Toll scrapping to encourage English firms to relocate

Tolls on the two Severn bridges have fallen today (08/01/2018) with vehicles exempted from VAT, and the tolls will be scrapped entirely on the bridges by the end of this year.

But what impact will the abolition of tolls have on the commercial property sector in south Wales and for Newport in particular?

Here director of Newport-based M4 Property Consultants, Dan Smith, explores.

“Scrapping of the Severn Bridge tolls will make industrial space on the Welsh side of the border more attractive to occupiers – especially to businesses currently located in Bristol and south west of England. The rental prices on offer are far cheaper than those in Bristol and the surrounding area, meaning more and more firms are likely to make the move across the border to reduce costs, with little disruption to business.

However, in the short term the lack of a dedicated distribution space of any significant size may reduce activity and Newport, Monmouthshire and Torfaen must all address this lack of supply if they are to benefit from this increased demand. Considering the offices sector, Newport still lags behind it’s noisy neighbour (Cardiff) 15 miles west on the M4.

The Cardiff office market experienced record take-up last year largely thanks to its Central Square regeneration. Whilst most notably in Newport, Target continued to expand at Q2 Imperial Park, acquiring 10,000 sq ft. whilst Carpeo also took 26,000 sq ft at Caerleon House Cleppa Park.

However, the low level of overall take-up reflects the movements of smaller companies within the market due to the lack of available office space. However, the Severn Bridge tolls scrapping could spell good news for the office market, with average cost per sq ft of office space in Newport around £15 cheaper than Bristol and around £10 cheaper than Cardiff, offering massive savings to firms.

Firms relocating from Bristol to Newport should also be able to retain staff.

The scrapped tolls will save £1,400 a year for commuters and travel times between the two cities do not pose any significant barriers either. The scrapping of Severn Bridge tolls is unlikely to have any major impacts on the retail sector with the bigger impacts anticipated in the industrial and office sectors.

So, overall the commercial property market in South-East Wales looks bright, both the industrial and office sectors can take advantage of a projected increase in demand after the Severn Bridge toll scrapping. However, both sectors require investment to capitalise on this increased demand, without doing so it could prove a missed opportunity for regional growth.”

Article courtesy of Wales Online