Lack of industrial buildings could slow growth
Whilst there have been signs of the commercial property market in this area picking up over recent months, it still remains relatively slow, particularly when compared with the heady days of the early noughties. Nevertheless, we are seeing a decline in the number of good quality industrial buildings on the market, particularly within the size ranges of 5,000 to 35,000 sq. ft. We are now seeing companies actively searching for buildings of this type who are having difficulty finding anything which matches their criteria.
Part of the reason for this is that there has been no speculative development in this area since the credit crunch in 2008. We saw development prior to 2008, and at the time of the credit crunch there was a stock of newly built units on the market. Slowly but surely the majority of this stock has now been occupied. As a result we could soon be seeing an upward pressure on rents and capital values in this sector.
Forward thinking is now required to ensure that future growth and employment prospects are not held back by the lack of suitable industrial premises. Future development is likely to be held back as a result of:
• Bank finance – the inability of developers to gain finance for speculative development.
• The lack of available sites – suitable sites that have been identified by the Planning Authorities for future employment use.
• Infrastructure – the roads and services to the sites necessary to enable development to take place.
The LEPs in particular have an important part to play in driving local and regional strategic plann-ing. To date the Lancashire LEP has been involved in making representations for the location of an Enterprise Zone. These representations were unsuccessful and the Enterprise Zones have been located elsewhere. However, thought now needs to be given to identifying sites and providing the necessary infrastructure to enable industrial development in this area. The government is placing a great deal of reliance upon SMEs and the manufacturing sector to revive the economy and this can only be done if the right conditions are in place.
Trevor Dawson & Company