Occupiers are still keen to expand their property space despite the current market conditions, according to new research.
The CBI/GVA Grimley Corporate Real Estate Survey, previously the Property Trends survey, found that 43% of occupiers are planning to expand their amount of property space over the next six months.
Howard Cooke, director at GVA Grimley, said: ‘This survey does not support the speculation about a crisis in commercial property. Firms are still expecting to expand their property occupation much as they have in recent months.’
In the last six months, overall 22% of occupiers increased their property space, but some firms, including those in manufacturing sectors, saw a reduction in their space. These firms are expected to continue to reduce their property space in 2008. 22% of firms plan to reduce space, according to the twice yearly survey.
Banks, finance and insurance firms are also expected to reduce their property holdings in the first half of this year, with more than half looking to cut space and only around a quarter looking for expansion.
Cooke said: ‘The desire in the finance and manufacturing sectors to reduce property space can be attributed both to concerns about the impact from the credit squeeze over the next six months and the surplus space that these sectors traditionally carry.'
He added: ‘A watchful eye should be kept on how the coming changes to empty rate relief affect occupier behaviour, however, as these are likely to have some negative consequences.'
Empty rates and energy issues
Some 82% of firms believe that the changes to empty rate relief in April will have a negative impact. The CBI is one of a number of organisations that has lobbied the government over empty rates.
Just over half of firms are unaware of the requirement for landlords to obtain an Energy Performance Certificate (EPC) on their buildings – but more than three-quarters say they look at energy costs and efficiency before acquiring space, with location and costs still the most important factors. 61% of firms would pay a little more rent for a greener property.
Up to one in five businesses would consider relocating abroad to tap into other skill bases and avoid Brtiain’s regulatory regime and political issues.
The survey was carried out in October and November 2007.