Slow broadband can hamper rural commercial leasing, new report says

Slow broadband is a major constraint in the successful letting of commercial workspace in the countryside in the UK and has an impact on rents achievable according to new research.

It is also becoming more of an issue in some locations for residential listing available to rent, the latest analysis sector survey report from real estate firm Savills shows.

The survey reveals that nearly 70% of respondents confirmed slow broadband is a constraint on letting residential listing in rural areas and 80% confirmed slow broadband is a constraint on letting commercial workspace.

The survey also showed that in many cases a poor speed deters potential tenants from even making an appointment for a viewing and where space is let, on average rents are 16% and 25% less respectively where the broadband speed is slow.

‘Broadband speed is now generally one of the first topics raised by perspective tenants who are looking to rent some commercial office space in a rural area,’ said Ben Knight, director of Savills Rural.

‘Where it is poor vacant periods are often longer and in some cases there is no demand for a building however good the space and other facilities are. And with more people choosing to work from home for at least part of the week it is becoming a more common question from perspective residential tenants,’ he explained.

The report suggests that landlords looking to develop commercial space should assess the speed of broadband as part of the viability study and are in cases shelving a project if the speed is poor or taking matters into their hands and creating high speed networks using grant funding where applicable.

While the start-up costs are significant around £20,000-£30,000 in the first year, annuity income from those using the broadband is a valuable new income stream and of course the likelihood of finding tenants for the commercial space greatly improves the report says.

Two estates which have successfully developed their own broadband schemes are The Alscot Estate in Warwickshire and The Rushmore Estate in Dorset.

The Alscot Estate near Stratford-upon-Avon established the network South Warwickshire Broadband in 2014 which has led to a diverse range of businesses occupying premises and a 100 per cent occupancy rate. The tenants all have access to upload and download speeds of up to 36Mb per second plus voice over internet protocol (VOIP) and cloud services.

‘The benefits to the estate of having full occupancy with happy tenants are extremely valuable. Increasingly estates are having to diversify away from agriculture as farm incomes are pressurized by weak commodity prices and former traditional farm buildings provide attractive offices once converted,’ said Knight.

‘At Alscot we were able to immediately connect a gaming business taking one of the serviced offices so that they were up and running within 24 hours, which created a great relationship with the tenant from the outset,’ he added.

The Rushmore Estate in Dorset via Wessex Internet is now able to offer residential and commercial tenants wifi as well as providing all the estate businesses with good quality broadband. The two annual festivals held on the estate have complete connectivity and a telephone solution incorporating staff, trader, artist and public wi-fi and VoIP phones, which enables the organisers to operate an eTicketing system.

‘This spring a commercial tenant needed to expand his premises and also required improved broadband to cope with the business expansion, which we were able to provide meaning he has stayed at Rushmore. If we hadn’t been able to do so he would have been forced to look elsewhere,’ said Ruth Mason of Savills who manages the estate.

‘The estate has benefited from being able to offer good connectivity to residential tenants too, attracting some who need to work from home and encouraging existing tenants to settle and stay on the estate, which certainly would not have happened without good connectivity,’ she added.

The report also points out that the Government’s proposals to unleash the full potential of the countryside which were announced by Defra in August as part of its first 10 point Rural Productivity Plan included a pledge to provide extensive, fast and reliable broadband, making superfast broadband available for 95% of UK premises by 2017 and working with providers to address challenges in reaching the final 5%.

However, the report says that for many rural land owners and businesses this is too late and while the government reviews how to reach the final 10% an increasing number of rural estates, communities and individuals are taking the initiative to find their own solutions.

BOOKMARK THIS PAGE (What is this?)     

Source: Property News Spain