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Wasted space warning; COMMERCIAL PROPERTY.

MORE than one in four manufacturing companies in the Midlands are not using their property holdings to maximum efficiency and, as a result, are losing thousands of pounds off their bottom line, according to a recent survey by BK - The Property Assets Consultancy.

In the spatial equivalent of Parkinson's Law where ' work expands so as to fill the time available', many manufacturing processes spread out to encompass any unused floor space they may have.

Tim Matthews, partner at BK, said: "We found factories where companies with 50,000 sq ft premises actually only needed 35,000 - 40,000 sq ft to run their production lines efficiently, but had managed to spread into the extra 10,000 sq ft which they did not really require.

"In such circumstances, even if they are paying rent of only pounds 3 per sq ft, by the time you add rating liability of between pounds 1 and pounds 1.50 per sq ft and other occupancy costs, companies in this situation could reduce their property costs by up to pounds 50,000 per annum by working more efficiently.

"You would not pay an employee that amount to sit around doing nothing but that is what some manufacturers are effectively doing with their property.

"Alternatively, they could look to sub-let part of their premises, maybe by sub-dividing their premises to use, say two out of three bays and thereby gaining a useful additional income from the extra floorspace.

The sub-let does not necessarily have to be to another manufacturer. With the boom in distribution, many logistics companies and retailers are on the look out for premises in the Midlands."

Mr Matthews added: "Some of the companies we surveyed were working in old pre-War buildings where accommodation on many levels led to an increased use of space. When we plotted the area they actually needed to work in, we found that we could reduce it by as much as one third in a modern purpose designed building. If their original premises fronted onto a busy main road, we were also able to look at the possibility of redevelopment for a higher value use.

"Many of the companies we surveyed in our research are clearly very good at operating their business to the highest efficiency but they are still failing to ensure that their property is being used to the maximum effect. It is one further area they should consider in these tough times for manufacturers."
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Copyright 2001 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Business
Publication:Coventry Evening Telegraph (England)
Date:Feb 13, 2001
Previous Article:The heart of the county; COMMERCIAL PROPERTY.
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