Commercial property owners and investors look set to benefit from the announcement that the government is to establish four more enterprise zones throughout England, as part of its attempt to kick-start a private sector recovery from the economic downturn, economic stagnation and economic standstill we’re all caught in the midst of.
The announcement that areas within Birmingham, Bristol, Leeds and Sheffield will be allowed easier planning controls, faster broadband and discounted business rates should give welcome cheer to business owners with commercial property in these zones or those investors looking for commercial property with enhanced yield and growth opportunities.
The government has already declared enterprise zones in Nottingham, Manchester, Liverpool and London – noticeably focusing its efforts on the north of England and the Midlands, where commercial property is still struggling to pull itself out of the economic doldrums. Recent results from Segro and UKCPT show that steady growth in the commercial property market is focused very much on London and the South East, with areas further west and north struggling to pick themselves up demand-wise.
The plans for enterprise zones will see some £100 million targeted largely at these areas and it is claimed they will create somewhere in the region of 24,000 jobs in the run up to 2015. Discounted business rates will address some of the concerns of commercial property investors, who had already criticised the government’s changes to the Empty Properties Rates Relief in April of this year. That move saw the threshold for rates relief on empty business units reduced from £18,000 to just £2,600, drawing many more commercial property owners and investors into the tax bracket.
The setting up of enterprise zones has not been universally welcomed, with some commentators questioning the effectiveness of a 1980s policy in the 21st century.
Andrew Sissons, researcher from the Work Foundation think tank and author of the report Do Enterprise Zones Work?, says that the success of enterprise zones in the 1980s and 1990s was measured and not quite as widespread as many believe. He points to commercial property regeneration and investment in infrastructure as the keys to the success of an area. Whereas many enterprise zones in the 1980s helped revive regions in physical decline, creating massive opportunities for commercial property investors who were looking to establish new units and growth, there is less of a need for that now.
Although the final decision about where the new enterprise zones lie has been centralised, planning within them remains in local hands. Joe Anderson, the leader of Liverpool City Council, has spoken of the need to control the criteria by which commercial property and businesses are allowed to develop in the zones so as to avoid an adverse effect on outside areas. However, Sissons is sceptical of such moves, pointing to examples of commercial property owners closing their businesses in one area in order to redevelop them within the zone.
Although not widely used, local development orders were introduced by the last government meaning businesses can develop or modify commercial property without applying for planning permission. The government has recommended that these be used to restrict enterprise zone benefits to specific industries.
