Business is booming in the UK. There are an estimated 4.9million private sector businesses in the UK, employing around 24.3million people, with a combined turnover of £3.3billion. Three quarters of these businesses are non-employing, or sole traders.
However, although thriving enterprise is a good news story for our economy, start-ups and micro businesses are threatened by continuously rising commercial property prices. Small businesses in London are bearing a huge 'cost burden' according to the Federation of Small Businesses and London First. Their Small Business Cities Index has ranked London the second highest compared with 23 other global cities when it comes to work space rentals, taxes, wages, and redundancies.
It's not just offices, micro businesses working in light industry also face high rents. An online search of available commercial studios and workshops for rent in a variety of areas across London brought up a price range of £560 – £1,630 per month, very high prices for a start-up cycle mechanic or a growing architect's firm.
Rental terms with big landlords, such as the length of a contract, are also major obstacles for businesses which are just starting out. Whilst landlords prioritise a steady income and stability, start-ups need the flexibility to experiment and change location if their initial plans do not work out.
Empty garages for start-ups
Thousands of garages are estimated to be lying empty in London alone. My report, From Lock Up to Start Up has identified 3,275 empty garages owned between just ten housing associations across the Capital.
Converting some of these empty garages into basic standard, affordable studios, workshops and commercial space could provide the much needed affordable space that London's start-ups and micro businesses so desperately need. Specifically, this proposal involves housing associations investing in their garages and, if they are not suitable for housing, converting them into affordable work space for micro businesses, where a high street location is less important for trade, such as: cycle mechanics, architects, printers, carpenters, and product designers.
My report estimates the cost of converting a garage into a business unit to be approximately £26K, which would include basics such as electric rewiring, insulation, heating, water supply, and decent internet connection. If a converted garage space was rented out to a business at £60 a week, the housing association would make their initial investment back in approximately eight years, and profits could be reinvested into their stock.
Neighbourhoods and local areas would also benefit as many empty garages are a magnet for vandalism, fly-tipping and anti-social behaviour. By giving businesses the opportunity to set up in different boroughs across the Capital, some of the burden can be relieved from prime Central London locations, while quieter areas can benefit from increased footfall, passing trade and investment.
Of course, there are practicalities that must be taken into consideration. Providing housing is priority for housing associations, and garages could be converted into basic business space only if they are not suitable for housing. Not all disused garages would be appropriate for conversion into basic business units, consideration would need to be given to factors such as location, proximity to transport and restrictive access to the site. Finally, the need to secure planning permission is a major consideration. Early dialogue and close partnership between housing associations and boroughs would be key, especially to consider the impact on local planning priorities and the impact on the area such as parking spaces and traffic flow.
I am urging housing associations to work in partnership with the Mayor and to convert empty garages in a pilot of an initial 300 garages in London to help micro-businesses grow. The Mayor should support housing associations by conducting a pan-London analysis. This could include identifying feasible locations and providing practical advice about potential planning issues. Housing associations can use this analysis to identify potential garages from their stock, come up with a suitable pricing model and engage with appropriate local businesses to gauge interest. If a citywide pilot is successful, there is no reason why this scheme could not be rolled out widely across the UK.
Steve O'Connell is GLA Conservatives planning spokesman. His report, 'From Lock Up to Start Up' can be downloaded here: glaconservatives.co.uk/lusu