Delivering quality accommodation for small businesses in London despite market difficulties

Abstract

Public policy on the subject of small business support generally concentrates on tackling market failures in delivering finance, innovation, technical development, skills and entrepreneurship. However, in growing city regions such as London, the difficulty in obtaining good quality fit-for-purpose accommodation can be an important factor inhibiting the growth of otherwise successful business. The rate of business formation is very high in London, but paradoxically, the very vibrancy of the economy creates a real estate market that can be hostile to the needs of small businesses, particularly those which achieve rapid growth. This article will consider the factors that cause this situation and will then outline some practical examples of how they can be overcome by smart public sector intervention.

Notes

In 2002 the London Development Agency considered a measure that would have involved using public funds to help reduce the letting risk to developers of small unit industrial estates, hence reducing the overall costs that would have to be applied to the appraisal of individual projects and improving the prospects of commercial viability. It was not taken forward because of problems with state aids.