Partner Article

Businesses look to reduce property portfolios

Fewer firms expanded their property portfolios over the last six months, while the weaker economic outlook has pushed up the number of firms planning to reduce their property holdings, the latest CBI/GVA Grimley Corporate Real Estate Survey has revealed.

The twice-yearly survey, conducted between 12 March and 4 April 2008, reveals a balance of +15% said they had increased their property holdings in the last six months, indicating a slower rate of growth than in the previous survey (+22%) and some way below expectations (+21%).

Twenty per cent of firms now plan to reduce their property space - a marked increase on the 12% of firms contracting their property in the past six months. Twenty-seven per cent of firms still expect to expand their property holdings in the next six months, giving an overall balance of +7%.

The survey asked firms how the credit crunch has affected their ability to do business and found, unsurprisingly, that by far the greatest impact is being felt in the financial services sector. As well as a reduced ability to borrow money and delays to projects, firms said key effects of the credit squeeze were to be seen in impacts on property disposal and acquisition.

Sarah Green, CBI North East Director said: “The recent changes to empty property rate relief are adding a billion pounds a year to businesses’ property costs. Firms tied into a lease may have little room for manoeuvre, but all companies should seize the opportunity to review their surplus property, or face these extra costs.”

Howard Cooke, Director at property consultants GVA Grimley said: “The rapid expansion of property seen in recent years is really starting to peter out. In the last six months, far fewer firms have sought to expand their property holdings and more are now looking to reduce it in the next six months.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .