Councils are often best placed to invest in commercial assets

February 25, 2019

Words James Cogavin, Investment Director, Lunson Mitchenall |

It’s noticeable that there are growing concerns in the press about the new wave of local councils investing in commercial property – especially considering the nature and scale of the investment by some high-profile councils. However we are frequently seeing councils up and down the UK making considered commitments, in their local area, that will benefit their local communities in the long run.

From the data released – Spelthorne BC’s spending equates to a quarter of all spending on commercial property by all councils in England in the past five years – which stands at circa £4bn. This is clearly not representative of the majority of councils’ attitude towards commercial property investment. They typically target assets with investment lot sizes between £5-20million.

Commercial property is a popular investment class as the income generated can provide additional funding for local authorities and offer opportunities to regenerate their town centres. In many cases, councils are best placed to make a judgement on commercial investment risk within their own boroughs as they know the area well and are long term stakeholders in their region.

At Lunson Mitchenall, we are seeing first-hand how many local authorities are choosing to pave the way to regenerate their local town centres. Specifically, as the retail market
slows, local authorities are finding that the private sector is increasingly willing to sell town centre assets. This presents a great opportunity for councils to take a lead role in the future regeneration and town centre master planning of their area.

A great example of this is in Egham town centre where we worked alongside Runnymede BC. The council owned the freehold interest of large parts of the town centre -= but the controlling interest was with the various long leaseholders. We worked with the council to acquire a long leasehold interest from an institutional seller on a long let Waitrose and the Travelodge investment for £21.6m. This sat alongside a parade of 18 retail units on the high street, which the council had previously bought-in as part of the same placemaking initiative. This gave the council greater control over the town centre regeneration and a reliable income stream for the future success of the borough.

There are so many councils across the UK who are investing in commercial property for the benefit of the local people and the local area. The key is to make astute and considered investments. While some councils are grabbing the headlines for the size of their investments, we are seeing that councils all across the country are making sensible commitments in their local areas which will benefit their communities for years to come.

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There are so many councils across the UK who are investing in commercial property for the benefit of the local people and the local area. The key is to make astute and considered investments
James Cogavin, Lunson Mitchenall

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