A South Yorkshire council is considering launching a £2m property investment fund to kick-start the development of commercial sites and test the demand for future projects.
Barnsley Council’s economic growth watchdog examined how the authority could create the right conditions to boost the town’s economy and prosperity. After focusing on the development of sites earmarked for commercial use — or those likely to be designated in the future under Barnsley’s Local Plan — its favoured option was the property fund.
“Businesses like to move in to ready erected properties and structures and set up and start working rather than developing brownfield sites,” explained the group’s chairman, Paul Hand-Davis. “Our main recommendation, therefore, is that we establish a property investment fund to kick-start such activity as soon as possible.”
The report suggested that £2m could be allocated from the authority’s economic strategy investment budget, but this would require formal approval by the council’s ruling cabinet.
“An initial investment by the council of around £2m could generate up to 100,000sq ft of commercial property space,” added Hand-Davis, “which should provide a good ‘litmus test’ to see what is needed to bring forward and nurture other speculative schemes.”
The watchdog also suggested the council should look first at the town’s collection of neglected brownfield sites. “However, some former coalfield sites are in poor locations for present day commercial developments, being some distance from good transport links and, in some cases, they can only be accessed through residential areas,” its report said.
Council property funds are not new, although Nuneaton and Bedworth Council recently became Britain’s first authority to launch a property business charged with making a profit to plough back into other commercial sites.
Through its pro-active approach to property acquisition Eastleigh Borough Council is probably the most successful of the non-urban authorities. It is now at the forefront of asset management development within local government and, over the last five years, has invested more than £100m.
The Hampshire council has an impressive portfolio of property acquisitions that provides it with a significant annual income. Since 2009 it has made a healthy £2m in profits, after financing costs, from rents on its acquisitions which goes toward keeping down council tax and protecting front line services.
Eastleigh’s innovative approach to property management now means the council is a freehold landlord to a high-profile mix of businesses including B&Q, Lloyds Bank, Weatherspoons, Matalan, Halfords, Pets at Home, Costa Coffee and Travelodge.
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