A Regional Perspective on the Impact of the Privatisation of the UK Public Industrial Property Stock

Abstract

There has been a long tradition, dating back to the 1930s, of promoting regional development in the assisted areas of the United Kingdom through the provision of industrial units. At the end of the 1980s the government decided that the time was then ripe to sell off the publicly owned portfolio of industrial and commercial property, which was predominantly to be found in the peripheral regions of the United Kingdom. The author charts the privatisation process in England and Scotland. It had been envisaged that the sale would lead to higher rents and invigorate private sector investment. More than a decade on, the author seeks to assess whether this forecast/hypothesis proved correct. The Scottish experience is used as a case study of the UK privatisation programme operating in a peripheral region, and the impact is assessed at two levels: on the Scottish market as a whole; and in the postprivatisation experience of the former publicly owned industrial estates. The original forecasts of the Conservative government prove to be naïve. No evidence of a wide-scale rise in rents, or speculative development, was found, nor has there been an increase in institutional investment in industrial property; the public sector has begun to intervene again—albeit in a different guise.

Understanding industrial land supply: how Dutch municipalities make decisions about supplying serviced building land

“…In addition, Segeren et al (2005) have previously observed that in most regions of the Netherlands the average asking prices of serviced building land offered by private developers are even below the prices charged by municipalities. 3 Jones (2005) also contends that governmental organisations still intervene directly in the industrial property market, albeit in a different guise. As in many other countries they are sometimes actively involved in urban regeneration by providing serviced building land and buildings.…”

“…A comparable policy narrative has recently emerged in the Netherlands. This narrative suggests that land prices have to be raised and the availability of serviced building land restricted for private development and investment to occur (Bestuurlijke Werkgroep Uitvoeringsstrategie ( For the Scottish industrial property market, Jones (2005) argues that these assumptions did not prove to be correct in that he found no evidence of considerable increases in either rents, speculative development or institutional investment after the privatisation. In addition, Segeren et al (2005) have previously observed that in most regions of the Netherlands the average asking prices of serviced building land offered by private developers are even below the prices charged by municipalities.…”

“…The underlying assumption driving this operation was that the sale would result in higher rents and therefore stimulate investment by the private sector. The general opinion was that rents were low, partly because public agencies offered rental units below prices that the industrial firms would be willing to pay and partly because the high vacancy levels, accepted by governments, had a depressing effect on rents (Fothergill, Monk, & Perry, 1987;Jones, 2005).…”

“…Since the 1930s, governmental bodies in the UK have been promoting regional development in depressed, predominantly peripheral areas through the public provision of industrial buildings (Jones, 2005;Wood & Williams, 1992). Buildings in the public stock were usually let to the final users, but premises were also sold to them and sometimes, when there was some demand, serviced building land was sold to commercial developers.…”

“…Buildings in the public stock were usually let to the final users, but premises were also sold to them and sometimes, when there was some demand, serviced building land was sold to commercial developers. At the end of the 1980s, it was decided to privatise the portfolio of publicly held industrial property (Jones, 2005). The underlying assumption driving this operation was that the sale would result in higher rents and therefore stimulate investment by the private sector.…”