The property market fears Enterprise Zones could simply shift investment from one location to another. Salloway Director Marc Ballard says their success
should be measured in terms of inward investment.
In my view Nottingham should be welcoming of the decision to allocate an Enterprise Zone (EZ) within its borders. Although, what opportunities does it create for occupiers and the property market and how will its success be measured?
It's clear that the government view the new EZ designations as a method of quickly stimulating economic activity. However, there can be no doubt that the incentives available within the new generation EZ's are much watered down compared to the previous generation in the 1990's. These were initiated to deal with economic decline of entire coalfield areas. In the early part of my career I worked in Mansfield and I witnessed first-hand how an EZ, Crown Farm Industrial Estate, could effect a local area.
Coalfield EZ's were allocated for 10 years and benefitted from significant incentives for businesses to relocate within them, including business rates relief and capital allowances for construction. The new allocation has a planned life span of 5 years only and a much smaller incentives package. The effects of Coalfield EZ's were wide ranging. The EZ became a 'honey pot' for property activity and occupier enquiries. The impact was that any property requirement, whether inward investment or indigenous to the town, was drawn to the EZ at some determent to the surrounding real estate market. The desirability of empty rates relief in particular meant that values and rents within the EZ were on average 25% higher than mean values outside the zone. This created excellent investment opportunities for landowners within the zone but starved the market outside of activity.
I do not believe that the new EZ policy will have a similar onerous effect on Nottingham's wider market. The policy is targeted at a specific sector of the market based around Boots core market strengths and as such I believe that this will be attractive primarily to inward investment rather than businesses already in Nottingham. There may be some movement of target sector businesses from the surrounding market into the zone but I believe the net benefit will be greater economic activity within Nottingham as a whole.
My concern with the EZ is deliverability. In the 1990's massive chunks of money where thrown at creating road and transport infrastructure into sites and creating 'oven ready' opportunities for potential occupiers. It is my understanding that the Boots EZ is far from immediately deliverable - something that I would have thought would be a requirement given the short timescale of the incentives available and the government need for a quick economic stimulant. As such if money is not found through RDF funding or otherwise to service the allocated site and refurbish the buildings within it, I believe that the opportunity presented may be missed. In this regard, I would have thought that a floundering but fully serviced site such as Eastside would have been a more logical choice to get the economy moving and quickly.
The success of the EZ can, in my view, be measured only by the inward economic activity that the zone provides to a city. If the Boots EZ attracts significant bio / healthcare companies to the city which would have ordinarily have gone elsewhere then that is a triumph.
The opportunities presented by the EZ to the local property market are both tangible and emotive. I believe that enquiries in to the city will increase and this will spin off into the greater Nottingham property market. A more compelling opportunity however is the chance that seeing development and real progress at Boots may inspire Nottingham's wider property market to awaken from its current slumber. Now that would be a success.