How to Take Into Consideration The Current Market Position When Choosing Business Premises

Sooner or later, with or without ‘encouragement’ from the planners, most small firms need proper business premises. Working from home may be a useful launching pad but it is not usually a lasting solution, particularly if the firm is to grow. The question therefore arises: what kinds of premises are there for small businesses? It is important to familiarise yourself with the different kinds of property available to the small business. Thorough research into the market will ensure that you match your requirements realistically against the price that you can afford to pay.

The current market position

The commercial and industrial property market has been undergoing rapid change in recent years. Undoubtedly the driving force has been a new awareness of the needs of small business and a consequent growth in public-sector provision, particularly of small factory units. In the late 1970s, the Department of Trade and Industry commissioned a survey by Coopers and Lybrand. The study (published in 1980) looked at factory premises up to 2,500 square feet and identified a shortage of suitable accommodation in this sector: ‘with only minor exceptions, in current market conditions demand exceeds supply throughout the country’. It concluded that ‘there is clear evidence that the shortage of premises has con­strained the establishment and development of small firms’.

The Coopers and Lybrand findings attracted considerable attention and helped to lay the basis for three major subsequent initiatives:

  • A significant relaxation of town planning controls on small businesses. In 1980 and again in 1984 the Department of the Environment issued circulars (22/80 and 16/84) to all local authorities advising them to take a much more sympathetic approach to the needs of small firms. More recently the 1985 white paper ‘Lifting the Burden’ has reinforced this advice to local authority planners.
  • An increase in the public sector provision of small factory premises. A wide range of government bodies are now actively engaged in this field: these include local authorities; New Town Development Corporations; the Scottish and Welsh Development Agencies; and the British Steel Corporation. English Estates also has a large portfolio of factory units. Formerly known as English Industrial Estates, this organisation operates as the building arm of the Department of Trade and Industry. It specialises in factory provision in depressed regions and. recently took over the building work previously undertaken by CoSIRA (the Council for Small Industries in Rural Areas). CoSIRA is an agency of the Development Commission, a government body whose aim is to enhance the economic and social welfare of rural areas. In addition to all these government organisations there has also been a growth in units funded jointly by public and private bodies, and in the provision of units by charitable trusts.
  • Tax incentives to encourage greater private-sector involve­ment in small premises were introduced in March 1980. For three years under the Small Workshops Scheme, a 100 per cent Industrial Allowance was given for capital expenditure on the construction of workshops not ex­ceeding 2,500 square feet.

Taken together, these three government measures have had a substantial impact. In many parts of the country there has been a distinct improvement in the market position, particularly for modern factory units over about 1,000 square feet. For smaller workshops, however, the market position remains tight in some areas. This is due in part to the success of the Enterprise Allow­ance Scheme and other government measures designed to encourage the creation of new small firms. The increased business birth rate obviously intensifies the demand for very small, ‘starter’ premises. Moreover, many small businesses are not interested in new factory units but are looking instead for older, cheaper premises. At this end of the market there are often special problems for unneighbourly businesses, as town planning controls can still seriously curtail the choices available. Small motor-car repairers, glass-cutters, scrap merchants and indeed any noisy, dangerous or unsightly enterprise may well face particular difficulties in finding accommodation. In addition there is, of course, a wide range of retailing and com­mercial companies looking for shop or office space: parts of the property market which lie outside the realm of recent government initiatives and in which there is relatively little public sector involvement. In these sectors, market trends are less clear-cut and much depends on the general level of economic buoyancy in each local area.

Indeed, in all sectors the stock of available premises is bound to change over time and vary from place to place. This article does not attempt, therefore, to provide a mass of detailed information on particular places or individual properties: such a catalogue would be enormously lengthy and rapidly out of date. A general review of the state of property markets in different areas is already available in the Business Location Handbook produced annually by Beacon Publications Ltd (Northampton). Instead, this article introduces the range of different kinds of small business premises in the United Kingdom, examples of which you may well find in your own locality.

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About the Author: Marie Mayle is a contributor to the MegaHowTo team, writer, and entrepreneur based in California USA. She holds a degree in Business Administration. She loves to write about business and finance issues and how to tackle them.

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