PROPERTY AND PROCUREMENT
• Business Rates – estimates can be obtained of the likely business rates applicable to the completed facility based upon existing local comparable buildings. If the occupier is considering relocating a facility in another European country then the basis of levying a property tax is likely to be different to the UK and should be investigated
• Financial Support – Government funding has previously been made available to assist with encouraging the development of new facilities in the renewables sector and this should be investigated thoroughly
An occupier with a strong balance sheet (profits in excess of 3 times the proposed rent on any scheme) will help reduce the funding costs for development and improves the end capital value which will assist in keeping the rental value low. In addition, if the building is specialised in any way then this may reduce the end value in the market place.
However, there has been virtually no speculative development of industrial property in the UK since 2008 and buildings that have lain vacant for some years are, over time, gradually being occupied as various sectors of the economy improve. In time, this will assist in improving market values which should increase developers and funders confidence.
SUMMARY Typical important issues include:
• Planning – in many areas where buildings can be developed to serve the offshore wind industry, site ownersand developers are obtaining outline planning permissions or zoning for large tracts of land to be used for employment purposes. When the detailed size and specification of a facility is known then early dialogue is recommended with the Local Planning Authority to establish the likelihood of the scheme gaining consent and the time frame involved
• Land Contamination – information should be obtained about previous uses of the land and confirmation obtained that suitable remediation measures have been undertaken
PRICES
The commercial property sector has experienced a severe downturn since late 2007 with many vacant industrial and warehouse facilities throughout the UK. Where property owners are seeking to let existing buildings then competitive terms (freehold and leasehold) can be obtained.
However, where occupiers are seeking to have a new facility constructed then the end capital value or rent may be relatively expensive to what the market demands dictate. The reasons for this are that the risks associated with development have increased together with the costs and availability of finance.
Several landowners and developers are preparing large sites for industrial property development near to existing port facilities around the UK. With weak demand over recent years attractive terms can be negotiated for existing facilities but, as the amount of available stock reduces due to a lack of development, plus increased demand, this is likely to change in the medium term.
If businesses are considering relocation or expansion then they should commence the property procurement process.
Richard Beaumont Matthews & Goodman LLP
www.matthews-goodman.co.uk
Wind Energy NETWORK
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