May 2009 - Time to snap up commercial property bargains

According to Schroders UK, commercial property is a ‘screaming buy’ at the moment. They have advised foreign investors to take advantage of both a commercial property market that has suffered a fall from its 2007 peak of some 40%, and a currency that many see as undervalued compared to both the Euro and the Dollar (at the time of writing Sterling is in the process of making something of a comeback against both currencies).

However, the Bank of England’s monthly summary of business conditions in the UK confirmed that the UK construction industry is still in a moribund state. The report confirmed that construction activity had continued contracting and in recent months, in addition to the already scant private sector contracts, there had been further reports that growth in public sector work was slowing, or that projects were being delayed.

Residential construction remains at very low levels and, looking forward, the Bank’s contacts did not expect any recovery in the coming months. There was an excess of retail and office space in many parts of the United Kingdom and the viability of prospective commercial property projects remained constrained by lower property valuations and the cost and availability of external finance.

The trick, of course, in any market is to anticipate the bottom. If you are looking for signs that we may be close to the bottom then you would be heartened by Cushman Wakefield’s Business Briefing which indicated that prime yields for UK property have stabilised in the last two months with 21 of its 24 key yield outlook indicators flat-lining between March and April.

Cash may be king but when the banks are being given the use of our cash for next to no return and are refusing to lend it back out the front door for anything other than bombproof investments then it’s time to withdraw our hard-earned and place it in the nation’s favourite substances – bricks and mortar.

So how best to take advantage of opportunities in commercial property? Buying at auction can be a sound policy provided you have undertaken a full due diligence exercise in advance. Commercial property lawyer Steve Petty of Cousins Business Law offers all clients no purchase no fee terms when buying at auction which means you don’t need to worry about a large legal bill for carrying out due diligence on a property you fail to acquire.

Properties occupied by blue chip companies with a number of years left on their lease are ideal buys but with the large house builders having largely withdrawn from the market, there are also opportunities to bid for sites with long-term development potential.

If you are looking to invest in commercial property then make sure you have the right professional team in place to move quickly if an opportunity arises. A surveyor with expert knowledge of the relevant geographical area and market sector is essential and if you need finance just any old broker won’t do these days. Cousins Business Law can introduce you to other professionals in whom we have confidence to ensure you end up with a peach rather than a lemon.

For help with any commercial property deal contact property lawyer, Steve Petty, on 01926 629005 or by email.

Not content that the smoking ban and credit crunch are having a significant impact already on the licensed trade, the Government seem determined to go back on their promise of a ‘light touch’ in dealing with the licensed trade. It seems the Home Office is taking over from the Department for Culture Media and Sport in regulating licensed premises. Its consultation on the code of practice for alcohol retailers entitled “Safe, Sensible, Social: Selling Alcohol Responsibly” has just been issued and it doesn’t bode well for anyone in the industry hoping for a freer rein and sensible regulations.

Instead, it seems the industry is to be tied up in a whole heap of new red tape in order to address a few problem licensed premises. This one size fits all approach which includes a series of mandatory and discretionary measures for off-licences, pubs and private clubs is not what the industry needs right now.

The consultation period lasts until 5th August 2009, so now would be a good time to review the proposals and lobby against them if you see fit. Full details of the conditions of the proposed code of practices can be found on our website in the article Storm warning for licensed premises.

For advice on licensing issues, contact Nigel Musgrove, licensing solicitor with Cousins Business Law, on 01285 847001.

There are 5 basic methods of resolving construction disputes, the most usual of which arise between a contractor and employer, or between a sub-contractor and main-contractor. A new article on the Cousins Business Law website, 5 Methods of resolving construction disputes, details the basic characteristics of each method, from the cheapest upwards and points out their main pros and cons.

Here’s a snapshot of the pluses and minuses in each case – read the full article or contact Cousins Business Law for more details

Contract Administrator - ask the Contract Administrator to make a decision.

Pros: quick and cheap.
Cons: may not be binding.

Negotiation - over the telephone, by correspondence, at a meeting or through mediation.

Pros: quick, cheap and parties in control of outcome.
Cons: unless parties have equal power, it may not be effective.

Adjudication - all parties to a construction contract have a statutory right to adjudication which can be commenced at any time and a decision within 28 days.

Pros: quick, relatively cheap and immediately enforceable.
Cons: rough and ready decision, and can be overturned in later proceedings.

Arbitration - much more like court proceedings than adjudication. Requires a genuine dispute and a binding agreement.

Pros: a thorough procedure although quicker than court, convenience, privacy, a binding decision, and parties can opt to choose an arbitrator with technical expertise in the issue to be decided.
Cons: expensive.

Litigation - where a dispute is referred to the courts for a decision.

Pros: a more thorough procedure, a binding decision, multiple parties can be joined in, best if there is a point of law to be decided, and often more decisive.
Cons: can be slower than other resolution methods, expensive.

No two disputes are the same and the decision as to what method should be adopted in a particular case should be decided in consultation with a dispute resolution solicitor who can advise what is best in your particular case.

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