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Survey reveals engineering firms struggling with property costs

A survey conducted by the Confederation of British Industry (CBI) and GVA Grimley shows engineering firms are not exploiting opportunities arising from the credit crunch and are instead contracting their property holdings.

The rate of growth for the surveyed firms' property portfolios has fallen from 22% to 15% in the last six months while there has been an 8% increase in the number of firms planning to reduce their portfolio over the same period.

Other findings show that the greatest effects of the credit crunch have been felt by the financial sector, resulting in project delays as companies find it increasingly difficult to borrow money.

GVA Grimley Director, Howard Cooke, said: "The rapid expansion of property seen in recent years is really starting to peter out. In the last six months, far fewer firms have sought to expand their property holdings and more are now looking to reduce it in the next six months.

"The impact of the credit squeeze, while acting as a drag on the economy as a whole, is still mostly making itself felt in the financial services sector. Nevertheless, at times like these, firms in all sectors need to be thinking of ways they can manage their property better."

Following changes to the empty property rate relief in April, many engineering firms are already paying more to manage their property portfolios.

This fact was reflected in the survey as 80% of the engineering firms had highlighted the efficient use of property as an important item on their boardroom agenda.

The CBI's Head of Infrastructure, Karen Dee, said: "The recent changes to empty property rate relief are adding a billion pounds a year to businesses' property costs. Firms tied into a lease may have little room for manoeuvre, but all companies should seize the opportunity to review their surplus property, or face these extra costs."

"This survey shows not many businesses have so far been able to reduce their surplus property. This is in large part due to the time lag inherent in changing property holdings," she added.

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