Monday, 16 April 2018

A note on why land values matter...


This is a really splendid building in Bradford city centre:



As you can see it occupies a large footprint, has three stories and an imposing presence (it's also listed and in a conservation area but those details aren't relevant to my point here). It was recently sold at auction where it was listed at £670,000. I've a feeling it might have gone for less than this despite having good sitting tenants. For less than a flat in Southwark you could have all this magnificence!

The thing is that this price reminds me that land values in central Bradford are essentially zero. Imagine that's a cleared site for a second - could you build a three storey office block (even one that's not natural stone and to a high design quality) there for less than £670,000? Of course not.

The building is, however, there and this means it has value. But the sad - and it is sad - truth is that land in Bradford is pretty much valueless even if the buildings currently sitting on that land can be used and can generate some sort of yield. Forgive me for feeling that it's pretty difficult to have a commercially-driven regeneration strategy if the land values are zero or negative.

Maybe we need a different approach? Like the one here

.....

1 comment:

The Stigler said...

"Forgive me for feeling that it's pretty difficult to have a commercially-driven regeneration strategy if the land values are zero or negative."

Why? If anything, if you have cheap land, that's an advantage. It means your staff have very cheap rents, which means you can outperform companies with more expensive rents.

I think you've put the cart before the horse. It's not that cheap land discourages business. It's location, lack of transport links that discourages business, which then leads to cheap land.

I'm convinced that the decline in London house prices isn't really about Brexit, but about companies doing office work not needing their staff and suppliers within zone 4. I know a large new media company that are increasing staff in Leeds and not in London or the South East. I do more work around the Bristol area than closer to London now, and this is even extending to unfashionable places like Chippenham.