MP Poulter’s warning after multi-million pound office deal revealed
PUBLISHED: 16:30 20 May 2020
The news that council-owned Ipswich Borough Assets has spent £22.5m on buying a business park in Peterborough has led one of the town’s MPs to hope that it doesn’t come to regret the deal.
And questions remain about whether the middle of a lockdown with office staff being urged to work from home is the best time to spend money on a business park, most of whose tenants are offices.
Central Suffolk and North Ipswich MP Dr Dan Poulter said: “I hope they don’t come to regret this deal. It seems rather a strange time to go out and buy a development of offices. More and more businesses are now looking at encourage their staff to work from home.”
He pointed out that Barclays and HSBC banks – who are not tenants on the Peterborough Business Park that has been bought by IBA – have announced plans to move staff out of large offices and into smaller branches or having them work from home even when the lockdown is over.
He added: “Many companies are finding that it is possible for their staff to work from home or at least away from large offices and I think that will be a long-term trend. I don’t know that this is such a great time to invest in a portfolio of office space.”
IBA is owned by Ipswich Council and it has been set up to own commercial property and pay the borough a regular income from rent to help supplement council tax receipts.
The council is able to borrow money at a very low interest rate from the Public Works Loans Board and pass it to IBA which then pays the authority far more back in rent receipts. The Peterborough deal is expected to boost council receipts by up to £3m a year.
Colin Kreidewolf is a senior Ipswich councillor and chair of IBA. He said he accepted there would be questions about the deal and its timing – but felt the tenants at the park were very strong and had long leases on their buildings. Almost all the units are currently occupied.
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Among the larger tenants are Anglian Water and Associated British Foods.
Mr Kreidewolf felt the offices there would continue to be in demand even if some staff did switch to working from home.
He said: “This park has very good access to the A1 which has recently been upgraded which gives excellent links to London and other cities in the midlands and north of England. Although the offices are very high quality, the cost of renting there is much less than it is for offices in London.
“Also – and it feels strange to say this because we’ve always encouraged links to public transport, walking and cycling – in this case and at this time it is a major plus that there are such good road links and there is a very high ratio of parking spaces to office accommodation.”
A key factor in persuading IBA to buy the business park 90 miles away from Ipswich was the need to diversify. IBA’s investments in the past have been focussed largely, but not exclusively, on retail and it owns two successful retail parks in the Ipswich area as well as the former Burton’s shop on Tavern Street.
But there are question marks over both retail and office developments in the wake of the lockdown – although there are some suggestions that retail parks may be less badly affected than traditional town centres in the long term.
Retail parks tend to attract shoppers going to them for specific pre-planned purchases. And retail park stores, including some on Anglia Retail Park on Bury Road and Beardmore Park at Martlesham which are owned by IBA have continued to trade through the lockdown selling essential items.
Many offices – like those at Peterborough – are only now starting to think about reopening even though many of their tenants will have continued to pay rent over the last 10 weeks.
And council-owned companies buying commercial property is a familiar theme across the country and the political divide. Conservative-controlled Babergh and Mid Suffolk councils have their own property company Cifco which was buying sites like the Peterborough City Centre branch of Caffe Nero while IBA bosses were insisting they were only interested in property in the immediate Ipswich area.
This latest investment by IBA is seen as a long-term income generator for the borough council. Any property investment can be seen as a gamble – at this time it is even more of a gamble, but if IBA turns out to be right and it has paid a bargain price for a blue-chip property it could be good news for the town.
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