it planned to close 30 UK stores and convert 45 more into food-only shops as part of a business overhaul to slash the amount of shop floor space devoted to its ailing clothing ranges.

In April, it announced the first six closures, all in town or city centre locations, as shoppers increasingly turn online or favour out-of-town retail parks where parking is plentiful.

Similarly, Debenhams announced plans in April for up to 10 of its 176 stores to close, under new chief executive Sergio Bucher, who intriguingly joined the retailer from Amazon in October last year.

He polled 16,000 shoppers before drafting his turnaround plan to focus on ‘social shopping’ and making store visits a ‘fun leisure activity’.

Martin Lane, managing editor of price comparison web site www.money.co.uk said that the retailer still faces major headwinds.  

He said: “High-street retailers are really struggling to compete with our nation’s love affair with online shopping and the department store has done little to shake up its fading image,”

Online retailers have an advantage with lower costs as larger out of town distribution warehouses have lower rents and therefore lower business rates.

Clearly, other traditional retailers will be considering their property strategy and portfolios.

The impact is not just on retailers, or the town centres they may vacate, but on landlords too. Lower occupancy rates will result in falling rents and landlords becoming liable for the business rates of vacant properties after three months.

On a positive note, we are seeing an increase in the value of commercial development land outside town centres driven by a requirement for storage and distribution centres.

But the days of central government being able to rely on business rates for a reliable and increasing share of the tax take may be numbered.

Though, while the government generates a 20^th of all tax from business rates, I guess there will be very little incentive on their part to undertake a major overhaul!

The tragic events at Grenfell Tower last month may yet prove to be a watershed moment in building safety.

The following week the Government issued an urgent message to owners, landlords and managers of private residential blocks in England and Wales, offering free initial safety checks for cladding to be paid for by the government.

In the message, Melanie Dawes, Permanent Secretary at the Department for Communities and Local Government, said: “It goes without saying that owners/landlords have robust fire assessments for their properties.

“It is likely that many of these assessments do not consider the type of cladding used in a building and we would recommend you look again at your assessments.”

Downing Street said English councils estimated that 600 high-rise buildings used similar cladding to Grenfell Tower.

Three weeks after the tragedy, staggeringly, all 181 out of 181 tower block cladding samples have failed combustibility tests by The Building Research Establishment, whether owned by councils, housing associations or private landlords, Communities Secretary Sajid Javid announced last week in an oral statement to Parliament.

At the time of writing, we know at least 80 people died in the disaster, though the death toll may yet rise much higher, so it is absolutely right that residential tower blocks are the immediate focus of safety checks.

But thousands of other buildings may well use similar cladding – and the public inquiry may yet conclude that many other factors contributed to the disaster.

Curiously, the lack of sprinklers and the inability adequately to respond to residents’ safety concerns seem to have been largely forgotten in the headlong rush to ‘curse the cladding’.

Many schools are now rapidly conducting checks.  Newly promoted Premier League football club Brighton is checking the cladding used on its stadium and training ground after it was revealed it was made by the same company which produced materials used on Grenfell Tower.  

Indeed, owners, landlords and property managers of buildings as diverse as office blocks, factories, warehouses, entertainment and leisure venues and shops should treat Grenfell as a wake-up call.

If ever you needed the prod to contact your property managers about ensuring you are fulfilling all your buildings regulations, fire safety and inspection and Health & Safety checks, then Grenfell has provided one.

In particular, I would encourage owners and landlords of sites they have refurbished to review their recent works and satisfy themselves that they have done everything they can to protect life and limb.

Landlords face various duties under the Occupiers Liability Act 1957, the Landlord & Tenant Act 1985 and the Defective Premises Act 1972 – as well as the specific requirements under tenancy agreements.

Inevitably, human lives are rightly the focus here.  But it is sensible planning and risk management and mitigation to check for the safety of undoubtedly expensive buildings, plant and machinery too.

Please contact us if you have any concerns about buildings you own, manage or occupy.

Dan Ballard - Partner
dan.ballard@fishergerman.co.uk

Development is back in vogue with a genuine appetite for potential sites despite the current economic and political uncertainty.

We ran an article in our summer magazine on the increasing attraction of rural areas to residential developers with no end in sight to the UK’s housing shortage.

The ongoing under supply is driving activity alongside continued government support for the Help to Buy scheme and HCA funding behind housing associations, who are increasingly looking at open market development as well as social housing.

But homeowners need jobs too.  So, even in the uncertain climate, the need for new employment sites will continue.

This demand for employment land has pushed industrial land values up considerably and in some key areas of the country, prices have reached almost &600,000 per acre, rivalling or even exceeding residential land values.

So, where residential development has historically provided higher returns, now things are changing and the development of new industrial buildings is right back on the agenda, presenting great opportunities in commercial property.

The exciting thing from our point of view is that Fisher German is ideally placed to advise developers, landowners and investors from our multi-disciplinary perspective and with a geographic spread that matches well the key areas where development is sought after.

So, we can easily flex to meet changing priorities within central government and local authorities as to acceptable planning uses.

And we can support increasingly popular mixed-use schemes and assist with change of use, for instance from pubs to residential or agricultural to commercial.

Furthermore, with many long-term landowner clients of the firm, we have access to the broadest spread of potential land holdings for development –  alongside the most up-to-date database of potential buyers.

In particular, we’re seeing more developer buyers in the market for small to medium sized development sites in key employment zones across the Midlands and up the M1 and M6 corridors.

The sustained genuine interest and unsatisfied demand has grown over the past two years with a recent spate of lettings in the key 20,000-50,000 sq ft bracket in the West Midlands limiting supply further.

Chase Commercial’s 30,000 sq ft Ratio:Park development in Kidderminster is a good example of a smaller scale industrial scheme.

Tills Direct has bought the first 1,600 sq ft unit of 10 on phase one of the new enterprise park specifically for small and medium-sized enterprises.  A second phase of 11 units will follow.

Worcester council approved plans for 240,000 sq ft of employment space supporting 500 new jobs at the 20-acre Nunnery Park gateway scheme on the edge of the city.

The St Modwen scheme includes nine trade counters, a Greene King family pub restaurant, a drive-through KFC restaurant and a car showroom.

We’ve also just brought to market a fascinating development opportunity for ‘loft style living’ on both banks of the River Avon in the centre of Tewkesbury.

A mixed residential, retail and leisure development is anticipated, with both new build and the conversion of the former Healings Mill Brewery Building and associated buildings.

It all points to exciting times for commercial as well as residential development.  If you own a site or are looking to develop or invest in opportunities, we’d love to help you out, so please get in touch.

Demand for industrial and logistics property is booming.

Up and down the country, warehouses – some large enough to house 100 tennis courts – are springing up, many to ensure that online shopping orders are delivered as quickly as possible.

Internet shopping giant Amazon alone dispatches over 70 million packages across the UK each year – with the number set to rise.  Online shopping increased by a hefty 16% last year.

Another factor driving the need for industrial space is the continued growth in the UK’s still significant manufacturing sector, which in turn boosts the thousands of smaller companies who supply the manufacturers, all of who require space to work and operate from.

Recent take-up in the West Midlands has been dominated by businesses linked to the automotive sector with many forming part of the Jaguar Land Rover supply chain.

The demand for industrial and logistics space is concentrated broadly across the centre of the UK, significantly matching our own commercial office network.

The area bounded by the M1, M6 and M42 motorways is so popular among industrial and logistics companies it is known in the industry as the Golden Triangle.

Yet supply of floor space hasn’t kept pace with demand in recent years. That is partly because local authorities perceived the need for new housing as more urgent than assigning land for industrial or logistics use.

Furthermore, residential development has provided higher returns, so the development of new industrial buildings has been limited, particularly at the smaller end of the market.

Now the situation appears to be changing and there could be exciting opportunities for developers, landowners and investors in commercial property, particularly those involving land in or around the Golden Triangle.

The strong demand for employment land has pushed industrial land values up considerably and in some key areas of the country, prices have reached almost &600,000 per acre, rivalling or even exceeding residential land values.

This is potentially good news for those with land holdings, who have found their plots couldn’t be developed for housing.

Location is key with easy access to a motorway and other transport facilities a must.

Also, proximity to an urban area is often important to ensure the companies who locate there have an adequate labour supply, and good public transport so workers can easily get to and from work.

A super-sized 1,000,000 sq ft national distribution centre, such as one occupied by Amazon, is likely to need almost 50 acres, with an absolute minimum of 5 acres for one large building of 100,000 sq ft.

We have considerable experience in bringing forward strategic development land, and are currently advising landowners across the Midlands on sites that have industrial and logistics development potential.

There is an emerging story across the West Midlands, and along the M1 corridor in places like Doncaster and Leicester, where we are seeing developers competing for land and therefore paying strong prices.

And for landowners who want to create a long-term asset, the upsurge in demand for industrial space also presents real opportunities, as commercial developers have been reluctant to build smaller buildings (less than 50,000 sq ft), resulting in a real shortage of this type of stock.

One of the advantages of these smaller units, as well as small industrial estates, is that they can be more resilient to wider economic fluctuations.

The covenant strength of the occupiers may not necessarily be as strong, but there will always be a steady turnover and a flow of new businesses emerging.

Rob Champion – Partner
rob.champion@fishergerman.co.uk

We’ve only been in our new Doncaster office a couple of weeks, but already it feels like home.

The commercial team has achieved a 100% success rate on eight market appraisals we were asked to undertake prior to the move.

Of those properties, we have already sold Copley Road in Doncaster and the Amazone investment at Harworth.

We have also let subject to contract a bar restaurant opportunity in The Courtyard, Bawtry and a prime retail unit in Doncaster, while a second is under offer.

It means just two properties are available on Saint Sepulchre Gate and Sunnybar in Doncaster, though the team has already conducted viewings and expects this to go under offer quickly.

Many of the lettings or sales have impressively been for properties that were on the market unsuccessfully for some months with other agents – or joint agency instructions where we have secured the deal.

I am so proud of this genuine team effort, with associate Rob Haigh and newly chartered surveyor Ben Flint involved alongside me as partner and our experienced support staff of Laura Street and Emily Stringer.

We have given sound, solid advice and had the courage of our convictions to advise clients on the market in a certain way and ensure that clients are fully informed about the current market conditions and the tactics that they need to secure occupiers in what is a challenging market, particularly in the retail world.

We have proven even within a very short period that we can generate new interest in what can be stale properties and have worked extremely hard at trying to secure the right types of occupiers.

Indeed, some of the enquiries we have handled have taken a significant amount of time to turn initial tentative enquiries about the town into actual full-blown offers on properties.

It augurs well for our continual expansion into Yorkshire and the Humber region and to exploiting our strategic location in the booming M1/M18 corridor.

Certainly, the response we’ve had from clients and fellow professionals has been overwhelmingly positive and given us wholehearted endorsement of our plans.

And the first few weeks in Doncaster confirm our confidence that the move will be a catalyst for further growth of our business.