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| 07.07.08 SMALL OFFICES STILL VIEWED AS GOOD BUYS Credit crunch uncertainties are failing to scare small business owners in Scotland from buying their office premises. Despite the softening of the commercial property market and money being harder and more expensive to find, providers in this sector report that demand remains strong and are ploughing ahead with further investment in new developments across the country.Some of this continues to be driven by company directors taking a long-term view and placing their offices in self- invested personal pensions (SIPPs), but one of the market leading developers, Business Homes CALA says most people are aquiring the properties via the traditional route of commercial mortgages. This joint venture, which combines the Yorkshire- based market leader with the Scottish based CALA properties, provides small pavilion- type office buildings from 1250 to 6000 sq ft, importantly with their "own front door." Business Homes CALA managing director James Houlston says the appetite for purchase is strong across business parks in Aberdeen, Dunfermline, Edinburgh, East Kilbride and Glasgow. We have 10 schemes in Scotland at the moment and are experiencing high demand from people wanting to buy property. Many small business owners are seeing their premises as a good investment and a way to progress expansion plans for their businesses." Following a successful scheme at Glasgow Airport Business Park, where all the units were sold or pre-let prior to completion, the firm has just snapped up a 1.7 acre site at nearby Cardonald Business Park in a £620,000 off-market deal brokered by DTZ. The company's £5m Livingston project initially planned to build the 10 blocks in two phases but it has been condensed into one becasue there was such a rush to buy space. Five of the units from 3043 to 6168 sq ft have already been sold and five more will be completed in July. Occupiers are paying £190 per sq ft freehold or a rental of £16 per sq ft. While stressing that every would-be purchaser needs to take detailed financial advice beforehand, Business Homes' research claims the mortgage approach alone can slash the cost of a 3000 sq ft office from a typical rental of around £17 per sq ft to £10.35 on an interest only loan or £13.05 on capital and interest, assuming a 20% deposit and 25 year loan at 7%. Stephanie Trigg, an independent adviser who assits the firm's customers, says:"In my experience, the credit crunch has not reduced the availability of commercial mortgages as it has in the residential market. These are currently widely available from numerous banks, with lenders providing up to 80% of value on quality commercial properties." |
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