Aldermore Commercial Market Report: Think BIG
With the economy improving, increasing confidence means a rising number of firms are looking to invest and expand
With the economy improving, increasing confidence means a rising number of firms are looking to invest and expand. However, despite the new enthusiasm from businesses to develop, planning for the costs of the coming year can prove to be a difficult undertaking: those who would rather avoid running the risk of a cashflow crunch that can come with expanding a business may be less eager to take advantage of 2014’s more positive outlook.
With the news in 2013’s Autumn Statement that business rates for SMEs would be capped at 2 per cent, the government’s delay to the revaluation of business rates from 2015 to 2017 will have been unfortunate for many who are facing increasing costs. Facing ever-increasing pressure to compete with online retailers, many have said that the different rates give online-only retailers an unfair advantage over traditional bricks and mortar stores.
Low business rates can mean the difference between a company thriving or merely surviving. Under the Localism Act, councils have the ability to grant reductions on business rates at their own discretion.
However, while rates may continue to be an issue for some time, the range of policies on offer at councils across the UK show that the willingness is still there to help small businesses, encourage wider investment into town centres and help high streets and communities thrive.
Newark and Sherwood’s ‘Think BIG’ campaign (Business, Investment and Growth) looks to help firms get the finance they need to expand, building on the strong foundations that many high streets already have. Croydon has a £3.5 billion regeneration underway to revitalise their centre into a thriving commercial, residential and shopping hub, and one of the key aspects of their plan to become a destination for businesses is their ‘free for a year’ business rate deal. Under the scheme, any business relocating to or expanding within Croydon city centre, from a single shop to a large business occupier, can benefit from a 100 per cent business rates discount in 2014/15.
With a study from Jones Lang LaSalle estimating that 80 per cent of high street shops’ leases are due to expire over the next five years, there is a danger that some retailers will choose not to renew in less profitable areas in favour of locations that will best serve their business plans.
With the International Monetary Fund having upgraded the UK’s growth forecast to 2.4 per cent recently, and new figures out from the Office for National Statistics showing that GDP in 2013 hit 1.9 per cent, returning confidence will mean a greater number of businesses looking to expand, and support from both councils and the mortgage industry will be essential to ensure their success. Rather than looking to curb available options, now is the time to invest in the future of SMEs who are looking to take advantage of renewed economic confidence.
Firms who may be unsure about how to go about expanding their businesses could profit from information about financing paths they may not be aware of. Working together with brokers and intermediaries is essential to making sure that SMEs can find and understand the best ways to take advantage of any opportunities available.
By Rob Lankey, Managing Director of Commercial Mortgages at Aldermore Bank
Keywords: Commercial Market Report, Aldermore Bank, commercial loans, commercial mortgages, economy, business, cashflow, revaluation, rates, bricks and mortar, Localism Act, councils