Government told to sell
An advisory group has slammed the government for their failure to release vacant property to small businesses.
A report from the Public Accounts Committee describes government activity in making property available to SMEs as “lamentably slow”, and suggests they should “get on with selling buildings” instead of “holding out in the hope of a future rise in property prices”.
Figures suggest that of the government’s £280bn estate, approximately 4.5% is currently vacant, with this figure expected to rise to 11% by 2020.
Critics argue that any boost given by the release of government property would do little to increase liquidity in the market. Marcus Langlands Pearce, property director at Henderson Global Investors, cites the lack of general quality of the offices, whilst empty rates liabilities, capex liabilities and built in void periods could mean it reaches “the point where in some parts of the UK, the valuation will be virtually nothing”.
However, with holding costs mounting, any attempt to recoup the losses from the government’s £1.8bn annual offices bill by stalling for a higher sale price, may be cancelled out by initial expenditure. PAC chairman, Margaret Hodge MP, claims the government savings of £100m go little way towards their target of a total £800m annual saving by 2020.
She hit out at government attempts to make 300 vacant properties available to SMEs, saying occupiers had been found for “just 24 sites over the past six months”. “Until property is seen by departments as a cost as well as an asset, the vast potential savings will not be realised”, said Hodge. The “mothballing of unused buildings” is described as a “clearly wasteful” situation, which could “lead to urban blight”.
Such delays are likely to do little to inspire confidence in the public sectors ability to out-manoeuvre the current turbulence in economic legislation. It therefore falls to private sector investors, represented by Search Office Space, to provide quality serviced office capacity with the flexibility to grow in line with start-up industries.