Slash in property holdings forecast

By Jim Dow

FEWER firms expanded their property portfolios over the last six months, while the weaker economic outlook has pushed up the number of firms planning to reduce their property holdings, according to the latest CBI/GVA Grimley Corporate Real Estate Survey.

Keith Aitken, regional senior director (Scotland) at GVA Grimley: “The rapid expansion of property seen in recent years is really starting to peter out. In the last six months, far fewer firms have sought to expand their property holdings and more are now looking to reduce it in the next six months."

While acting as a drag on the economy as a whole, the credit squeeze most still mostly making itself felt in the financial services sector. Nevertheless, at times like these, firms in all sectors needed to be thinking of ways they can manage their property better.

Mr Atiken continued: "Much can be gained by restructuring a lease, reducing your rent, or paying to break a contract. Currently, firms appear unaware that the credit squeeze presents opportunities as well as threats.”

The twice-yearly survey, conducted between 12 March and 4 April 2008, reveals a balance of +15 per cent said they had increased their property holdings in the last six months, indicating a slower rate of growth than in the previous survey (+22) and some way below expectations (+21).

Twenty per cent of firms now plan to reduce their property space – a marked increase on the 12 pc of firms contracting their property in the past six months. Twenty-seven per cent of firms still expect to expand their property holdings in the next six months, giving an overall balance of +7.

In the extraction & utilities sector, a balance of 48 pc of firms said their property holdings contracted over the past half year, while a balance of 74 pc expect it to reduce in the coming six months.

More firms in engineering and manufacturing also expect to contract their property space than expand it.