Skills shortage reaches pinnacle

RICS has revealed that the UK’s construction skills shortage hit critical mass in the final three months of 2014, with 48% of the group’s members reporting a lack of staff across all main trades. "Labour shortages have become increasingly onerous in every area of the sector,” commented Alan Muse, director of the built environment at RICS. The Times, Page: 41

Supermarkets sitting on 1,000 acres of land

New figures from CBRE have revealed that supermarkets are building on just 6% of the land they control across the UK, underlining the problem they face with undeveloped sites. CBRE said the pipeline of new grocery stores in the UK is 46.61m sq ft, the equivalent of more than 1,000 acres. However, just 2.8m sq ft of these new stores are under construction. The land is either subject to a proposal for a new food store, or planning permission has already been granted. The Telegraph, picking up on the figures, says the news will lead to critics claiming that supermarkets are hoarding land that could be used for new homes. The paper also points out, however, that the statistics highlight the scale of the challenge grocery retailers’ face in dealing with their land. If the retailers decide they no longer want to build shops on the sites, they will be forced to book billions of pounds in write-downs. Chris Keen, director of supermarket leasing at CBRE, said “It is too early to say whether we are looking at a hiatus or the onset of an actual long-run decline in UK grocery store development activity. A sea-change in grocery markets is however certainly occurring.”

Government criticised for not listening over business rates

The government's report into the future of business rates has been called a sham by critics who argue that ministers didn't take any advice from businesses and representatives. Officials also failed to speak to Dutch counterparts despite being told by experts that the system in the Netherlands is similar and where business rate revaluations have been held yearly since 1997. Ruud Kathmann, of the Netherlands Council for Real Estate Assessment, said of the reform: "By a more frequent revaluation the differences between the previous assessed value and the new one would become smaller and that is easier to explain. Therefore we also expected a lower number of appeals." A report by the British Property Federation has called on ministers to learn lessons from overseas. Paul Turner-Mitchell, who wrote the report, said: "Businesses are getting fed up with the Government constantly asking for their opinions on how to create a simpler system and then ignoring the advice. The perfect example to learn from, yet the authorities didn't bother even making a phone call."

Business rates to be reviewed

George Osborne will announce a review into the structure of business rates which will be completed by early 2016, in his Autumn Statement. Experts have warned that the business rates system unfairly punishes high street firms with large properties and unfairly benefits online retailers with small premises. Some experts are calling for business rates on small premises to be scrapped altogether, arguing that of the 1.7m commercial properties on which business rates are paid, about 1m are used by small businesses. However, if such firms were exempted from business rates, it would reduce the Government’s take by only 6%. Simon Tivey, a rating expert at PwC, said: “There are huge numbers of very small properties that are contributing very little to the rates tax pot but no doubt costing significant sums out of the Valuation Office Agency’s £100m budget to administer.” One proposal submitted to the chancellor is for these small locations to be “bundled” rather than individually assessed for ratings.

Supermarkets must close one in five stores

Analysts at Goldman Sachs have warned that Britain’s biggest supermarket groups must close one in five shops to turn around their performance. In a report on the grocery industry, Goldman said the retailers had to close stores in order to reduce their cost base. Analysts said this would then allow them to compete with Lidl and Aldi, and grow profits. “Our analysis of the UK grocery industry suggests capacity exit is the only viable solution for a return to profitable growth,” Goldman said, adding that store estates needed to be reduced by around 20%. The analysts said that if current trends continue then sales in large out-of-town supermarkets will fall by 3% every year until 2020. This would mean that sales in larger stores fall by 18% over the next six years. Separately, Chris Keen of CBRE said that grocery retailers had added 3.2m sq. ft. of space last year but were likely to reduce this to 2m sq. ft. next year. He said that supermarkets were allocating more space to non-food activities. "We'll see more space given up to concessions, to sublets, to things like gyms. Supermarkets will have more of a department store feel."