Warehouse space shortage warning

UKWA said it was now over a year since changes to the Empty Property Rate (EPR) rules resulted in empty warehouses becoming liable for the same rates as occupied buildings. When the new rating scheme was introduced, UKWA expressed considerable concern about the impact that the legislation would have on the logistics and third-party storage industries. Those fears, it now says, would appear to have been well-justified. UKWA CEO Roger Williams (pictured), said: "The Government's move to scrap rate relief on empty industrial property has led many landlords to demolish perfectly sound warehouse property as a way of avoiding paying the substantial amounts of tax that unoccupied facilities now incur. Indeed, a recent report by property consultants Lambert Smith Hampton, found that owners of properties tended to wait for 12 to 18 months once a property had become vacant before making the decision to demolish it, which indicates that the speed of demolition of warehouse buildings is likely to increase in the near future. "Furthermore, the cost of EPR is proving a major deterrent to speculative warehouse construction. By encouraging the early demolition otherwise useful warehouse buildings and discouraging new speculative development the imposition of EPR means that when this recession ends there will inevitably be a shortage of warehouse accommodation and rents will rise significantly – thereby creating inflation."