A Government bid to boost construction won’t stimulate activity in Sheffield, according to property expert Robin Ellis.
Mr Ellis, director of national rating and lease consultancy at CBRE, says the scheme to exempt commercial property completed between the start of October and the end of September 2016 from rates payments if they remain empty isn’t sufficient enough an incentive.
And, he says, the Government has missed an opportunity by failing to include smaller scale refurbishment projects.
The Department of Communities and Local Government says the exemption from empty rates payments is intended “to help stimulate construction.”
It argues that construction decisions take into account the risk of paying empty property rates on newly built commercial property if the property does not become occupied straight away.
The department says reducing the risk may encourage some commercial property projects to go ahead that wouldn’t otherwise, helping to stimulate the construction industry.
However, Mr Ellis doesn’t believe that will happen in Sheffield.
“Most office developments in Sheffield require pre-let commitments of at least 70 per cent before development funding can be secured,” says Mr Ellis.
“There are numerous sites in the pipeline, including a further 160,000 sq ft at The Square, St Paul’s Place, 100,000 sq ft,, and West Bar, 350,000 sq ft.
“The relief will only be applied up to the State aid limit of around £175,000 over a three- year period.
“This is relatively insignificant compared to the cost of construction of schemes such as these in Sheffield and will not be sufficient to stimulate new development.”
Robin Ellis reckons there is 1.1 million sq ft of vacant office space in Sheffield city centre and second-hand stock could benefit more from this relief.
“Had the scheme been targeted at smaller scale offices, requiring refurbishment to bring them up to current standards, then it would have had a more significant impact on the fabric of the city.”
n To qualify for relief, a property must be vacant, non-domestic and wholly or mainly comprised of new structures.