More than 163,000 small and medium-sized enterprises (SMEs) in the north west of England are planning to move or expand their business premises in the next 12 months to cater for an expected increase in activity, according to new research by Yorkshire Bank.
As economic confidence and activity levels grow, the research suggests that one in three (34%) SMEs are planning to expand their existing premises, move into larger properties or expand into additional locations to meet the increased demand for their products and services.
These investment plans are being made against the backdrop of improving confidence and economic conditions for UK businesses. According to the latest official statistics, capital investment by businesses grew by 9% in the second quarter of this year compared to the same period last year*.
NEARLY HALF OF BUSINESSES REPORT IMPROVED PROSPECTS
According to the Bank’s research, which surveyed 174 small and medium-sized businesses across the north west of England, nearly half (49%) believe economic conditions are better for them now than it was a year ago, leading to more than one in three (40%) planning to invest in measures to encourage business growth.
Phil Tarimo, regional director for Yorkshire Bank, said:
“More businesses are looking to invest and prepare themselves for a period of sustainable growth over the next few years. One aspect of that preparation is an investment in the bricks and mortar from which they operate – factories, offices, and distribution centres – providing security for their businesses and staff and providing solid foundations from which to grow.
“New, refurbished or expanded premises have a number of effects for a business and its employees. By modernising or investing in the working environment businesses can expect to see improved productivity. Having additional space also allows for growth in staff numbers, new equipment or the room to develop new products and services.”
More than a third (40%) of all businesses surveyed would consider buying their premises outright if the right funding package was available and large deposits were not required.
METFLEX MOVES FROM RENTS TO OWNERSHIP
One such business that has been supported by Yorkshire Bank to purchase its premises outright is Metflex Precision Mouldings Limited (Metflex), an East Lancashire-based specialist manufacturing business which produces rubber components for a range of industries.
In 2010 Metflex moved into a new purpose-built factory and offices as a rent-paying occupier but after a period of growth has decided to buy the property outright. Metflex has bought its 37,000 square foot office and factory in a deal worth £2m with 100% finance support from Yorkshire Bank in Blackburn.
The findings of the survey follow the introduction of new lending initiatives by Yorkshire Bank earlier this year which were designed to support the growth and investment ambitions of small and medium sized businesses. As well as initiatives such as extended loan terms, the Bank has developed funding packages to allow businesses to buy their trading premises, and depending on the circumstances, this could be up to 100% of the premises’ value.
Phil Tarimo continued:
“Businesses up and down the country are looking to strengthen their position as economic conditions improve. That could be creating jobs, developing new products or targeting new markets.
“Our research suggests that more than one in four SMEs want to improve or expand their premises to provide a strong base from which to expand. This sort of investment will not suit every business at this point in time, but we believe many are looking to the future with sufficient confidence and healthy order books.”