Firms continue to cut property holdings
BUSINESSES have continued to cut their property holdings in the past six months, the latest CBI/GVA Grimley Corporate Real Estate survey reveals today.
This follows widespread space reductions since the turn of the year, and further shrinkage over the next six months is expected.
The twice-yearly survey, conducted between August 26 and September 16, shows that while 12% of firms increased their occupied space in the last six months, 25% reduced it, giving a balance of -13%. This was slightly less negative than the expected balance of -25%.
The survey also reveals, however, that a similar fall is expected in the coming half-year period (a balance of -15%).
Financial services firms recorded the sharpest property contraction over the past six months, with the engineering sector and transport, warehousing and distribution companies seeing the next steepest falls. The sharpest decline in the next six months is expected to be in the financial services sector again.
Three sectors – leisure (including hotels, bars & restaurants), retail and construction – reported an increase in property holdings over the past six months and the same sectors anticipate a rise in the next six.
During the recession, cost reduction and cash flow remain the most important issues affecting companies’ property decisions.
Firms were again asked about the impact of the credit squeeze and the slowing economy on their business. Access to credit was having at least a noticeable effect on 68% of firms and the economy on 85%. These were up from 62% and 81% respectively last time.
Howard Cooke, director at leading property consultant GVA Grimley, said: “With little let-up in the impact of the recession, firms have continued to reduce property holdings in the past six months. Unfortunately, these cuts will continue as long as the poor economic climate persists.
“Yet again, most firms feel some impact from the recession, with slightly more blaming tighter credit conditions than six months ago.”
Andrew Palmer, CBI regional director for Yorkshire & the Humber, said: “In the recession, firms are looking to cut their property costs wherever possible, but the Government’s failure to restrict next year’s rate rises to 7.5%, as we had proposed, together with the ongoing loss of empty property rate relief risk is making a difficult situation even worse.
“As a start, the Government should use the Pre-Budget Report to restore the original level of empty property rate.”
