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Brexit and rash decisions don’t affect underlying confidence

We had a deal cancelled at the point of signature last week.  All the reasons for completing the contract remain; the rent and terms is fine, the size is what is required and the location was perfect.  The reason given was that (if true) the company’s accountant had advised that because of Brexit they should find somewhere to buy.

“No names, no pack-drill” but of all the reasons to buy a new factory/warehouse and office, Brexit would be the last on my list and I cannot understand this reasoning knowing how difficult it is to find the right place to buy for any one specific business.  The decision to buy rather than lease has more to do with whether a company wants the property on its own balance sheet or not.  True, industrial/warehouse property yields are significantly higher than other forms of investment and, commonly, a property can be bought over a period of ten to twelve years.

Nevertheless committing capital to the purchase of a building is to remove working capital from a company’s operations and should not be made lightly.  The banks have, for over fifteen years, been steadily selling off property and leasing it back because they know that they can get a better return by lending money rather than having the capital sat in buildings.

If the concern about Brexit has to do with uncertainty following Brexit, should not the advice be to take a building on a lease and be sure to negotiate a degree of flexibility allowing for uncertainty?

We are all in the Brexit boat together and a decision not to take a lease of a building in favour of trying to find something to buy prevents the very flexibility one would look for in a lease; tie up working capital that would otherwise be used in the business and, unless someone is very fortunate, forestall the time with the move (and presumably expansion) at a point when, by definition, it is most beneficial to the company.

By all means buy if you wish but the decision, so far as I can see, if generally based upon Brexit is particularly difficult to understand but I may, of course, be missing some vital part of the context in which the advice was given.

In the meantime, Bridge Business Park at Colne Bridge in Huddersfield has been completed by Frank Marshall Estates Ltd providing 37,500 sqft of first class industrial/warehouse accommodation in 6No units from 2,500 sqft.  The merged firms of Walker Singleton and Hanson Chartered Surveyors are marketing from £8 per sqft per annum.  This will be formally launched at the end of September.

Despite rather than because of Brexit, owning one’s own factory remains a popular choice for some and the shortage of land has drawn Aflex Hose from its home in Sowerby Bridge to Bradley Huddersfield where they have taken 11.5 acres, sold by Walker Singleton on behalf of Kirklees Council for a new factory of 206,612 sqft.

Confidence in the West Yorkshire area and Huddersfield remains positive.


Mark S Hanson

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