A good time for businesses to invest in new facilities? At Trilogie we think so.
Procuring a new build manufacturing facility, distribution depot or office block in an uncertain economic climate might seem like a daunting task, but before you put the decision to one side, you should consider this:
* Building project costs have fallen significantly during the recession and now represent good value to those who are considering expansion or reorganisation.
* Civil engineering order books have shown a roughly 38% fall on an annual basis and growth in construction output is expected to be sluggish in 2010/11 if, as the cuts in Government capital spending begin to bite in 2011.
* Changes to the planning system are already emerging. The Conservatives had, before the election, put forward a Green Paper called “Open Source Planning”, a radical change to the planning system which will inevitably take time to bed down. There is, therefore, a case for arguing that a significant application submitted now may avoid getting bogged down in changes to the planning system under the new Government.
* Land is relatively cheap compared to a few years ago, and strong deals can be driven with developers, contractors, Landlords and others keen for liquidity, turnover and mitigation of empty rates liabilities.
Whilst the UK economy as a whole may not experience recovery growth at the levels seen in the “noughties”, Trilogie CRE takes an optimistic view on the outlook for certain sectors of the economy over the next couple of years. Many of our clients are operating in global markets and are already experiencing upturns in demand as some world markets, less affected by recession, have started to grow relatively strongly in the last few months.
Office for National Statistics figures published in August, indicate a relatively strong growth in exports – on a world basis, UK exports reached a two year high in May. Exporters are relying on continued demand from India and China, but there are fears that the US economy will slow in the last quarter of this year.
The latest forecast published by British Chamber of Commerce also strikes an upbeat note with a prediction that the UK economy will grow by 1.7% compared to its March forecast of 1.3%. But growth prospects are being tempered by an expected weakness in consumer demand as unemployment remains at relatively high levels and discretionary spending is squeezed.
Over the past two years there has been very little speculative development and consequently a shortage of good modern facilities is apparent. Occupiers requiring new space will need to procure this by either working with a developer or, with the right advice, directly with the landowner.
We think the time is right to consider the options available if your company is looking to expand its facilities or rationalise by “right sizing” the business. Historically low construction costs and capacity in the civil engineering sector to undertake projects, we believe, provides a good opportunity for businesses to consider investing in new facilities. Trilogie CRE has wide experience of leading clients through complex developments from site search and acquisition, through design and specification to contract supervision. Additionally Trilogie has a proven track record in seeking funders for commercial development projects where their client will become the occupier. This model allows the business to take advantage of its own good covenant to leverage an advantageous lease from their landlord if they decide not to retain the freehold.
At Trilogie we recognise the business imperative to make the correct decisions on investment. We would welcome the opportunity to talk to you about any of your business plans where property is an important element. Visit our website www.trilogiecre.com to see the full range of services that we offer to corporate occupiers.
For more information:
Keith Martindale
Trilogie Corporate Real Estate
km@trilogiecre.com
T. 01628 811277
F. 01628 528109
