Business Rate Revaluation and Effect on Rents

I have been surprised that I have seen no-one from the property development and investment industries talk about, or even mention in passing, the effect of the Business Rate Revaluation on the rents they can charge for commercial premises.

Everything else being equal, if the cost of running a business goes up because of increased Business Rates, businesses can’t afford to pay as much in rents.

In the short-term there isn’t much most businesses can do about this. But when the time comes for lease renewals or rent revaluations it could be that tenants push for no or low increases. New lettings may even achieve lower rents than is currently the case.

Along with this comes a whole range of possibilities and scenarios for the commercial property and development industries, and even the economy at large. Yet, I have heard no one talking about this – until today.

Derwent London’s Chief Executive, John Burns has today said that an average rise in business rates in London of 10% will increase pressure on tenants, saying “we will have to see how it goes”.

I think this “we will have to see how it goes” is the first recognition that the Business Rates Revaluation will affect the rents which can be charged and made to stick, and thus development values.

I think this is good – it is better that the tax payer gets the money to spend on infrastructure and services than the landowners get this free, unearned gift. The only thing missing is the removal of the Business Rates Cap, where the total amount raised is capped and only uprated by the rate of inflation– we don’t cap the amount which we raise from income tax and change the rate charged accordingly, so why do this with business rates? There is lots we could do with this additional tax income.

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Making Places which Work for People – by involving the people

If we leave the development and regeneration of cities to only one form of capital (economic) we will get a one dimensional city which only works for one section of society.

I recommend an article by Philippa Nicole Barr of Macquarie University as a good read about how we need to bring together all forms of capital: social; cultural; intellectural; political; and natural; in order to balance the effects of economic capital so as to make ‘Places Which Work For People’ – all people.

I give a taste by quoting a paragraph here:

“The redevelopment of existing communities and the construction of new urban areas is frequently funded by private companies looking to make a high return on investment. This is achieved by high-value sales or rental rates. But without regulation, these processes create conditions that exclude or disempower poorer people within cities; for example, by limiting access to public spaces or making rent and home ownership unaffordable. One recent study revealed that, compared to other groups of people, poorer renters move more frequently into disadvantaged areas, each time experiencing a decline in their living standards”.

Link to the full article:

https://theconversation.com/heres-how-to-give-people-a-greater-say-in-their-cities-62672?utm_medium=email&utm_campaign=Latest%20from%20The%20Conversation%20for%20October%2011%202016%20-%205779&utm_content=Latest%20from%20The%20Conversation%20for%20October%2011%202016%20-%205779+CID_926dacc321f58c95e4e3aefadfa7e3e5&utm_source=campaign_monitor_uk&utm_term=Heres%20how%20to%20give%20people%20a%20greater%20say%20in%20their%20cities

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Entrepreneurial Development Model for Town Centres

I have been saying for some time now that many of the UK’s struggling town centres and high streets will not be improved or regenerated via the traditional property development model. Instead, in order to improve, they need to use the Entrepreneurial Model.

So, it is interesting to see that some Local Authorities have decided to buy (or a looking in to buying) high street properties and shopping centres. However, to make a success of this ownership these local councils will need to employ a different sort of manager to those they are used to recruiting, and they can’t depend on property agents to make a success of it for them.

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What has Hip Hop music to do with urban regeneration?

What has Hip Hop music and gang culture to do with Urban Regeneration and Urban Planning?

On Friday I watched the BBC4 programme ‘Rubble Kings’ which told the story of how gang culture in parts of New York came out of the damage done to inner-cities by top-down urban planning and de-industrialisation, and how eventually gang leaders decided that other gangs were not the problem; and instead of fighting each other they needed to fight ‘the man’ by coming together, and to re-build their areas from the bottom-up instead of taking what the top-down was willing to ‘give’ them. Part of this community rebuilding came from Hip Hop music and the music scene.

I recommend you view it – there isn’t much Hip Hop music in it as the programme is really about regeneration rather than music.

Link is here: http://www.bbc.co.uk/iplayer/episode/b07vxmxw/rubble-kings?suggid=b07vxmxw

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Skills Shortages: lessons from the recent past

I can recommend the BBC Programme which celebrates the 50th anniversary of the opening of The Severn Bridge (‘The Severn Bridge at 50: A High Wire Act’). You can find it on BBC iPlayer here –

http://www.bbc.co.uk/iplayer/episode/b07tmmwy/the-severn-bridge-at-50-a-high-wire-act?suggid=b07tmmwy

I particularly liked the contribution from Michael Parson (around 05.58 minutes): As a new civil engineer, fresh out of Bristol University, “I was in charge (it’s a job to imagine it nowadays) of writing the specification for the new bridge. I was the only one working on it.”

I think this experience has lessons for us in 2016, when we are hearing warnings about skills shortages in the UK’s infrastructure and construction industries, which will delay or prevent the delivery of many large projects and programmes which the UK needs to deliver.

Instead of looking for people with exactly the ‘right’ experience; and moaning when we can’t find them, we need to give opportunities and responsibilities to young, newly qualified engineers (or indeed older workers with different experiences). This is what we had to do at a time when resources were still scarce in post-war Britain, and as we can see from The Severn Bridge a good job was done.

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Economic re-balancing and Regeneration need short, medium and long-term strategies

This is quite short – but wouldn’t quite fit into a tweet:

Many of our economic and regional re-balancing processes will take many years if not a few generations before the required re-balancing is achieved. Therefore, we must also have short and medium term transition strategies to ensure that current citizens are to have fulfilling lives.

A lot more could be said, but this will do for now.

 

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Total Landscape Approach and Green Infrastructure

A ‘Total Landscape Approach’ is a way of working which recognises and accepts that major infrastructure and civil engineering projects are not just large pieces of concrete and steel etc. It accepts that these large projects affect and impinge on the environment in many ways including visually and ecologically. The ‘Total Landscape Approach’ integrates the planning, design and delivery of projects so that potential effects on ecology, the environment and people are considered from the very beginning and design is dealt with in a way which not only reduces the negative effects but provides positive ones.

Large infrastructure and civil engineering projects should be conceived, designed and delivered not just to minimise negative environmental effects but to also take advantage of the multi-million £ being spent in order to provide additional and new environmental benefits – to make places and the environment better than they were before the project was implemented. Many people and groups object to large (and not so large) projects because of the environmental damage often done (or feared to be done) despite legal protections which are in place. By fully and whole-heartedly embracing and working with the environment and environmental constraints as an integrated part of the concept, the detailed design, and delivery, many of these objections can be addressed and countered. But this can and must be taken further by using a ‘Total Landscape’ approach, where not only are environmental effects minimised but the project used to actively improve the environment.

For example, instead of only trying to choose routes for the new Lower Thames Crossing and its connecting roads which attempt to mitigate the amount of ecological damage done, with loss of habitat and biodiversity minimised, the project ought to be adding to biodiversity and habitats along the routes, and take the opportunity to link existing pieces of valuable habitat together in order to provide migration and movement paths. This may mean (and is in reality likely to mean) that the overall project extends beyond the narrow linear footprint of the new and improved roads into a network of projects.

It is now normal practice to include tree planting on large road projects, but the detail must be extended to include considerations such as only using local trees and planting material of local providence rather than cheap material from say eastern Europe which will be of different genetic material and may bring in plant diseases. The planning for and procurement of planting material must begin as soon as possible so that local tree nurseries (and there are some in Kent) can gather seeds of local providence, sow and grow them on. This will also help local businesses and the local economy. In addition the landscaping, tree planting and habitat creation must take into account what other benefits it can bring such as reducing pollution; covering effects of road noise; reducing the effects of rain-fall; contributing to drainage and flood management; reducing the effects of crosswinds and snow-fall etc. The planting and landscaping must also be designed to provide visual interest (to road users and communities alike) and provide landmarks.

The look of the civil engineering, as well as its integration with the natural environment, must also be considered from the very beginning at all scales from the local to the strategic, to ensure that it ‘sits’ in the landscape and adds positively to it rather than is just plonked there without thought of how it looks from a distance and close up. In the early days of motorway design and construction in the UK landscape architects were employed at the earliest stages to ensure the roads worked visually with the landscape and added to it rather than against it and to its detriment. Likewise, landscape architects were involved with designing the landscape which nuclear power stations sat in. (Sylvia Crowe and Geoffrey Jellicoe being involved with motorways and power stations).

Many people are against the building of large bridges as they say that the large road approaches and the scale of the bridge ‘sterilises’ the surrounding area because of the poor environment created. With careful planning and good design this does not have to happen. For example, a major new parkland for public use could be created (as has been done around The Golden Gate Bridge in San Francisco).

And as here in Lisbon (see photos below) where a neighbourhood centre sits right under the bridge and high quality new homes have recently been built.

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With sufficient forethought and planning, and an integrated land acquisition and place making strategy, it may even be possible to develop high quality business and science parks beneath and around the bridge approaches thus obtaining rents or capital gains to off-set the capital and running costs of the bridge.

This short note isn’t intended to set out a detailed prospectus of what could be done in taking a ‘Total Landscape Approach’ to the new Lower Thames Crossings, but is intended to get such an approach onto the agenda. Such an integrated landscape-led design approach has the power to transform a road crossing and links into something that has character and beauty – and is highly functional.

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