A new £500m government fund designed to help commercial development projects off the drawing board has been welcomed by CBRE.
The Mayoral Revolving Growth Fund (MRGF) – outlined in a policy statement accompanying the Budget – will provide six regional mayoral authorities, including the West Midlands Combined Authority (WMCA), with access to government-backed borrowing to help accelerate investment, unlock development and boost confidence in regional markets.
According to Will Ventham, who heads the Birmingham office of CBRE, the fund is unusual in that it specifically targets commercial property, with Grade A office space, lab space and innovation hubs singled out.
He said: “The majority of government development funding devolved to the mayoral authorities has focused on new homes and infrastructure provision. The creation of MRGF acknowledges the challenges facing many commercial developers as they seek to de-risk projects in what has been a difficult market. As the Treasury notes, high remediation costs and risk-adverse lending practices are among the many hurdles that have made some commercial developments marginal.”
The policy statement acknowledges that capital flows to London and the South East have significantly outpaced investment in regional cities, leaving the latter suffering from “underinvestment, constrained local fiscal capacity, stalled regeneration efforts and reduced economic dynamism.”
Ventham added: “Let’s be frank, £500m spread across six regional authorities won’t go far. However, it’s a good start and will undoubtedly leverage additional private finance.
“Yes, we need new homes to address the housing crisis. Yes, we need new infrastructure to catalyse investment. But if we are to create jobs to improve growth and productivity we need first class business space. This fund acknowledges the importance of commercial development to the economic ecosystem. We welcome it and look forward to exploring it further with developers, investors and the WMCA.”
