Retail property body BCSC has written to the Government asking it to make a firm commitment to help boost the retail property development pipeline in its pre-budget report next week.
In a letter to Chancellor Alistair Darling, BCSC president Jeremy Collins laid out three key recommendations to stop retail development stalling and called for the introduction of a UK variation of tax increment financing (TIF), a review of its “ineffective” policy on empty rates and local authorities to work with development partners in “constructive and progressive ways”.
Tax increment financing is a US-style mechanism for pump-priming regeneration projects, whereby
public bodies can borrow against anticipated future revenues to fund infrastructure projects.
Collins said: “We strongly support the introduction of TIF in the UK for several reasons, including its more efficient approach to infrastructure financing than the current public sector approach and its very significant capital raising potential. We also ask Government to address its empty rates policy, which simply acts as an additional drain on owners and occupiers.”
A BCSC/Lunson Mitchenall research paper found credit restrictions have hindered investment.Union Square, St Enoch’s in Scotland, Southgate in Bath and the extension to St David’s in Wales, have been the only major retail schemes delivered this year.
Lunson Mitchenall managing director Marcus Kilby said: “Under current conditions I don’t see a huge amount of proposed schemes in 2010, with developers waiting for confidence among the financial markets and retailers to return.
“However, without the help of national and local government to pump-prime and champion some of these schemes, my fear is that when retailers are ready to expand again, the development pipeline will be running several years behind, which could significantly impact retail growth.”
BCSC executive director Edward Cooke said: “There is also the broader issue of rising business rates, which is putting increasing pressure on rental values in shopping centres. In turn that impacts on the financial attractiveness of investing in retail property development.”