Small Businesses 'Unaffected by Commercial Property Slump'
Thursday April 17th 2008
February saw commercial property building work in the UK fall for a fourth straight month, a trend that is causing major worries for investors, but not necessarily for small businesses.
While office space is one of the primary uses for commercial property, the National Federation of Enterprise Agencies (NFEA) claimed that smaller firms were principally renters of commercial space – and had less to lose from the credit crunch.
The group highlighted the varying dynamics of the residential and commercial property sectors, claiming that the falling value of UK property is bringing rent down and is actually welcome to the majority of businesses who rent.
George Derbyshire, chief executive of NFEA, said: "There is not the same level of turnover [as in residential markets] and many more properties are rented, rather than owner-occupied, so we would not expect to see the same "boom or bust" approach.
"We are not aware of any great level of concern at the present time, although anecdotally, businesses looking for funding to buy premises will find lenders more cautious than previously."
He added however that for real estate investors looking to rent out their acquired properties, concerns were mounting over the potential for raising rents and over the effect of the credit crunch on new business projects and potential clientele.