In a classic example of the law of (un)intended consequence it appears that government cut-backs will hit the property rental market hard.
As the Telegraph points out the property industry appeared to get off the tax hook quite lightly in the emergency budget, but this may just have been in recognition of the pain that is to come.
Already the government has announced the intention to close 157 courts and, with massive cuts to come, it would be inconceivable that central and local government wouldn’t be keen to identify property savings.
According to the Telegraph the civil service occupies the equivalent of 150 office blocks. UK Central Government is the largest tenant of Land Securities, which itself is the largest property company in the UK. Land Securities controls 24 shopping centres, has 9.7 million sq ft of office and retail accommodation in London and 50,000 people work in offices owned or rented by them.
The Labour government had already begun the process of saving Â£1 billion in property costs. But the chief executive of Telereal Trillium, which is looking for a key government property redeployment role, believes this could be increased to Â£4.5 billion.
The commercial property market will also be hit hard by the resulting job losses. As money becomes tight spending and demand fall and retailers feel the pinch. This could lead to many downsizing or shutting their doors for good.
Further knock on effects could be not only that investing in property companies becomes unfashionable but also that no-one invests in the building of new commercial property ventures. What we have will just get older and tattier.