Commercial Property - Practical issues

Monday, January 28, 2008

Commercial property takes time to build, often years, and certainly longer than residential property due to the more stringent planning and building regulations.

This means that the supply of commercial property is fixed in the short term while the economy can change quite quickly. In terms of economic boom this means that the supply of suitable property may lag behind the surge in businesses requiring accommodation.

Conversely, new property may be well under construction in response to a boom, only to find the economy loses momentum just as wealth of new property hits the market.

The lack of development in the 1990's, primarily due to the struggling economy, has left a shortage of suitable property even today, particularly in the South.

Commercial sectors will also affect the value of property and the market. Over the past few years the office sector has been weaker than the retail or industrial sectors, in part because there is a relatively good supply of office space. In London and the South-East, for example, there is plenty of office space available due to recent developments.

The area is also vulnerable to business migration, where the costs of running a business and employing staff can be reduced by moving to a cheaper area. Many areas are now offering financial incentives to incoming businesses.

If you have any questions on this article or others like it, please feel free to contact Drew Mitchell at Solution Mortgages on 0845 123 1260.