One of the most obvious trends in the logistics market over the past few years has been the decline in the number of decent warehouses for rent. It’s not just the recession – it’s also the fact that the government started charging rates on empty properties. In 2008, one property developer calculated that this would cost it £8m a year.
Not surprisingly, speculative warehouse development stopped dead. Some buildings were even demolished. Since then practically all warehouse development has been on a build to order basis, and the number of good quality buildings available has fallen dramatically.
That’s not a lot of help if you need to get a logistics operation up and running quickly.
So, it’s good news that hidden away in the small print of the Chancellor’s Autumn statement is a commitment to exempt warehouses built from October 2013 from empty property rates.
It only applies to new developments built between October 2013 and September 2016, so it is no use to anyone with an existing empty property.
But it should provide a stimulus to the market and reduce some of the pressure that has been particularly apparent in parts of London and the East Midlands.
While George Osborne also agreed to cancel the next rise in fuel duty, he didn’t go the extra mile and reinstate the rate revaluation that has been postponed until 2017.
Normally rate revaluations are bad things – you might as well substitute “rise” for “revaluation”. But this is the one time when it might actually be a good thing.
Business rates are currently based on 2008 property values – and values have fallen substantially since then.
The government said its aim in delaying the revaluation was to promote stability in the market. In fact it simply maintains higher rates and adds to logistics costs.
So, as we start 2013 perhaps we can award the government a brownie point – plus a black mark for disingenuousness.
In the meantime, I wish you a successful and prosperous 2013.
Malory Davies FCILT,