Empty commercial property benefits?

square_bear

I hope this is a suitable place to ask this question because I can't see a section for commercial property on here.

I just want to understand a bit more about how commercial property rules benefit the owner, especially when it's empty.

I will add that I don't own one.

In most places I visit there are many small and large former shops, offices or workshops which are empty. Often with a To Let sign or no sign at all. Not many showing 'For sale'. Some of these look as though they've been empty for years, one near where I work has been empty for at least 30 years and it's on a main road.

There must be a benefit to some landlords allowing a place to lie empty for years (tax relief, subsidies etc) and just watching the price of the property rise without actually doing anything to it? Otherwise, they would be just draining money, surely?

Also, often the first floor of a commercial can often be an active shop with many customers but when you look at the floors above it shows empty, dilapidated rooms which could be renovated to be let out for housing.

Is there a method in the madness or is there business sense in what some owners are doing?

davidmcn

The upper floors bit is partly a planning issue and partly because if you wanted to make it into separately-occupied housing etc you'd need to build new stairs / lifts / entrance doors, which would mean removing much of the (valuable) ground floor space.

Also not all commercial occupiers want to have new upstairs neighbours moaning about noise/smell etc, and there's the potential that they may in the future want to add it back into the ground floor commercial space.

square_bear

The upper part on some of these buildings can be 2-3 levels and if money was spent on renovations then surely it would be returned once let for 2-3 years.
I get what you mean about smell/noise for the upper tenants if above a take-away or taxi office. But in some cases it may only be a newspaper shop or standard office on the ground floor.

Mostly though, if the whole building was empty what benefits are there to leaving it that way?

eddddy

There's no real benefit to keeping commercial property empty. In fact, it costs money - business rates are still payable, insurance premiums are increased and perhaps there are added security costs.

It's just down to low demand, due to business factors.

The growth of online sales and custom-built 'out-of-town' shopping areas, custom-built 'out-of-town' office parks with flexible space, hot-desking, good road connections etc, means that a lot of older commercial property has become redundant.

Sometimes property can sit empty for a year or two, whilst the owners try to get planning consent for redevelopment.


There's an 'edge-case' where building owners can't get consent to redevelop - so they try to keep a building un-let / un-sold for a few years to try to prove to planners that it's not a viable building in it's current state. But that's rare - and it tends to relate to 'important' buildings.

davidmcn

square_bear wrote: »

Mostly though, if the whole building was empty what benefits are there to leaving it that way?

There aren't any secret "benefits", if it's empty it's costing the landlord money. Commercial properties often have lower demand and tend to require more money sunk into them to change use or occupier. If there's the prospect of redevelopment on the horizon then you may as well sit and wait, even if that means the place being unoccupied for several years.

Doozergirl

In our High Street a lot of the property is owned by bug investment companies, pension funds etc. They advertise them with ridiculous rents - there doesn!!!8217;t seem to be much impetus to make things work on a local level.

G_M

It's down to Tesco and the like taking business away from High streets. Fewer & fewer businesses can make money in the High street

You'll also have seen the large number of charity shops in these areas. The charity ays the insurance, rates etc but gets the shop (usually) free, which is better than it being left empty and costing the owner mone.

I've also come across examples where a supermarket opened a new, bigger, store but deliberately left their older smaller one empty. This is to prevent a rival supermarket using it and increasing local competition.

Thrugelmir

G_M wrote: »

It's down to Tesco and the like taking business away from High streets. Fewer & fewer businesses can make money in the High street

Now Amazon and online shopping. Tesco is utilising it's floor space in different ways, such as sub letting.

davidmcn

G_M wrote: »

You'll also have seen the large number of charity shops in these areas. The charity pays the insurance, rates etc but gets the shop (usually) free, which is better than it being left empty and costing the owner money.

And a lot of the commercial occupiers are similarly allowed to stay on rent-free deals after the end of their lease, until such time as the landlord finds a better offer.

knightstyle

There are a couple of shops I know of with two stories above that have been empty for over 12 years, No for sale or to let signs and the upper windows are starting to rot badly.
So do the owners still pay business rates etc? Is it a tax relief scam or perhaps money laundering?

davidmcn

knightstyle wrote: »

There are a couple of shops I know of with two stories above that have been empty for over 12 years, No for sale or to let signs and the upper windows are starting to rot badly.
So do the owners still pay business rates etc? Is it a tax relief scam or perhaps money laundering?

Rates are payable, but based on whatever the rentable value of some knackered old storage space etc would be. Not sure how any tax relief or money laundering would work? The spaces simply aren't worthwhile doing anything else with.

In ye olden days, shops would typically have needed more space for stock rooms, but nowadays they're more likely to have everything delivered just-in-time from big warehouses elsewhere.